Putting People over Politics on the Minimum Wage

Apr 17, 2017 by AFP

One of the most politically popular policies for liberals over the last few years has been raising the minimum wage. This so-called “fight for fifteen” has garnered the support of many left-wing politicians and their political allies such as big labor unions. As a result, numerous cities have passed minimum wage increases, such as Seattle, Oakland, and Washington, D.C. But as these policies are beginning to take effect, some liberal leaders have noted the negative impacts and reconsidered their positions.

After seeing jobs and businesses leave cities, Baltimore Mayor Catherine Pugh reversed course and vetoed an increased minimum wage measure. Her reasoning? An increased minimum wage would not only have adverse consequences on workers, but also the small businesses that are the lifeblood of cities. Local business owners told Mayor Pugh that they would be forced to move business to nearby Baltimore County if the minimum wage law was enacted. Afterwards, Mayor Pugh said, “I want people to earn better wages, but I also want my city to survive.”

It’s not only Mayor Pugh who is rejecting these policies. Other mayors and legislators around the country are also having second thoughts. Last week, Kansas City Mayor Sly James came out against a minimum wage ordinance because “it’s not effective… and not going to mean anything.” Democratic Mayors in Cleveland and Minneapolis have also argued against the “fight for fifteen.” Cleveland Mayor Frank Jackson wrote that a minimum wage increase would put our city at an economic disadvantage, which will result in disinvestment and the loss of jobs.”

Mayors have good reason to veto minimum wage increases after mixed results from cities like Seattle. Proponents argue that $15 per hour minimum wage will raise the standard of living and help low-income workers, but looking at the effects on the restaurant industry makes clear the opposite is true.

In June 2015, Seattle passed a $15-an-hour minimum wage law. Data shows that Seattle’s restaurant industry lost 700 jobs between January and September of 2015. Meanwhile, the rest of the state gained 5,800 new restaurant-related jobs, making Seattle the outlier.

Seattle is not the only city that has lost jobs due to minimum wage increases. Washington, D.C. raised the minimum wage to $10.50 an hour in July 2015. The following year, the number of restaurant employees fell by 1,400, which is the largest loss of food-related jobs since 1985. This led food vendors and new businesses to move outside the city. During the same time span, surrounding suburbs in Maryland and Virginia saw 2,900 new food industry jobs.

Walmart closed an Oakland facility when the city raised the minimum wage to $12.25 in 2015. Around 400 employees were affected by the closing. These layoffs have become harsh realities for mayors advocating for substantial minimum wage increases. It’s not just small businesses owners, but also large franchises that lose from minimum wage increases. But the people who lose out most are Americans at the bottom rung of the economic ladder looking for badly-needed economic mobility. The real impact of minimum wage increases is pricing more and more people out of a job – the last thing millions of Americans need right now.

Mayors that passed minimum wage increases have watched jobs leave their cities. High minimum wage laws are often passed with the intention to increase prosperity, but have traditionally done little to raise incomes and promote long-term stability for workers. Lessons from Seattle and Washington, D.C. have clearly resonated with some, and for the sake of American workers and job-seekers, we can only hope the clarity continues to spread.