Those who think higher minimum wages solve problems are mistaken, as it’s contrary to a common sense economic principle. The higher the price of a good or service, the less affordable it becomes, and thus, the less of it is purchased, whether it be labor or a cup of coffee. Should the government require all cups of coffee, whether they are now $1 coffee at McDonalds or $5 coffee at Starbucks, to suddenly be priced at a minimum of $15 per cup, obviously far fewer cups of coffee will be sold at $15. As a result, more people would do without coffee, or make their own at home. With less coffee being ordered, there would be less need for employees at coffee shops, and the workers’ hours would be reduced as well as many being fired. If you only have $5 in your pocket, you could previously buy 1 Starbucks coffee at $5, or 5 McDonald’s coffees at $1 each. Once the price is $15 for a cup of coffee, even though you want coffee, you can no longer afford it.
Report: $15 Minimum Wage in Seattle Killed Jobs
Democrats adopted $15/hr minimum wage in 2016 national platform
Seattle’s groundbreaking minimum wage hike hurt the low-income people that it was meant to help, according to a report prepared for the city council.
Seattle became one of the largest cities to embrace the $15 minimum wage—double the federal minimum of $7.25—in 2014, adopting an ordinance that would achieve the hike by 2017 for major employers and 2019 for small businesses. The new base rate pleased labor activists and the politically powerful Service Employees International Union, but it has dealt a blow to the take-home pay of workers even before the hike has been completed.
Researchers from the University of Washington found that low-income workers saw their pay fall drastically when the city moved to the $13 mark in 2015. Companies reduced the number of hours that employees worked to cope with the increased labor costs.
“The lost income associated with the hours reductions exceeds the gain [in hourly rates],” the report says. “The average low-wage employee was paid $1,897 per month. The reduction in hours would cost the average employee $179 per month, while the wage increase would recoup only $54 of this loss, leaving a net loss of $125 per month (6.6%), which is sizable for a low-wage worker.”
The study also found that the baseline wage did not help as many low-wage workers as bill supporters expected it to because “most affected low-wage workers were already earning more than the statutory minimum at baseline.”
The minimum wage hike has been the centerpiece of the Democratic Party’s economic agenda over the last several years. Democrats put the $15 minimum wage on its 2016 party platform, despite the fact that nominee Hillary Clinton had misgivings about the drastic hike’s effect on hiring; she initially backed a $12 rate during the primary.
“Democrats believe that the current minimum wage is a starvation wage and must be increased to a living wage. No one who works full time should have to raise a family in poverty. We believe that Americans should earn at least $15 an hour and have the right to form or join a union,” the platform said.
Labor watchdogs said that the study should serve as a “wake-up” call to those who have led the campaign to drastically overhaul the minimum wage.
“This important study ought to be a big wake-up call that the ‘Fight for $15′ minimum wage effort is actually hurting those they say they want to help—reducing incomes and eliminating economic opportunities for low-income Americans who need them most,” America Rising Squared spokesman Jeremy Adler said in a statement.
Michael Saltsman, research director for the pro-free-market Employment Policies Institute, said that the results of the study were not surprising and fell in line with previous research that has linked drastic minimum wage hikes to jobs and earnings losses. He said that the report shows that the push for the wage hike is “colliding with economic reality” and that policymakers should approach future bills with caution.
“Similar to members of the flat earth society, some true believers in the labor movement may be unmoved by this body of evidence, but sensible policymakers on the left and the right should feel very comfortable opposing $15 knowing that it hurts employees rather than helps them,” Saltsman said.
The $15 hourly range has spread from Seattle to other major metropolitan areas. New York and California, as well has numerous deep blue cities, including Washington, D.C., and Boston, have passed legislation to eventually raise wages to $15 an hour. Not all of those laws are guaranteed to take effect; the California law allows lawmakers to opt out of future hikes if they are found to hinder job creation or hurt the economy.
