Seattle's Painful Lesson on the Road to a $15 Minimum Wage
bloomberg.com
bloomberg.com
Seattle's situation is much more complex. Condos are going up and ST3 is funded, but the city needed that rail system a decade ago. The biggest problem in Seattle, as is the Bay Area, is growing income inequality.
When the fishing industry grew in Seattle, so did local shops, bars, hotels and all the other industry that gets paid various wages across the board to support each other. Seattle is a tech capital, and those jobs are very high demand. People in tech often get paid more than lawyers and even doctors.
I remember a lawyer telling me very few of the police he's met live anywhere near the areas they work in. People who bought houses decades ago for $150k are watching their neighbours take buyouts and leave, selling their places for $800 to over a million.
The disproportionate amount of income given to those in high demand fields hurts everyone else across the board. Seattle is building a lot more housing, unlike the bay area, but there is still a considerable amount of single occupancy housing in the city that's empty simply because the owners won't sell it or bring it up to code.
It's more than just minimum wage. There are a lot of complexities in that city where you can't just focus on a couple of numbers.
If a $15 minimum wage was imposed nationally, these communities would collapse and you'd simply have millions of additions to the ranks of urban poverty.
Perhaps making a direct comparison wasn't what you intended to do, however?
I do wish I had something more rigorous to give you. I am pretty sure I am not the first to make this argument though.
https://www.washingtonpost.com/news/posteverything/wp/2017/0...
So he's not an economist, not a statistician and is a political activist having an agenda that this study seems to undermine. I don't have enough knowledge in statistics and econometrics to know which team did better job - Berkeley or UW - but if I had to choose, I would certainly not make the choice based on a word of a political activist without relevant background.
One possibility is that the businesses were already overpaying for labor by staffing more employees for more hours than were needed. But that just turns a minimum-wage hike into a convenient excuse to roll back hours/staff (much as economic downturns tend to be used as a cover for companies to lay off people they no longer needed anyway).
Another possibility is that more hours are being assigned to salaried employees since it doesn't cost extra to have them work more. But that would actually be a good thing -- it would increase the demand for salaried full-time employees, and being a salaried full-time employee is much better than being a minimum-wage hourly employee.
Another possibility is that businesses are just closing down more often rather than pay people to keep things operating. But that seems unlikely.
So what's actually happening?
>Sowell has said that he was a Marxist "during the decade of my 20s"; one of his earliest professional publications was a sympathetic examination of Marxist thought vs. Marxist–Leninist practice. His experience working as a federal government intern during the summer of 1960 caused him to reject Marxian economics in favor of free market economic theory. During his work, Sowell discovered an association between the rise of mandated minimum wages for workers in the sugar industry of Puerto Rico and the rise of unemployment in that industry. Studying the patterns led Sowell to theorize that the government employees who administered the minimum wage law cared more about their own jobs than the plight of the poor.
Why do almost everybody think they can go against the laws of economy?
[1] 50 Years of Research on the Minimum Wage: https://www.jec.senate.gov/public/_cache/files/c876c468-ffca...
[2] https://en.wikipedia.org/wiki/Thomas_Sowell#Education_and_ca...
Edit: This is aside from any opinion about how good or bad the content of the article is, just pointing out why I think people are increasingly okay with ignoring economists' opinions.
That's correct, but current Marxists or people who claim to be left-wing always make it a top priority issue to increment the minimum wage.
Minimum wage jobs aren't meant to be a job for life. It's an entry level job. If you want higher paid jobs, you need to earn it. Minimum wage increase causes unemployment, you end helping a few at the expense of others who happen to need help the most.
For example, Someone owns a fence building company, and their crew can lay 1000' of fence a day by shoveling the fence post holes. The owner spends $100,000 and invests in a couple of big power augers, which lets his crew now lay 5000' of fence a day(also, the crew is less tired at the end of the day).
The crew is now 5x as productive as they were in the past, but it is because of the capital investment of the owner, not through any intrinsic increase in productivity from the crew itself.
Who gets to capture the increase in revenue?
A policy that has the effect of transitioning the economy from low-skill low-wage jobs to more high-skill high-wage ones ought to be celebrated among human beings as a victory. It provides an incentive for workers to improve their skills to compete more effectively and meaningfully increase their income.
Only those who outright prefer a serf economy can describe this study as a negative for Seattle.
[1] https://civicskunk.works/moving-the-goalposts-on-seattles-mi...
But ultimately minimum wage laws are based more on ethics than anything. I've not heard of any business going out of business because of this in Seattle. I doubt there are any. This city is ridiculously expensive to live in. I want the people serving me food, etc. to be able to afford to live here. $15 per hour doesn't go far enough, but in lieu of something more dramatic it's the least we can do.
Assuming my ability to raise prices is capped due to out of city competition, then my only choice is to do more with less, which means hiring more productive workers.
To me, that means hiring better people. People who don't need training, can multi-task, who can deal with having more work than time.
So, sorry kid looking for your first job, I just hired someone from outside the city who was making $15 an hour because they where worth it. I can't afford to train you anymore.
I'd be interested to know how it has impacted broader economic activity in the region.
From [1]: "Our results show that wages in food services did increase—indicating the policy achieved its goal — and our estimates of the wage increases are in line with the lion’s share of results in previous credible minimum wage studies. Wages increased much less among full-service restaurants, indicating that employers made use of the tip credit component of the law. Employment in food service, however, was not affected, even among the limited-service restaurants, many of them franchisees, for whom the policy was most binding. These findings extend our knowledge of minimum wage effects to policies as high as $13."
[1] http://irle.berkeley.edu/files/2017/Seattles-Minimum-Wage-Ex...