What do you think you’re going to get when you decide your city is going to impose a minimum wage twice the one imposed by the federal government? You know you’re going to get a lot of lost jobs and struggling businesses, which will have a hard time balancing their cost of labor with the value they’re receiving back from their workers. But you’d think you’d at least get the admiration of your left-wing supporters.
You’d think that. But you’d be wrong.
In Seattle, Mayor Ed Murray has decided to cast all economic rationality to the wind and back a plan to raise the city’s minimum wage to an astonishing $15 an hour. Even Barack Obama, who apparently thinks a higher minimum wage solves “income inequality” and is no sweat for employers, is only recommending an increase to $10.10 per hour from the current $7.25.
I guess Mayor Murray figures that if you’re going to use the heavy hand of government to redistribute wealth, there’s no sense being tentative about it.
But even this gambit isn’t enough for Kshama Sawant, a member of the Socialist Alternative Party who was just elected to the Seattle City Council. The official newsletter of the Democrat Party, also known as the New York Times, gives us the skinny:
Kshama Sawant, a Socialist Alternative Party member who was elected to the Seattle City Council last year on a single-minded drive to raise wages, said the plan had been “watered down” by business interests on the mayor’s 24-member committee on income inequality, of which she was also a member. In a packed news conference at City Hall right after Mr. Murray’s, she called on her supporters to continue their effort to gather signatures for a possible ballot initiative on wages this fall. The campaign might also put pressure on the Council to make the mayor’s plan better for workers, she suggested. “Every year of a phase-in means yet another year in poverty for a worker,” Ms. Sawant said. “Our work is far from done.”
Councilwoman Sawant’s issue apparently is that the $15 minimum wage is phased in over too long a time.
So this is what it’s come to in American governance these days. Forcing a minimum wage that’s more than double what the federal government imposes represents a dastardly capitulation to the moneyed corporate interests.
Those of us who care about good economic policy know something the socialists who are running Seattle will never admit: Raising the minimum wage, especially when you raise it higher than the federal minimum wage (and especially this much higher), will kill jobs. Not only is this obvious, it’s not even hard to explain why.
Every business is looking to minimize its costs and maximize its revenue. But you know you can’t make your costs zero, especially when it comes to labor. So what you want to do is make the right level of investment in your workers. What is the right level of investment? It’s the level that yields you the best return in the form of value workers give you through quality performance and productivity.
The problem with a $15-per-hour minimum wage is that there are simply too many workers who can’t produce enough to generate the return you need to justify that investment. That may not be the worker’s fault in every case. Some are too young. Some are too inexperienced. Some haven’t learned good habits. And sure, some just don’t work that hard or aren’t very skilled.
Many of these workers can perform enough to generate a good return on a $7.25 per hour wage. Some might even be able to give you what you need at $10 an hour. And in time, as they gain experience and improve their skills and performance, many of them can likely justify a higher wage. But $15 an hour? You’ve just priced a whole lot of them right out of the work force.
You’re hurting the employers, too, because that employer probably would have benefitted from giving that low-skilled worker a chance at a lower wage. But now, by imposing such a high minimum level on all wages, only certain workers can be employed – and you have no choice to but to use these folks to do more menial tasks that are worth far less.
Don’t believe me? See Dan’s piece from last week about former Democrat Congressman David Bonior, who was once an advocate of raising the minimum “tip wage” of $2.36 for servers and others who mainly earn their money from tips. What does Bonior, who has opened two restaurants in Washington D.C., pay his servers? Why, $2.36 an hour! Because he has to “make the numbers add up.”
Maybe the socialists who are running Seattle city government should be made to run a small business for a little while before being allowed to impose wage standards. They might learn a thing or two.
