Socialist Utopia Setback: Seattle’s $13 Minimum Wage Led To Drop Of $1,500 In Income For Low-Wage Earners

Posted: June 26, 2017 | Author: | Filed under: Economics, Health and Social Issues, Mediasphere, Politics, U.S. News | Tags: , , , , , , , , , , | Leave a comment

Ben Shapiro writes: Remember that time Seattle’s socialist city council member Kshama Sawant pressed for the city to increase its minimum wage to $15 per hour? I actually debated Sawant on the issue; I asked her if she would be in favor of raising the wage to $1,000 per hour. She misdirected from the issue.

Seattle actually ended up embracing $13 per hour, raising the minimum wage from $9.47 in 2014 to $11 in 2015 to $13 in 2016 under the theory that an increase wouldn’t throw people out of work, wouldn’t encourage part-time hiring, and would inflate salaries enough to allow more affordability in the Seattle housing market.

From the dustbin of history: The socialist zombies of Seattle

A new study demonstrates that, as usual, central planning of the economy leads to precisely the reverse of the results the planners seek to achieve.

According to a new paper from the National Bureau of Economic Research:

Using a variety of methods to analyze employment in all sectors paying below a specified real hourly rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016. Evidence attributes more modest effects to the first wage increase. We estimate an effect of zero when analyzing employment in the restaurant industry at all wage levels, comparable to many prior studies.

In other words, restaurants didn’t fire anybody, they just put them on part-time shifts and cut back their hours. That shouldn’t be a surprise, since that’s precisely what happens every time the government places an extra burden on employers. Read the rest of this entry »

The Truth About the Minimum Wage

Posted: October 23, 2014 | Author: | Filed under: Economics, Think Tank | Tags: , , , , , , , , , | 1 Comment

From the Foundation for Economic Education: People don’t like to think that anyone’s labor is worth less than the minimum wage. Someone might end up flipping burgers for $5.00 an hour. You might think the minimum wage is a way of paying some sort of dignity premium–hence language like “livingteen-worker wage.” People with such good intentions look at the direct beneficiaries of these policies, say, burger flippers now making $7.50 an hour. They pat themselves on the back. But they rarely count the invisible costs: willing human beings who never get hired in the first place.

[Also see – Fast Food Management and Customers Alike Have Every Reason to Tell Big Labor: ‘Go Pound Sand’]

“But $5.00 an hour is not enough to live on!,” they’ll say. For whom? A teenager living at home with his parents? An elderly person who wants simply to stay active? A single mom with three kids? A single woman sharing an apartment with 2 roommates? Of course, not all of these people could live off of $5.00 an hour. But some of them could given the opportunity. Concerns about those who couldn’t don’t justify minimum wages even if we ignored the invisible costs of the policy, which include reduced margins to businesses that might otherwise grow (and hire more people).

In other words, if you take off the bottom two rungs of the income ladder, many will never climb it. That’s the effect of the minimum wage. The more cynical side of me says that’s how many politicians and the overpaid teamsters want it.

Enjoy this great video and some timeless pieces on the minimum wage by some of FEE’s excellent scholars.

-The Editors

The Truth About the Minimum Wage

Further Reading:

Minimum Wage, Maximum Folly by Walter Williams

“While there is a debate over the magnitude of the effects, the weight of research by academic scholars points to the conclusion that unemployment for some population groups is directly related to legal minimum wages. The unemployment effects of the minimum-wage law are felt disproportionately by nonwhites. A 1976 survey by the American Economic Association found that 90 percent of its members agreed that increasing the minimum wage raises unemployment among young and unskilled workers. It was followed by another survey, in 1990, which found that 80 percent of econo­mists agreed with the statement that increases in the minimum wage cause unemployment among the youth and low-skilled. Furthermore,­­ whenever one wants to find a broad consensus in almost any science, one should investigate what is said in its introductory and intermediate college textbooks.­ By this standard, in economics there is broad agreement that the minimum wage causes unemployment among low-skilled workers.”

Raising the Minimum Wage Will Do No Harm? It Just Ain’t So! by Richard McKenzie

“With the money-wage hike and the reduced benefits, workers can be left worse off since the fringes and slack work demands taken away were provided in the first place because workers valued them more highly than the wages forgone for those benefits. Given the findings of his own as well as other researchers’ studies, Wessels deduces that every 10 percent increase in the hourly minimum wage will make workers 2 percent worse off.” Read the rest of this entry »