Seattle became the first municipality to pass a $15 minimum wage law, to be phased in over several years — and so far, it’s not working out very well.
According to a study by the American Enterprise Institute, the city’s restaurant industry has lost 700 jobs. Meanwhile, restaurant hiring in the rest of the state is booming, with nearly 6,000 jobs created.
In its report, the American Enterprise Institute looked at restaurant job growth in both Seattle and the rest of Washington. The state itself has gained 5,800 industry jobs since January. Seattle, however, lost 700 jobs in the same time. The state minimum wage is $9.47. Back in June Seattle passed its own minimum wage of $15 an hour. The city ordinance is designed to phase in over the course of several years. It will reach $15 an hour by 2017 for most employers.
“One likely cause of the stagnation and decline of Seattle area restaurant jobs this year is the increase in the city’s minimum wage,” the report speculated. “It looks like the Seattle minimum wage hike is getting off to a pretty bad start. Especially considering that restaurant employment in the rest of the state is booming, and nearly 6,000 more restaurant workers are employed today than in January.”
Seattle was the first place to pass a $15 minimum wage measure and became the first major victory for supporters. San Francisco and Los Angeles followed not long after and now many cities have either enacted it or are considering it. Some states are also giving the $15 minimum wage serious consideration. Currently it has not passed on the state level.
New York Democratic Gov. Andrew Cuomo first announced Sept. 10 his plan for raising the state minimum wage. If enacted, the increase will gradually put New York City to the $15 mark by 2018 and the rest of the state by 2021. Florida and Massachusetts have also began taking steps to pass it.
The impact minimum wage increases have on workers and employers is in dispute. Critics often argue increasing the minimum wage, especially as high as $15 an hour, will hurt the poor by limiting job opportunities. The problem is businesses need to offset the extra cost of labor by either raising prices or cutting workers. It is particularly troublesome for low-profit industries like restaurants who struggle much more to absorb the extra costs.
While the Seattle minimum wage is currently $11 an hour and won’t hit $15 an hour until 2017, it figures that the industry most sensitive to changes in minimum wage would feel the pinch first. The restaurant industry is extremely volatile with businesses opening and closing all the time. I suspect the reason for the net loss in jobs is that no one in their right mind is going to open or expand a restaurant in a locality where they are going to have to pay employees $15 after a couple of years. I also suspect that even successful restaurants are eying locations outside of the city to move to.
The union activists who have been pushing the $15 an hour minimum wage will find a way to blame someone else when employment tanks in these cities. No doubt they will point the finger at greedy businessmen who refuse to embrace this marvelous social experiment that has nothing to do with economics, but everything to do with politics.
I might be cruel in thinking this, but I would love to see the faces of some of these fast food workers agitating for $15 an hour when the boss tells them they’re being replaced by a robot.
Will they understand it’s their own fault?