Nobody deserves a minimum wage. Everyone deserves a fair wage. But what’s “fair” depends on a whole host of factors, not least of which is the health of the economy.
Labor activists for several years have been clamoring for an across-the-board $15-an-hour minimum wage. “Fight for 15” has won key victories in big cities, including Los Angeles, San Francisco, Seattle and Washington, D.C. Gov. Jerry Brown last year signed legislation that would raise California’s minimum wage – now $10.50 an hour – to $15 by 2022.
The chief claim for the $15 wage is that it would raise living standards for millions of workers in the retail and food-service industries. But that may not be true. The market may not be able to bear it.
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For example, has the drive toward $15 really helped workers in San Francisco, where the minimum goes to $14 on Saturday? Since the city began phasing in its ordinance in 2014, locals have been shocked to discover the law of unintended consequences.
Business owners have found themselves raising prices, slashing hours, or shutting down altogether. More than 60 Bay Area restaurants have closed since September. A working paper released earlier this year by Harvard Business School researchers suggests that as higher wages are phased in, more restaurants are likely to close and fewer new ones will open.
It just makes sense. When higher labor costs meet tight profit margins, a business owner will either cut labor cuts or shut down.
Ah, but anecdotes are not data. On cue, a new study of Seattle’s minimum wage increase from the University of Washington finds that, yes, $13 an hour is reducing workers’ hours and earnings. The study estimated the average low-wage worker lost $125 a month.
Remember, Seattle hasn’t reached $15 an hour yet. That’s still a couple of years off.
The UW study has its critics, though it’s worth noting that nobody seemed to have a problem with the research when the same team reported the initial wage hike had no ill effects.
But this is an odd rebuttal: “Their data exclude workers at businesses that have more than one location,” notes Ben Spielberg of the Center on Budget and Policy Priorities in the Washington Post, adding that “while workers at a stand-alone mom-and-pop restaurant show up in their results, workers at Starbucks and McDonald’s don’t.”
One of the better criticisms of the higher minimum wage is that it would harm small businesses disproportionately. Big businesses can absorb costs more easily by raising prices. It’s as if the Left has all of a sudden discovered the virtue of economies of scale while giving diversity the back of the hand. Let’s all hail our new corporate overlords!
Of course, McDonald’s can also save money by automating the front of the store, as the chain has already done in Europe, where labor costs are sky high.
Automation is coming, and not just to McDonald’s. A $15-an-hour minimum wage likely means more self-serve kiosks at restaurants, supermarkets, you name it. John Tierney at City Journal calls it the “robot employment act.” If anyone wonders why automats are making a comeback in the Bay Area, that’s why.
Maybe it will work out and tens of millions of Americans will soon realize Karl Marx’s dream of being able to “hunt in the morning, fish in the afternoon, rear cattle in the evening (and) criticize after dinner.” Or we may be left with a dystopian hellscape of unemployed opioid addicts.
More data is coming. Elected officials who crowed about the justice of the higher minimum wage had better have answers if “Fight for $15” blows up in the faces of the very people it was intended to help.
Ben Boychuk is managing editor of American Greatness, a conservative journal. He can be contacted at firstname.lastname@example.org or on Twitter @benboychuk.