When Seattle passed a $15 an hour minimum wage law, liberals cheered. That was three years ago. What did it accomplish for the poor – who the law was intended to help? A new report from the University of Washington finds that the law is actually hurting the very people it was intended to help. Since the passage of the law, the study finds, the average worker has clocked nine percent fewer hours and earned $125 less per month.
“If you’re a low-skilled worker with one of those jobs, $125 a month is a sizable amount of money,” Mark Long, a UW public-policy professor and an author of the report told the Seattle Times. “It can be the difference between being able to pay your rent and not being able to pay your rent.”
It’s all about simple math. Every company has a personnel budget. They have a limited amount of money to pay in salaries. When the government dictates they must pay employees more money, one of two things will happen, and either is bad for the poor. First, they will lay off some workers in order to have the money to pay the other workers. Second, if they don’t do that, they will simply raise their prices for consumers, which will again affect the poor. Additionally, forced wage hikes lead to inflation, meaning the poor will eventually have to pay more for a loaf of bread.
Count McDonald’s among the growing list of companies that is fazing out workers in order to save money. Automation is replacing workers.
Still not convinced? Setting the actual proof aside – the failed Seattle experiment – ask yourself this simple question. If $15 per hour is better than $10 per hour, and if – as liberals claim – the hike has no negative effects, why not raise minimum wage to $20 per hour? Why not $50 per hour? If $15 per hour has no negative effects verses $10 per hour, why stop there? That’s mean-spirited. Why not pay everyone much, much more?
One doesn’t have to be an economist to understand the simple math. When government steps in and mandates higher wages, small business owners either shut down, pay fewer employees (meaning lay-offs), or charge more for their services. Either way, the working class is harmed the most.
When government dictates that a company must pay its employees more money, said company doesn’t suddenly have more money to pay its employees. So, for example, instead of paying out $1 million in annual pay spread across 50 workers ($20,000 each), they will now pay 33 workers ($30,000 each), leading to lay-offs. Or worse yet, the company will eliminate all such employees, using modern automation instead.
So the working poor are hurt the most.
Other liberal policies are just as harmful to the working poor. Here are a few examples.
1. Climate change
New regulations rolled out by the Obama Administration, in a response to climate change (they used to call it global warming) have resulted in higher energy prices. Green energy still costs more than fossil fuels. And the poor spend a much higher percentage of their income on energy than the rich.
Imposed regulations result in higher costs for factories. Environmental amenities are expensive. This affects all of us, but especially the working poor, who can least afford it.
3. National security
Open borders result in more crime. Sanctuary cities result in more felons going free and killing innocent lives. Pulling out of Iraq results in ISIS. More money spent on the welfare state results in less money for national security.
None of this is to impugn the motives of liberalism. But there are these pesky things we call facts. Fact: Obamacare gave us a 200% increases in premiums instead of the 25% promised cut. Fact: The war on poverty has left us with a higher poverty rate than ever – $20 billion later.
Let’s return to the most recent experiment in liberal economics. I’m sure the government of Seattle meant well when they raised the minimum wage to $15 per hour. But good intentions did little to help the thousands who were laid off. And good intentions did little to help the small business owners who could no longer afford to stay open.
Liberalism is a legitimate view. It is held by roughly a third of Americans. But I posit that there is a competing view that has proven superior when applied.
It’s called capitalism.
By all accounts, California is governed by pure liberalism, while Texas is governed by conservative capitalists. And guess which state is losing thousands of business owners and workers to the other state – every day?
And if you have a friend in Seattle who is benefiting from the highest minimum wage in America, you may want to send him a check – because he is making $125 a month less today than before he got his “raise.”