This fall the citizens of SeaTac will vote on raising the minimum wage in their city to $15.00 an hour. In response to the initiative’s backers anticipating a windfall for the city’s workers, I have one question: Exactly where will this wealth come from?
If we could vote ourselves rich, we would have done so long ago. No, this extra money doesn’t magically appear in worker’s paychecks, it is taken from a few in the city and distributed to many. But what is even more shocking than the prospect of a majority voting themselves the property of a minority, is the sad fact that the initiative’s supporters don’t realize that the greatest harm will fall on those who they think they are helping. Let me explain.
First of all, the predictable response of businesses will be to lay off employees. A business with 3 waiters or housekeepers currently at $10/hour will reduce their staff to 2 workers at $15/hour. The least productive of the 3 will be laid off, and the remaining 2 will be asked to work harder. A good portion of the Sea-Tac worker’s raise will come from the paycheck his neighbor no longer receives.
This minimum wage will not just apply to those on the bottom rung of the employment ladder; it will bump up wages for everyone. The skilled worker will demand to be paid better than the unskilled worker now earning $15/hour, the supervisor more than the supervised, the manager more than the supervisor, and so on. This is why the union is backing the initiative, their members don’t make minimum wage, but they are expecting a $5/hour raise across the board. This initiative will cost business far more than just $5/hour for their lowest paid employees.
Some businesses will try to avoid the expenses this initiative imposes (not just a wage increase, but mandated sick leave and regulations on hours and job security) by reducing the number of hotels rooms or employees to be exempted from it. Again, this will mean fewer jobs.
In the end, much of the costs of the Good Jobs Initiative will be from what liberals see as that endless pot of leprechaun gold, also known as “profit”. But, whether it is a large corporation or mom-and-pop operation, a reduced profit (or a loss) has very real results. When operations become less profitable, expansion is put on hold or abandoned, maintenance is deferred and even the businesses that can not relocate will start thinking about an exit strategy. With labor costs substantially higher than just across the city limits, the City of Sea-Tac will see few businesses willing to set up business there. No growth equals no new jobs.
Like all liberal policies, this initiative hurts the very people it purports to help. Some of the working poor will see a benefit, but at the cost of a lost job for others, and the loss of the opportunity to get a job for many more. In the end it just replaces what some deride as a non-living wage with no wage at all.
[Image used under Creative Commons license with attribution; credit: wyatt_e]
Nansen,
Concisely written. I love Minnie’s turn of phrase that made DETROIT into a verb. Adding to your analysis, for many businesses employees are optional. The reason businesses hire non-family as employee’s is that such people are worth what they are paid, whereas a family member might not be. But, at 15$/hr, an employee can be replaced by family.
G.
Liberals, Detroiting anything they can find to destroy. Then they’ll ask for a bailout.