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Confounding people and wages
Continuing the argument, the higher minimum wage puts real people out of work - individual persons lose their jobs if their productivity is significantly less than the mandate. Employment is subject to a large number of factors that affect both supply and demand, so among those other factors, confounding the minimum wage discussion will be the impact from the scheduling constraints also recently passed into law in Seattle. The new law will mean:
- Workers will get two weeks advance notice of work schedules
- Any changes by the employer will result in the worker getting extra pay
- There has to be a minimum of 10 hours between shifts
- Employers have to offer any available hours to existing employees before hiring more people
As for unintended consequences, some members of the council appear to be nonplussed, but at least they have granted some latitude to study what might happen:
“I think we heard the same concerns when the City of Seattle passed the minimum wage ordinance,” said Councilmember Lorena Gonzalez. “The sky has not fallen, In fact business is as good as it has ever been.” The new law takes effect in July 2017, and Gonzalez says the city will study its effects for two years to decide whether any changes should be made.
Here is a bit of how Reason reported on this story:
The Affordable Care Act (ACA) also bears some of the blame for the lack of hours, says John Vigdora, the UW economist who authored the July study on the city's new wage floor. Many employees have found their hours cut by employers looking to avoid the employer-provided-insurance mandate in the ACA, which kicks in only when someone works hours over a certain threshold, he explains.
Whether the new scheduling regulation will help workers get these hours back remains an open question, and Vigdor speculates that employers that are particularly concerned with their level of customer service may choose to absorb the costs of the new law, maintaining current staffing levels. Businesses in a more precarious financial situation, on the other hand, or less reliant on offering good customer service, are likely to respond by cutting hours.
In San Francisco—the only other city to adopt secure scheduling legislation—many businesses have indeed cut back on staff. A study conducted six months after the law went into effect found that "in response to the ordinance, 1 in 5 surveyed businesses had cut back on the number of part-time hires, and a similar number were scheduling fewer employees per shift," according to the San Francisco Chronicle.
Even if the economy grows as a result of increasing the minimum wage (a point that is far from proven), this policy translates into a wealth transfer from those people who lose their jobs to others who do not.
How much disemployment we see in aggregate will depend how many people are currently below the mandated floor, but also on the "background" employment changes in the area. The UW study suggests that Seattle's growth has so far continued, but the aggregate unemployment won't reveal people moving out of town to find work, or what jobs become more strenuous in order to make up for their productivity differences, or where there is less time off allowed, or fewer perquisites on the job, or any of the other ways people were previously free to arrange their employment relations.
If there were no downside to the minimum wage then proponents should not stop at $15; statewide they should not stop at $13.50. But to acknowledge the downside is to also accept that it falls most heavily on a very particular group of people, for whom it could be disastrous to fall out of work and remain that way; those people are likely to be the ones with the fewest skills and the least advantages.