Settled Science: On Minimum Wage, Basic Economics Again Rudely Intrudes on Liberal Dreams
Posted: Jun 26, 2017 2:25 PM
Whenever the Left pushes for sharp increases in the minimum wage (which has intrinsic populist appeal and tends to poll well), conservatives argue that such plans would kill jobs, stifle entry-level opportunities, and end up hurting many of the very people it was ostensibly meant to help. Liberals’ rhetoric about the minimum wage does not align with the data, critics contend, citing evidence about the types of workers who actually seek and fill those positions. Many supporters respond, in turn, with slogans and smears: It’s time to “give America a raise,” to end “starvation wages” and promote “fairness,” they claim, attacking “mean-spirited” and “greedy” opponents for protecting “the rich” at the expense of the poor. Which brings us to Seattle’s hard-left city counsel — home to such lovely characters as this woman — deciding in 2014 to ignore pleas from the business community and hike the minimum wage within their jurisdiction to $15 per hour. The Left celebrated, the Right braced for impact. The new law took effect two years ago, and basic economics has now rendered a verdict:
Seattle’s $15-an-hour minimum wage law has cost the city jobs, according to a study released Monday that contradicted another new study published last week. A University of Washington team studying the law’s effects found that the law has boosted pay in low-wage jobs since it took effect in 2015, but that it also caused a 9 percent reduction in hours worked, The Seattle Times reported. For an average low-wage Seattle worker, that’s a loss of about $125 per month, the study said. “If you’re a low-skilled worker with one of those jobs, $125 a month is a sizable amount of money,” said Mark Long, one of the authors. “It can be the difference between being able to pay your rent and not being able to pay your rent.” There would be about 5,000 more low-wage jobs in the city without the law, the study estimated…in the years covered by the study, 2015 and 2016, the minimum wage was at most $13, depending on business size, worker benefits and tips.
In other words, even before the full $15-per-hour mandate was phased in, thousands of jobs were killed, and low-wage workers’ hours were significantly reduced — taking money out of their pockets. Behold, the (ahem) wages of “fairness.” A rival study conducted by a progressive, pro-union organization was commissioned by the Seattle Mayor’s office (after preliminary data from UW’s respected, nonpartisan team of economists appeared politically unhelpful to the city’s policy), predictably declaring the move a big success. Unsurprisingly, it is being criticized as bought-and-paid-for propaganda. Its liberal authors are counter-attacking by alleging that the more credible study by mainstream economists is methodologically flawed, drawing this strong rebuke: “When we perform the exact same analysis as the Berkeley team, we match their results, which is inconsistent with the notion that our methods create bias,” one UW professor noted. It turns out that when you raise the cost of creating new jobs and sustaining existing ones, fewer jobs are created, and employers find ways to stay in business. Hardest hit are low-skilled, would-be workers looking to get a foot in the door — as well as low-income workers whose hours were slashed after the government artificially mandated a spike in their hourly pay. Based on the data, the harm outweighed the benefits:
— Phil Kerpen (@kerpen) June 26, 2017
Seattle’s minimum-wage hike seems to have reduced low-wage workers’ earnings by $1500 a year: https://t.co/zB3elfXWdJ
— Annie Lowrey (@AnnieLowrey) June 26, 2017
But hey, at least a bunch of liberal politicians were able to congratulate themselves on being “compassionate.” National Review’s Charles Cooke joked that the study’s conclusions simply indicate that the minimum wage must be goosed even higher:
Better make it $20. https://t.co/Gaon8cnTFi
— Charles C. W. Cooke (@charlescwcooke) June 26, 2017
Even though he obviously meant this in jest, there are undoubtedly left-wing activists re-writing their talking points demanding precisely this “solution” at this very moment. Hell, why not make it $150 per hour? By the way, the Democratic Party enshrined a national $15 minimum wage in its 2016 platform. To borrow the Left’s lazy, bullying preferred framing on so many policy debates, why do Democrats hate poor people? Especially those who actually work for their party? Parting thought: Between California’s dashed single-payer fantasy and Obamacare’s continued implosion, it’s been a rough stretch for liberal policy schemes. Not that it will deter the true believers for one nanosecond. Onward, for “fairness!”