$15 Minimum Wage is Disastrous

By Eric Minor

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The $15 per hour minimum wage proposal being considered by the Mayor and the Seattle City Council is, in a word, disastrous. Many economists agree that minimum wage laws do more harm than good as they make it impossible for young and low skill workers to find jobs. Washington State already boasts the highest state-wide minimum wage in America at $9.32 per hour, though several localities such as San Francisco and SeaTac have recently enacted local ordinances that raise their minimum wage above their state levels a little or a lot.

If $9.32 makes the door to employment sticky for low skill workers, $15 slams it in their face and throws the deadbolt. Having attended the first three city council meetings on this subject, one almost gets the impression that it is a vanity project for the city leaders to see if they can one-up some of the other municipalities that are threatening to outshine them as most progressive kid on the block. This is of course a poor basis for policy, especially policy that uses the coercive power of government to intercede in the freely made choices of others.

The late Nobel Prize winning economist, Milton Friedman, summed the situation up nicely in an interview from the 1970’s: ” The minimum wage law is most properly described as a law saying employers must discriminate against people who have low skills. The law says here is a man who has a skill that would justify a wage rate of a $1.50 or $2.00 an hour. You may not employ him — it is illegal. If you employ him you have to pay him $2.50. What is the result? To employ him at $2.50, you have to engage in charity. Now there is nothing wrong with charity. But most employers are not in a position where they can engage in that kind of charity. Thus the consequences of minimum wage rates have been almost wholly bad, to increase unemployment and to increase poverty. Moreover, the effects have been concentrated on the groups that the do-gooders would most like to help (minorities).”

Although the numbers have changed since the ’70s, the universal truths remain the same. If you Google “Milton Friedman Minimum Wage”, the first link you will see is a short three minute clip from the interview quoted above. In it, Friedman shreds the assertion that minimum wages are beneficial.

I can lend credence to Friedman’s argument from my own first-hand experience. I live in Gig Harbor and commute to Seattle most days to conduct my primary vocation — software consulting. This affords me a good living. I also own a small retail shop in Gig Harbor called Animal Crackers Kid’s Store, which has been in business seven years. The community appreciates my shop — they have told me so many times.

In seven years I have never taken a paycheck, but the business at least breaks even at this point. I don’t relate this to garner sympathy — I relate it to emphasize a point. If that is the case for my small business, I know intuitively that similar stories exist for thousands of other small businesses in Seattle — slim or no profits. As Friedman suggested, small businesses are simply not in a position to survive a massive leap in the minimum wage rate, with the effect being the opposite of what some “well-meaning sponsors” of a $15 minimum wage intend. Dozens of Seattle small businesses have already testified to that effect at the first three council meetings on the subject.

Seattleites — wake up and take action. Tell the council in strong terms to remain silent on this matter. If the proponents of this disastrous proposal can get it qualified for a ballet measure — fine — at least the people of Seattle will get a chance to decide their own fate.

 

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