Seattle Goes for Broke: Raises Minimum Wage to $15 an Hour

By:  Bob Adelmann
06/04/2014
       
Seattle Goes for Broke: Raises Minimum Wage to $15 an Hour

Monday’s announcement that the Seattle City Council had voted 9-0 to raise the city’s minimum wage to $15 an hour was much more about advancing a political agenda than about improving economic conditions of the working poor.

The announcement also revealed extraordinary economic ignorance among those supporting the measure.

City Councilman Nick Licata insisted, "By significantly raising the minimum wage, Seattle’s prosperity will be shared by more people and create a sustainable model for continued growth."

SEIU Local 775 President David Rolf expanded on the economic nonsense: "[The new law] will pump nearly $500 million into Washington’s economy, proving that a higher minimum wage fuels business and job growth."

It’s a good thing the council didn't decide to repeal the law of gravity at the same time. The iron law of economics says simply that when the price of something goes up, less of it will be demanded. The only redeeming feature is that the damage to the economy will be applied slowly, over time, giving the hapless small business owners most affected by the measure more time either to adjust or get out of town.

The suffering will be spread across four different groups of businesses, as well as being spread over time. Large employers, with 500 workers or more, will need to start paying their employees $15 an hour by no later than 2017. But if they also provide health insurance for them, that deadline is pushed out to 2018.

Small businesses, employing fewer than 500 people, won’t have to start meeting the new rule until 2021, but restaurant owners will have to begin paying their people $15 an hour including tips by 2019. By 2025, however, all businesses will be treated — or mistreated — the same: Every worker must be paid at the rate of $15 an hour, whether they’re worth it or not.

And that’s the rub. More than 100,000 workers in the Seattle area are currently being paid less than $15 an hour. When the new law kicks in, so does the iron law: Workers will have to produce at a rate that justifies their new higher wage, or they will be out of work. Some estimates place those affected adversely at almost 30,000 workers.

Click here to read the entire article.

Photo of Council member Kshama Sawant (right) at a May Day rally in Seattle: AP Images

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