Jobless in Seattle; City Raises Minimum Wage to $15/Hour

On Monday, the Seattle City Council unanimously passed Mayor Ed Murray’s plan to increase the city’s minimum wage to a whopping $15 an hour, more than twice the federal minimum wage.

The plan is to be phased in at different speeds depending on the size of the business; all employers will have to meet the $15 minimum wage by the end of the decade.

As SEIU 775 president David Rolf puts it, the plan “will pump nearly $500 million into Washington’s economy, proving that a higher minimum wage fuels business and job growth.”

Raising the minimum wage to allow low-income earners to get out of poverty is a noble idea; unfortunately, the laws of economics will always trump flawed ideology.

It would seem that the Mayor of Seattle and his city council members neglected to read the Congressional Budget Office’s February report that found that an increase in the federal minimum wage to the President’s request  - set at a much lower $10.10 per hour - would result in a net loss of 500,000 to 1 million jobs.

Raising the minimum wage does not spur job growth, in fact, it does just the opposite. Employers cannot hire more employees simply because they can’t afford to. In addition, employers are likely to calibrate offering a higher wage by looking for higher educated candidates, leaving the most vulnerable prospective employees on the economic chain without work.

COGC’s Executive Director Mattie Duppler was a guest on Fox Business Network’s Cavuto last month discussing recent protests by McDonald’s working demanding higher wages. She pointed out that many "corporate" businesses are in fact franchises, meaning they are operated by local small business owners. In Seattle, franchisees would be unduly  hit by the minimum wage hike by being required to phase in the wage increase at a faster pace than non-franchised businesses.  According to Forbes’ Jeffery Dorfman, “the more likely outcome is that the three to seven year transition period will allow business time to find ways to run their companies with fewer low-skill workers. In Europe, McDonald’s has been adopting automated ordering systems to replace workers for years.”

Citizens and business owners alike will begin to feel the squeeze the $15 minimum wage will impose as it is phased in over the next few years. Simply put, raising the minimum wage restricts business growth and is not only an inefficient way of helping the poor, it is downright harmful to the economic interests of those it is supposed to help.

TAGS: Regulation, Business

blog comments powered by Disqus