Why a $15 Minimum Wage Will Be a Disaster
Jordan Weissman doesn't expect Seattle's experiment to go well
By Kevin Spak, Newser User
Posted May 5, 2014 1:22 PM CDT
In this March 15, 2014, file photo people march during a rally to raise the minimum wage to $15 per hour in Seattle.   (AP Photo/seattlepi.com, Joshua Trujillo, File)

(Newser) – Seattle's plan to raise its minimum wage to $15 will be great for economists—the city will become a "gigantic laboratory for one of the most ambitious, and quite possibly misbegotten, labor market experiments in recent memory," observes Jordan Weissmann at Slate. But it probably won't be good for Seattle. While there's evidence both for and against raising the minimum wage, the evidence for it generally assumes that it won't rise too high or too fast. Seattle's plan would give it possibly the highest wage floor in the world.

"Any plan that makes hiring a worker more expensive than in France should be cause for concern," Weissman argues. Employers in such high-wage European countries have flocked to automation, replacing workers with digital checkout counters. Seattle's businesses could follow suit, if they don't just pack up and move to the far cheaper suburbs around the city. Still, Weissman is "oddly glad" Seattle's trying this. "Better that one city's job market crash than a whole country's." Click for Weissman's full column.

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Jun 2, 2014 10:27 PM CDT
One more point for discussion: We talk like the rich are "taking" our resources, and making their money on the backs of workers, but the reason why is that from childhood onward, we're taught that to support ourselves, we need to "find a job." We talk about how the economy is making "jobs" under a certain administration. But what exactly is a "job"? For most of us, it's a situation where someone else pays you to do something, so that they will receive some benefit. For others, it's a situation where you make the fruits of your labor available to anyone who wants it, and they decide whether or not to buy it from you. But why is the former situation, where we work for someone else, "for most of us"? In ancient times, nearly everyone was self-employed as some form of tradesman, farmer/rancher, or merchant. As our free-market economy made it possible for people to offer to pay others to do their work, more and more people agreed to do so. Why would people agree to such an arrangement? Why wouldn't they respond by saying, "Forget your offer! I can make more money working for myself, rather than for you to take some of the profit from my labor!" It's because of SECURITY and CONVENIENCE. Security, because when you work for your own operation, there's a risk that you could put a lot of work in and have people decide NOT to purchase the fruits of your labor. If few enough people decide to buy from you, you could end up working for a very low wage per hour that you put in, or even nothing at all! If you work for someone else, that person will have to pay you what (s)he offered to pay you for a set amount of work, so your work is guaranteed to be rewarded. Convenience, because when you work for someone else, they make all the arrangements necessary, provide the tools and workspace, advertise for the customers, and do lots of other things to make the job happen. All you have to do is take advantage! Now that we've gotten some perspective on the realities of working for someone else vs. working for yourself, let's look at the talking points on this issue. Some are saying that the "greedy rich" are making money off the backs of the workers, who are the "real creators of value" in this economy. Now, it's easy to see the workers as real producers of value, and it's clear that when someone offers to pay someone else to do work for their enrichment, it's only ethical to pay them what they're worth. However, people talk (and this is where my whole "from childhood onward" bit from the beginning) as though we're DEPENDENT on others to "create jobs" for us (i.e. offer to pay us to do work for them, so that they can go out and sell the fruits of our labor). We talk as though it's nearly unthinkable to create our own jobs! Now, I know that some people aren't in a position to do so, but when almost NOBODY does so, including people who could make their own work, the society becomes dependent on the few who employ them. In other words, we talk as though the employers aren't the "real creators of value," because their employees are, and then turn around and talk as though we're wholly dependent on them for the opportunity to "create value" in exchange for money (which is really just something to be traded for others' goods and services). This is hypocritical! Either we, the employees, deserve sole credit for the fact that we're working and "creating value" in the form of economic goods and services, OR we owe the very fact that we have opportunities to "create value" to our employers! We can't have it both ways!
Jun 2, 2014 10:01 PM CDT
Seattle won't be nearly as much of a good testbed as we think, because it's not isolated from the surrounding economy. If the minimum wage is raised in Seattle, but not in the rest of the country, the result for Seattle will be different on account of its minimum wage being higher THAN THE REST OF ITS ECONOMY. Something that wouldn't be true if the minimum wage were raised throughout the nation, or even the state.
May 9, 2014 11:33 AM CDT
Regardless of political affiliation or philosophy, simple economics shows us that the middle class pays for the increase in minimum wage. Money is a medium of exchange. Instead of doing a job and getting a chicken, I do a job, get dollar bills for doing the job, and give those dollar bills in exchange for someone else's chicken. When we raise my minimum wage, we are saying that the value of my job has increased, though it generally has not actually become more valuable (just like paying more for fast food when neither quality nor service has improved). To offset this false increase in value, we increase the cost of the chicken at the same time so that its value corresponds to my job's value. Thus, for minimum wage jobs, based on the job I do and the money I earn, there really isn't any change in what I can buy just because minimum wage increases. Instead, the increase in minimum wage actually affects the middle class. Middle class jobs don't typically get a pay increase when minimum wage goes up (at least in my experience!), except for those fortunate enough to have "cost of living" increases. Therefore, my middle-class money will buy less than it did before because the "value" of my job did not rise when minimum wage increased. Now I work the same, but the value of job is lower, and I can purchase less with the money I have been saving. It is a pretty simple situation to understand. Solving the problem politically isn't nearly as easy, as the numerous posts have shown!