SeaTac and Seattle have passed a law to pay a $15 minimum wage. This isn’t anything new. But the question still needs to be asked, “Has/Will this really help(ed)?” Just because Seattle hasn’t seen a major collapse yet, the supportive websites and news sources are writing plenty of articles that are raving about how conservatives and opposers were wrong. Since there are fewer conservative news sources, opposers with evidence are hushed and drowned out by the leftist journalists.
Seattle’s Main Advocate: A True Socialist
The city of Seattle’s councilwoman Kshama Sawant was the main advocate for Seattle’s $15 minimum wage. She’s got a PhD in economics, so she can’t be wrong, right? Not so fast. There have been plenty of times when economists weren’t right. Also, there are very few economists who won’t try to prove their political beliefs right. Knowing this, we should understand Sawant’s political beliefs. She’s a socialist. No, not a Democrat being called a socialist by my Republican self. She’s actually a member of Socialist Alternative. Don’t believe me, check out her bio on her official page on Seattle’s government website.
In order to understand Sawant’s political beliefs, we need to understand what socialism really is. According to the New Oxford American Dictionary, the definition of socialism is “a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.” The Oxford American Writer’s Thesaurus says that another word for socialism could be leftist, welfarism, or communism.
Keeping this in mind, Sawant believes that we should not only have a $15 minimum wage, but that we should also unionize Amazon.com and Starbucks. Two companies that are doing just fine without unions. She believes in rent control. In other words, she wants to establish price ceilings and price floors. She also wants to socialize many things that have been run more efficiently, privately.
Logical Fallacy: Appeal to Authority
The support that Sawant has gotten for her $15 minimum wage advocacy goes to prove that people will follow those who hold a high degree in a certain discipline. Sawant has a PhD in economics. It makes sense that people would think that Sawant knew exactly what would happen from a $15 minimum wage. Technically, she should. However, she failed to acknowledge what some laws in economics state.
The laws of supply and demand don’t make exceptions. If you increase the price of labor, the demand for labor will drop. It’s as simple as that. There is also a backward bending supply curve, which means that, eventually, increasing the price of labor will eventually decrease the supply of labor. Nevertheless, even if the supply curve had bent back enough to intersect the demand curve, it would be a lowered demand for labor. In layman’s terms: Increase the wage, businesses will cut jobs. Increase it by even more, businesses will demand less workers.
Certainly, these are things that Econ PhDs should know. I was taught these things by Econ PhDs. There comes a time when an economist needs to have a “come to Jesus moment” with themselves so they can go back to studying with the purpose of discovery rather than proving themselves right. I personally believe that Sawant is at that point. She used her knowledge and degree to gain support. She also used the peoples’ lack of knowledge to gain support for something that can be quite crippling to an economy.
How Many People Will Be Affected?
The organization 15 Now believes that a $15 minimum wage will help the economy and push it in the right direction. For an economy to really benefit from an increased minimum wage, it is generally agreeable amongst any person that a substantial amount of people will benefit from it.
The number of people that were estimated to be impacted by the $15 minimum wage was 6,500 if SeaTac airport would be included in the $15 minimum wage. The population of SeaTac is 27,875. The airport employees have been exempt as far as I’ve been able to tell. That being said, so far, only 1,500 people in SeaTac have benefited from it. This makes 5.38% of SeaTac’s workers those who have benefited from the increase. There is a major problem, though.
The major problem is that if you clicked the link above, you found out only 400 of those 1,500 people actually live in SeaTac. This makes the real amount of SeaTac actually benefiting a measly 1.43%; certainly not a substantial amount of the city. The problem isn’t so much that SeaTac needs to have a higher minimum wage for economic growth as much as it needs more people that make a higher wage actually living in the city. It doesn’t do SeaTac any good if the majority of people making even a $100 minimum wage if they don’t actually live in SeaTac.
The city of Seattle has about 100,000 people that might benefit from a $15 minimum wage. The population of Seattle is 652,405. This makes 15.33% of Seattle’s workers people who would benefit from the wage increase. However, how many of those workers actually live in Seattle? Remember, unless they’re going to spend that money, or be taxed on it, in Seattle, it does the city absolutely no good to raise the wage by so much.
“No Unintended Consequences”
Kshama Sawant had apparently said in an interview that she saw “no unintended consequences.” There’s just one problem with her statement: There are plenty of consequences that she’s telling everybody she didn’t foresee happening. The Seattle Times reported that a survey conducted by MinimumWage.com reports the feelings of 265 businesses in Seattle. According to that survey, 42% of businesses responded “very likely” to cut the number of employees on each shift. When it came to cutting hours, 44% of businesses responded “very likely” to actually do so in order to offset the cost of the new minimum wage.
As I said earlier, Sawant should have known that this sort of thing would happen. Especially because she holds a PhD in economics from North Carolina State University. The minimum requirements for admission into the North Carolina State University’s Econ PhD program includes a 3.0 (B) GPA in one’s undergraduate studies. This is common amongst Econ PhD programs, so we know for a fact that it’s not a faulty school.
To hold a PhD in economics from a decent school and to not acknowledge the consequences that come from increasing the minimum wage is quite serious in the world of economics. This is because the laws of supply and demand were completely ignored. I don’t believe that Sawant didn’t know about this sort of thing. No, I personally believe she actually knew, but she decided she wanted to be right. The question is now, “Was Sawant trying to use the lack of knowledge of the people to her own personal advantage?”
Has It Really Helped?
The overarching question of the article: Has a $15 minimum wage helped workers, or has it shown that issues will arise? According to the data found in the survey, Seattle is going to have some issues. It’s not really an issue of inflation as much as it’s an issue of scared businesses. Every manager and business owner knows that they have to make above a certain amount of money in order to stay in business. This is especially true with franchises.
Franchise owners and managers will probably be the first to make cuts. This is because managers have to keep a certain level of labor cost when operating the business. Many managers will get a bonus when they help franchise owners make more money. If labor is sucking profits dry, then managers will think of more effective ways for people to work and make cuts. It’s no different from owners of small businesses. Once they realize something is wrong, they react in the way they think is best for their business.
Whether or not this will bring on more issues than benefits is still to be seen. However, I personally believe that this is going to cause a lot more issues than there will be benefits because of the survey that was taken. There’s a lot of unintended consequences that need to be considered. Only so much of the cost can be shifted to the consumer. The rest has to come out of the net income of the employer. If we’re not careful, Seattle can come out crippled and made to be dependent on a central government instead of holding itself up.