Brace for Impact: Seattle’s $15 Minimum Wage Comes into Effect.

Today, the minimum wage for transportation and hospitality workers in the Seattle-Tacoma area will rise to $15 per hour. This was passed as law in an early November vote, increasing the wage from the statewide $9.32 per hour.The fallout from the vote has supporters claiming it is the first step towards revitalizing the Seattle area, while opponents claim it will further aggravate Seattle’s already-serious lack of employment.

As Fox News reports:

On Jan. 1, an estimated 1,600 hotel and transportation workers in SeaTac, Wash., will see their pay jump to $15 an hour, a 60 percent increase from the state’s $9.32 minimum wage.

While many workers look forward to the higher pay, employers are looking for ways to absorb the big increase in labor costs. Some plan on eliminating jobs. “We’re going to be looking at making some serious cuts,” said Cedarbrook Lodge General Manager Scott Ostrander. “We’re going to be looking at reducing employee hours, reducing benefits and eliminating some positions.”

The plan has also caused Han Kim — who runs Hotel Concepts, a company that owns and manages 11 hotels in Washington state — to shelve plans to build a hotel in SeaTac. The company already has three hotels in SeaTac, and Kim and a business partner were looking to build a fourth on land they own.

“Uncertainty is bad for business, and right now we’re right in that area so we’re just putting everything on hold,” Kim said.

One of the biggest supporters is Kshama Sawant, a socialist who also won her election to the Seattle City Council. She plans on making Seattle the next city to have a $15 minimum wage.

There may be a few jobs lost here and there, but the fact is, if we don’t fight for this, then the race to the bottom will continue,” Sawant said. [She] is skeptical that the higher minimum wage will lead to mass layoffs.

Ms. Sawant’s words are interesting. She is extremely dismissive of those that will become unemployed from this law; “a few jobs lost here and there” as she says. She apparently doubts that raising the minimum wage will lead to mass layoffs, but she is demonstrating at least some fuzzy understanding that increasing the minimum wage will disemploy workers at the margin.  Ms. Sawant is admitting that raising the minimum wage law will cost marginal workers “a job here and there” (which will likely prove to be an understatement). Who are marginal workers? Those whose labor is worth less than $15: the unskilled, the young, the elderly, the mentally or physically disabled, to name the larger categories. These are the people who will lose a job “here and there”; the workers who are most vulnerable will suffer the most.

When I worked as a salesman at an electronics store back in the day, we employed a few older ladies as door greeters and custodians. These ladies were all pretty old, except for one custodian who was mentally disabled. I am not exactly sure what they were paid, but I am fairly certain it was minimum wage. When the recession of 2008 set in, the full-time door greeters were canned and most of the custodians were fired because the store needed to cut costs. It seems to me a shame that because their pay could not be cut, these ladies had to be fired. They are clearly in the “marginal” category of workers, those who can typically only work for a low wage. Maybe these ladies found new jobs, but perhaps not; perhaps they would have rather taken a pay cut and kept their jobs, rather than be fired. Perhaps they would have quit rather than take a pay cut, but they would have been free to choose. At least they would’ve had a choice; because of the minimum wage law, they had no choice. Their jobs were priced out of the market.

Many people think of the Minimum Wage as a sanction on greedy employers: “Thou shalt not pay beneath $15 per hour.” This is incorrect. Employers will make whatever adjustments are necessary to continue without losses; fire personnel, cut costs, shrink operations, whatever they need to do to adapt. Employers may not like the Minimum Wage, but they have ways of dealing with it. What the law REALLY dictates is “Thou shalt not work beneath $15 per hour.” It is a sanction against workers, not greedy businessmen. If a worker’s labor is not worth $15/hr, what else can they do? Their only advantage would have been to compete with others by accepting a lower wage. When the price floor is $15/hr, they’re screwed; they are priced out of the market. This was the intended effect from the beginning, when the Minimum Wage was used to price immigrants and newly-free black people out of the labor markets in the late 1800s. The law still has this effect to this day.

Ms. Sawant, the dear socialist of the Seattle City Council, is taking the same view that American socialists took of Soviet Russia in the early 1930s after stories of Stalin’s campaigns of mass terror began to leak out: “You have to crack a few eggs to make an omelette.” People actually said this, I kid you not. This is exactly what Ms. Sawant is saying now, in different words: “Some people may lose their jobs from the $15 per hour minimum wage, but hey: we’ve got to crack a few eggs to make an omelette, am I right?” As a Socialist, Ms. Sawant claims to represent the interests of the poor and the working class, but we can see this isn’t the case: the poorest and most vulnerable amongst her constituency are the ones she is explicitly dismissing as eggs to be cracked. As it always is with these types, she is entirely OK with disemploying an entire strata of workers as long as she does not alienate so many that she is voted out of office. Ms. Sawant understands that pushing for, say, a $20 minimum wage would get her voted out of office; the unemployment incurred would be far too great. She wants to toe the line. She does not mind cracking eggs, as long as she gets to stay in office. Such is Democracy.

 

 

 

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One Comment on “Brace for Impact: Seattle’s $15 Minimum Wage Comes into Effect.”

  1. Nhan-Fiction January 1, 2014 at 11:38 am #

    Goes to show how little understanding people have of basic economics. Even if everyone magically made more money because of a higher minimum wage, a natural effect of the economy would be to increase/inflate all costs to make up for it.

    And of course, someone ALWAYS has to pay the price at some point or another. Many people are going to lose their jobs over this. -_-

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