Minimum wage laws seem to benefit the workers immediately after the wages are raised by the mandates of law. But soon the benefit evaporates as the marginal businesses which have higher component of wage cost close down, and other businesses raise prices, eating the increased wage. The economy finds its new level, which has lesser jobs than before, and more people on Welfare as unemployed.
In Europe, minimum wage laws have destroyed jobs like attendants in hotels, waiters in restaurants, and other unskilled jobs. In short, a man who produces work worth $10, will not be hired if minimum wage is $11. The economy would lose a contribution of $10, and the man would lose job and would sign up for Welfare. The money for his welfare will be diverted from the money that would have been otherwise spent by the taxpayers on other producers of services and goods, and in turn would render them unemployed.
Despite economist after economist showing that minimum wage laws only harm the workers and economy, politicians and bleeding heart “intellectuals” never grow tired of them. And therefore these laws stay, and minimum wage continues to climb up.
Over at PJMedia, Rick Moran has a report on the havoc a $15 minimum wage has played in Seattle:
“Evidence is surfacing that some workers are asking their bosses for fewer hours as their wages rise – in a bid to keep overall income down so they don’t lose public subsidies for things like food, child care and rent.
Full Life Care, a home nursing nonprofit, told KIRO-TV in Seattle that several workers want to work less.
“If they cut down their hours to stay on those subsidies because the $15 per hour minimum wage didn’t actually help get them out of poverty, all you’ve done is put a burden on the business and given false hope to a lot of people,” said Jason Rantz, host of the Jason Rantz show on 97.3 KIRO-FM.
The twist is just one apparent side effect of the controversial — yet trendsetting — minimum wage law in Seattle, which is being copied in several other cities despite concerns over prices rising and businesses struggling to keep up.
The notion that employees are intentionally working less to preserve their welfare has been a hot topic on talk radio. While the claims are difficult to track, state stats indeed suggest few are moving off welfare programs under the new wage.
Despite a booming economy throughout western Washington, the state’s welfare caseload has dropped very little since the higher wage phase began in Seattle in April. In March 130,851 people were enrolled in the Basic Food program. In April, the caseload dropped to 130,376.
At the same time, prices appear to be going up on just about everything.
Some restaurants have tacked on a 15 percent surcharge to cover the higher wages. And some managers are no longer encouraging customers to tip, leading to a redistribution of income. Workers in the back of the kitchen, such as dishwashers and cooks, are getting paid more, but servers who rely on tips are seeing a pay cut.
Some long-time Seattle restaurants have closed altogether, though none of the owners publicly blamed the minimum wage law.
“It’s what happens when the government imposes a restriction on the labor market that normally wouldn’t be there, and marginal businesses get hit the hardest, and usually those are small, neighborhood businesses,” said Paul Guppy, of the Washington Policy Center.”(from the article)
Read the whole article here.
