A lesson from Seattle.
The record of the political class is such that it is hard to understand why such a large proportion of the American public continues to place faith in them to solve our problems. The latest illustration of that puzzlement arises from a topic that we have discussed here on several prior occasions.
A recently released study from the University of Washington published by the National Bureau of Economic Research goes to great academic lengths to detail what just about any small business owner can explain to you in simple English.
The study states that the city of Seattle’s current $13 an hour minimum wage – a number that under current city law is on its way to $15 an hour – has actually hurt the very workers it was intended to help. Prior to the law’s enactment in 2014, Seattle’s minimum wage was already at $11 an hour, nearly 54 percent higher than the current federal minimum wage.
According to the report, the raise to $13 has had exactly the opposite of its intended effect. Unable to pass the higher labor costs to their customers, Seattle businesses are cutting both the number of workers that they employ and the number of hours that those workers spend on the job. The effect has been to reduce the incomes of those on the lowest rung of the employment ladder.
So much for the liberal idea that everyone is entitled to a “living wage.”
No one is entitled to a wage, living or otherwise. Wages must be earned. An employer must derive economic benefit from an employee greater than the employee’s cost. It’s as simple as saying that a clothing store can’t buy dresses for $50 and then sell them for $25.
Some idiot politician simply decreeing that an hour of labor is worth $15 doesn’t make it so. An hour of labor from an 18 year old just out of high school with no work experience is not worth much at all. That kid needs an entry level job to gain experience in the work force. Forcing an employer to pay him $15 an hour pretty much guarantees that few such jobs will exist. Hello self-serve kiosk.
Politicians promote minimum wage for one or another or a combination of two reasons.
The first is their own economic illiteracy – something that afflicts a distressingly large and growing proportion of the American population (particularly liberal politicians).
The second is that minimum wage buys votes, a disproportionate percentage of which come from the very cohort whose illiteracy – economic and otherwise – keeps them stuck on the lower rungs of the economic ladder. Politicians (of all stripes) who know better but who yet pander in this way are cynics of the worst sort.
All of this to shed light on your valid concern about Congress getting health care right. Health care policy has essentially the same verbs as minimum wage but different nouns – making the cynics and the illiterates in our ruling class just as likely to get it wrong.
This is one of those rare times when I’m in complete agreement. The government has no business dictating what a business pays for their labor supply. There are other examples just as egregious as the minimum wage. First and foremost is overtime laws. Why should any company be required to pay a worker time-and-a-half for work done beyond the normal 40 hour work week? If a company needs an employee to work 60 or 70 hours per week for the normal rate, and the employee is unwilling to, the company should be allowed to find another worker who will. Another example is safety laws (OSHA). If a company needs a worker to do some task in an unsafe environment, and the worker is not willing to, again the company should be allowed to simply hire another worker who will. All of these politicians need to dust off their copies of “Atlas Shrugged”.
Totally on target Paul. Having taught economics (high school and college), been a banker, Vietnam vet, serving on a credit union board for 25+ years, etc. etc., the government doesn’t need to “tinker” with wages!
YES, let’s just see what congressional Republicans — who had SEVEN YEARS to plot Plan B — and ran promising an end to Obamacare — come up with.
It is a never ending cycle IF we don’t put a stop to it. The government has no business telling business owners how much they can pay to hire anyone. In the first place, when you put demands on a business such as this, they have three choices: A. They can hire fewer people than they normally would have. B. not hire anyone new. C. Close their doors. If they do hire people at the higher rate of pay, they have to make up the cost somewhere and that usually means a higher price for their product. Which means that the people they hired are going to end up losing in the end because it makes the cost of living go up. So where is the point to this? The government doesn’t owe any of us a wage…we WORK for it. If we work hard, we should be rewarded for it. But that should be between the WORKER and the EMPLOYER…NOT the government!!! Raising the minimum wage is NOT helping anyone. LEAST of all the workers themselves. It is a cycle that has spiraled out of control, someone needs to wake up and smell the coffee here and NOW!
I own a business. I was the first employee, and I started at under minimum wage. I now have 97 employees. I pay what it takes to get the kind of labor I need, no more. Some at minimum wage, others at very much higher rates, all governed by supply and demand. I have any number of employees who, like me, started at the minimum wage, but who, because of their intelligence, gumption and grit AND willingness to learn on the job, now draw excellent paychecks. If government would stay out of things it apparently will never understand, the world and workers would be the better for it.