A lesson from Seattle.
The record of the political class is such that it is hard to understand why such a large proportion of the American public continues to place faith in them to solve our problems. The latest illustration of that puzzlement arises from a topic that we have discussed here on several prior occasions.
A recently released study from the University of Washington published by the National Bureau of Economic Research goes to great academic lengths to detail what just about any small business owner can explain to you in simple English.
The study states that the city of Seattle’s current $13 an hour minimum wage – a number that under current city law is on its way to $15 an hour – has actually hurt the very workers it was intended to help. Prior to the law’s enactment in 2014, Seattle’s minimum wage was already at $11 an hour, nearly 54 percent higher than the current federal minimum wage.
According to the report, the raise to $13 has had exactly the opposite of its intended effect. Unable to pass the higher labor costs to their customers, Seattle businesses are cutting both the number of workers that they employ and the number of hours that those workers spend on the job. The effect has been to reduce the incomes of those on the lowest rung of the employment ladder.
So much for the liberal idea that everyone is entitled to a “living wage.”
No one is entitled to a wage, living or otherwise. Wages must be earned. An employer must derive economic benefit from an employee greater than the employee’s cost. It’s as simple as saying that a clothing store can’t buy dresses for $50 and then sell them for $25.
Some idiot politician simply decreeing that an hour of labor is worth $15 doesn’t make it so. An hour of labor from an 18 year old just out of high school with no work experience is not worth much at all. That kid needs an entry level job to gain experience in the work force. Forcing an employer to pay him $15 an hour pretty much guarantees that few such jobs will exist. Hello self-serve kiosk.
Politicians promote minimum wage for one or another or a combination of two reasons.
The first is their own economic illiteracy – something that afflicts a distressingly large and growing proportion of the American population (particularly liberal politicians).
The second is that minimum wage buys votes, a disproportionate percentage of which come from the very cohort whose illiteracy – economic and otherwise – keeps them stuck on the lower rungs of the economic ladder. Politicians (of all stripes) who know better but who yet pander in this way are cynics of the worst sort.
All of this to shed light on your valid concern about Congress getting health care right. Health care policy has essentially the same verbs as minimum wage but different nouns – making the cynics and the illiterates in our ruling class just as likely to get it wrong.