The $15 An Hour Minimum Wage

Interesting article about Seattle's minimum wage. I've quoted highlights from the article.



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Quote:

Some time back I wrote a piece entitled “We can predict the effects of Seattle’s $15 an hour minimum wage.” It’s here. And without going into boring detail it essentially said that we’d see what we would expect to see from a rise in the price of something, that is a fall in the demand for it. Ever since I’ve had comments from people insisting that human labor just doesn’t work that way. That if wages rise then actually more people are going to get employed. An example came in only this morning: “ Between January and December of 2014, while Seatac’s business owners (and their customers) were absorbing the cost of paying minimum wage employees $15, unemployment decreased 17.46%, falling from 6.3% to 5.2%. It turns out that you CAN increase the minimum wage (even in large increments) and increase overall employment at the same time. No one at all has ever doubted that it is possible to increase employment and the minimum wage at the same time. The impact of the general economy is usually going to be larger than the impact of the minimum wage. The impact of that general economy could mean that employment rises, stays the same or falls, whatever happens to the minimum wage. But that’s not the interesting thing we’d like to know. Which is, what is the effect of raising the minimum wage on unemployment? Freed from the impacts of everything else happening in the economy? And there the standard answer is that it will raise unemployment and no, no one has managed to come up with a convincing case against this standard wisdom.

Quote:

“As the implementation date for Seattle’s strict $15 per hour minimum wage law approaches, the city is experiencing a rising trend in restaurant closures. The tough new law goes into effect April 1st. The closings have occurred across the city, from Grub in the upscale Queen Anne Hill neighborhood, to Little Uncle in gritty Pioneer Square, to the Boat Street Cafe on Western Avenue near the waterfront. The shut-downs have idled dozens of low-wage workers, the very people advocates say the wage law is supposed to help. Instead of delivering the promised “living wage” of $15 an hour, economic realities created by the new law have dropped the hourly wage for these workers to zero. Advocates of a high minimum wage said businesses would simply pay the mandated wage out of profits, raising earnings for workers. Restaurants operate on thin margins, though, with average profits of 4% or less, and the business is highly competitive