As a newcomer to this blog I feel I should take the opportunity to introduce myself. I’m the other mutt in this here report. ‘Nuff said. I spend my days in Seattle attending the University of Washington, and here in Seattle there has been a less than encouraging development: the $15/hr minimum wage. The argument for this raise in wages is that Seattle is an expensive city, so it is difficult for someone making minimum wage to make ends meet. Seattle is indeed an expensive place to live, in a tie with San Diego for Forbes most overpriced cities in 2014, and Washington’s minimum wage is already the highest in the nation at $9.32/hr, it is frightening to think of what will happen to the market when the $15/hr minimum wage is enacted.
Murray’s bill will phase in the wage in 3-7 years depending on number of employees and value of benefits given to them. Companies employing 500 or more will have until 2017, or they can increase benefits to give themselves an extra year. On top of that, there will be an annual cost of living adjustment of 2.4% to match inflation. This sounds great if you’re a student, teenager, or an individual with minimal education and/or skills, but in the end, it is difficult to see how this will have the desired affect and raise people out of poverty without inflicting more damage on a good deal of those already living in it.
The argument is made by the AFLCIO that businesses will absorb cost of the wages from their profits, but when has this ever been the case? Take the roll out of Obamacare for example, companies are finding ways to keep employees on part time schedules to save themselves money, why would it be any different in this situation? Minimize hours and expect more for the time on the job. To get more productivity, employers would draw from more skilled workers and have them at the new minimum wage, leaving low-skill, low-education workers out of the job force. If employers chose not to go this route, there would have to be across the board raises so that employees were paid to scale for the education, skill, or danger their job entails. So, rather than absorbing the cost of increasing the lowest wage, they will absorb the increase of all wages. Rather than absorb the costs themselves, they will most likely pass it on to the consumer. This means that the poverty line will have to be increased with the increasing costs, meaning that even fewer people will be getting out of poverty which, again, is the reason for the minimum wage.
That’s the possible effect of the private sector, but let’s take a look at how it will effect one of Seattle’s largest employers, the University of Washington. Tuition increases have been in the news for the last decade now, and with these added expenses, you can bet it will continue to be a hot-button issue. This is something that will affect everyone in Washington, not just those in Seattle. For the youth that want to attend UW and the taxpayer who will, most likely, foot at least part of the bill to reduce the tuition increase. This will then lead to more demand for student loan restructuring and, more radically, the demand for free school. The conspiracy theorist in me wonders if this is the first domino to fall in a larger plan.
Much smarter people than I have and will write more detailed descriptions of the impending disaster that is $15 minimum wage, I can only share from my personal observations and experience. As someone who has done minimum wage work and managed minimum wage workers, I can tell you there are some jobs and employees not worth two cents an hour. Hopefully this local experiment will make this fact all the more clear.