Tag Archives: jobs

Seattle’s Minimum Wage

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Here‘s a part (certainly not all) of the Left’s rationale for the $15/hour minimum wage just passed in Seattle. It’s from FoxNews‘ cite of David Goldstein, of whom they refer as a “Seattle blogger.”

If some jobs are lost, but we lift tens of thousands of low-wage workers out of poverty, that’s a net plus in the long run[.]

Which it would be, were this accurate. During the creative destruction that goes on all the time in a free market economy, jobs are lost and many more created—not only for low-wage workers, but for all workers. But the jobs that are lost due to government mandated minimum wage laws are exactly those of low-wage workers, who are priced out of the job market. There won’t be tens of thousands of low-wage workers lifted out of poverty by this law, these low-wage workers now will be trapped in no-wage poverty because they can no longer get jobs.

The simple fact is, the jobs are low-wage (notice that: the jobs are low-wage, not the workers in those jobs) because the value of the work—not of the worker—is so low.

And the Left adds this bit of rank cynicism:

It may very well be unfair, but unfair regulations are not illegal. The government distinguishes between different types of businesses and different types of industries all the time.

Because, you know, shut up.

Our Economic Future

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James Pethokoukis, at AEIdeas, has some thoughts. Oddly, so do I.

Pethokoukis first. He paraphrases Binyamin Appelbaum in New York Times:

…economist accept slower growth is partly the result of long-term trends…. [Y]ou have (a) the demographically-driven decline in labor force participation and (b) an apparent productivity slowdown starting in the mid-2000s as the pace of technological innovation and diffusion has slowed.

But these two are easily corrected. The “demographically-driven decline in labor force participation” is largely, if not primarily, the retirement of us Baby Boomers without associated replacement from births into existing and new families, much less an increase in that rate. (The long-term departure from the labor force by those who’ve given up finding work in this economy is a separate matter that policy corrections will resolve.)

The US, though, always has relied on high immigration rates, as well as yesterday’s higher birth rates, for our supply of workers at all levels of a company from the janitor/mailroom clerk (no dating me here…) to the President/CEO/Bossman. We don’t have high immigration rates today, so we’re not getting the influx into our labor force that we need. The illegal entry rates don’t make up for much of that at all, and the illegality of their entry serves only to hold them back from full contribution. That dearth is only exacerbated by our lower birth rates; it’s not caused by it.

The productivity slowdown and tech innovation rate is a function of the lack of new ideas, new approaches to old problems, creative approaches to new problems, etc from an entrenched population that’s used to doing things in the business world in a certain way (and that staidness is a fact of human nature). Here, too, immigration has played a major role in our economic vibrancy. Immigrants bring those new ideas, new approaches, new etc. And immigrants start new businesses—become those CEOs/Presidents/Bossmen—all out of proportion to their numbers.

All of which suggests a solution to that “slower growth” bit.

Can’t Win for Losing

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Economists were pleased that the economy created 217,000 jobs in May. That sent US payrolls to a record high. It was the first time since the late-1990s boom that the economy created more than 200,000 jobs a month for four consecutive months.

This despite fact that, as of the last jobs report, the US economy had—finally—”rehired” all the workers fired since the start of the Panic of 2008: “US total employment passed its previous peak of 138.4 million, set in January 2008.”  Normal recoveries regain their pre-recession levels after several months to a couple of years.

And it ignores the fact that, based on population growth, we’re still seven million jobs behind where we need to be from simple population growth since just before the Panic.

A Thought on Wages

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Wall Street is now starting to complain that wages are too low.

“Without a real acceleration in wages it is hard to get a meaningful pickup in consumer spending,” explained Michelle Meyer, senior US economist at Bank of America Merrill Lynch.

Weak consumer spending holds back profits and economic growth….

And

Weak wage gains also are making it hard for the housing market to return to normal, Mr [Jack, Executive Vice President and Chief Investment Officer at BMO Private Bank] Ablin said.

He calculates that new single-family home construction is running at less than 500,000 a month. Demographics say it should be twice that….

“People are waiting longer to get married and they are having fewer kids,” Mr. Ablin said. That is making them delay home purchases. “It is certainly making us a little more cautious on the economy.”

This, though, is an economic argument for why businesses are considering making the move—it’s a question of sound business practice that only businesses can make. It’s not at all an argument that government should intrude and mandate a specific minimum wage—or even (assuming government central planning were equal to the task) that government should try to tailor a mandate to government-perceived unique conditions.

Minimum Wage and Morality

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Seattle has passed an ordinance that will raise the minimum wage private businesses in the city must pay to $15/hr. The wage increase will take effect in stages over a few years, starting next April. I’ve written elsewhere (here, for instance, and here) on the economic utility of raising the minimum wage.

What about what a government-imposed minimum wage does to a worker’s morality? A Seattle home health worker earning $10.95/hr had this to say about her situation and Seattle’s minimum wage mandate, as summarized at the first link, and also quoted there:

[She] is looking forward to the way a higher wage will help her support her three children.

She said she and her three kids are living with her brother because she can’t afford an apartment of her own even though she works full time. “This will make changes to myself and also a lot of other people in my shoes.”

She says that like family taking care of family is a bad thing. But why shouldn’t family take care of family first, rather than strangers being forced to do so ahead of family? Plainly, this family does not need the outside help; they just find it…convenient.