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self-righteous/interest
It seems that Mr. Nick Hanauer is not the only person to take lightly the prospects of condemning people with the least level of skills and abilities to permanent unemployment. The Seattle Times reports that U.S. Senator Patty Murray and WA legislature Representative Suzan DelBene, national and state level politicos who nominally represent some portion of the people of Washington, feel similarly (“Murray, DelBene unfazed by predicted job losses from minimum-wage boost”)
To be clear, this is not just one or two people facing this, but 500,000 Americans who will likely lose their jobs due to raising the Federal minimum wage to $10.10/hour, bearing the brunt of the trade-off in welfare that the likes of Hanauer, Murray, DelBene, and many others consider within their purview to make.
That goes for “Martina Phelps, a 22-year-old McDonald’s employee from Skyway, [who] said a raise would help her be able to afford to go back to school”, cited by Jim Brunner in the ST story. Sure, it might help her go back to school - if it doesn’t put her and hundreds of thousands of other people like her completely out of work in the mean time.
The prospect of increasing the minimum wage is ripe for exploitation by more people than politicians pandering to the economically illiterate. It sounds so good to be in favor of making the poor better off - anyone who disagrees can be painted as a callous troglodyte, while the proponents can wrap themselves in high-sounding rhetoric. But with all the self-righteousness claimed by the promoters comes the self-interest of people who want to protect their established businesses from upstart competition, people who want to make their competitors face an added burden, and politicos willing to play each against the others for the favor of campaign contributions and another few years pulling the strings. This dimension is illustrated by the remarks quoted from ice cream store owner Molly Moon Neitzel - she "is worried the Seattle effort might hurt small businesses like hers. But as for corporate chains – no problem. “McDonald’s could do it tomorrow” - as if businesses at all levels are not constantly faced with the challenge of delivering a product to consumers at a price they think to be a value, as if McDonald's is immune to the pressures that will drive fewer employees, greater work load on remaining employees to compensate for the higher wages, increasing automation, and other means of cost reductions.
The prospect of job losses due to increasing the minimum wage seems all the more likely in Seattle, where the debate surrounds a substantially greater increase in the minimum wage - to $15/hour, a level that has already been imposed in the neighboring Sea-Tac community (“$15 wage floor slowly takes hold in SeaTac”). While that level has been imposed for only a few weeks, the anecdotes are illustrative of what we would expect - here are a few reported in the ST article by Amy Martinez:
“At the Clarion Hotel off International Boulevard, a sit-down restaurant has been shuttered, though it might soon be replaced by a less-labor-intensive cafe"
hmmm... shuttered... maybe to be replaced by a business that operates with fewer employees. How much more clear can the connection be illustrated? Well, don't worry, because ...
"The nearby Cedarbrook Lodge, by contrast, is undergoing a $16 million expansion."
What happens with Cedarbrook Lodge employment remains to be seen, of course, but we might start by observing that forcing that other business to close reduces the competition faced by CL and the other businesses that manage to stay open. Another aspect to this is how many businesses will deliberately stay small to avoid the burden of the minimum wage, futher reducing competition. A third consideration is that expansion is not necessarily one to employ more people, let alone enough to make up for the losses from other businesses. Another possibility is that "expansion" is targeting a more upscale clientele, for whom the level of service might demand the services of people who can already demand wages above the legal minimum.
"Other businesses have adjusted in ways that run the gamut from putting more work in the hands of managers, to instituting a small “living-wage surcharge” for a daily parking space near the airport. ... The new surcharge of 50 cents a day at MasterPark in SeaTac is an attempt to recoup some costs of the $15 minimum wage, said managing partner Roger McCracken. He said he also is considering cuts to MasterPark’s advertising budget, but he called layoffs “foolish” and rejected the notion that cashiers soon would be replaced by automation.”
In other words, the nature of the work and compensation will be changing for people to remain employed at the higher rates. Benefits that used to be provided as part of the employment arrangement will now be an expense levied on the employees. People at all levels of the organization will be working harder. Related businesses that provide accessory services in the overall structure of production will have reduced demand, putting pressure on their profitability and consequently employment.
"Meanwhile, workers are flocking to SeaTac to apply for minimum-wage jobs, and recipients of the mandatory pay raise say they’re enjoying the freedom of having extra money to spend or save."
No doubt they are, except for the people who have already lost their jobs. The people who lose their jobs in the coming months will less clearly see the connection. Those who are never hired at all will just be lost. My pessimistic streak makes me think that the responsible people - Nick Hanauer, Patty Murray, Suzan DelBene, and their ilk - will deflect their responsibility for this disaster and be off on a new crusade to make it all better with a new pronouncement to restrict how the rest of us make our way in this world.
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and here is a report from Reason.com on the CBO report that estimates the 500k in job losses
I like a lot of what The Guardian has to say in regards to the regular and comprehensive invasion of privacy by the NSA and similar government organizations, but their editors have a few things to learn about economics, as illustrated by this story by Gavin Kelly about the situation in Sea-Tac - “SeaTac: the small US town that sparked a new movement against low wages”