Seattle makes high-risk bet on $15 minimum wage

The News TribuneJune 13, 2014 

A flyer celebrates passage of a $15 minimum wage law by the Seattle City Council June 2.

TED S. WARREN/THE ASSOCIATED PRESS

Ask why $15 an hour is the right minimum wage for Seattle, and you get some pretty vague answers.

One of the most common: “It had to be a round number.”

According to the Seattle Times, that particular round number appears to have emerged from a gathering of enthusiastic labor activists in New York a couple years ago.

Someone at the meeting proposed $10. It was deemed too paltry. Someone else proposed $20. It was deemed politically undoable. So they split the difference: $15 an hour.

Too hot. ... Too cold. ... Just right! Goldilocks economics.

Last week, the Seattle City Council unanimously voted to phase in a $15-an-hour mandate over a period of years. Spooked by activists who demanded an immediate jump to $15, the council put considerably more thought into the schedule than into goal itself.

Big businesses – the bad guys – must start with an $11 minimum next year and move all the way to $15 within a few years. Smaller employers – the not-so-bad guys – can take as long as seven years, if their employees get tips and other benefits.

The best thing that can be said about this high-risk experiment is that it’s happening up the road, in a wealthy city that can absorb some economic shock. The rest of the state – and the nation – can sit back and watch how it plays out.

The Goldilocks theory is that there’s no downside, for anyone. Money will be squeezed out of capitalists, for whom cash grows on trees, into the hands of proletariats, who will buy more things and services. More money will wind floating around the city, and all boats will rise. Employers will sell more stuff, and nobody will go out of business or lose a job.

What’s going to happen will be a lot messier. There will be winners, but also losers. Some employers may wind up better off. Others will fold because they can’t meet payroll. To an uncertain extent, businesses will respond to the higher cost of labor by buying fewer hours from workers. That’s how real economics works.

Unfortunately, the biggest hit is likely to be felt among the young and unskilled workers who will get priced out of the labor market. Low-income workers who stay employed will find some of their gains offset by the loss of food stamps and other assistance.

The three-quarters of Seattle businesses that employ fewer than 10 people will be also hurt disproportionately. So will nonprofit social-welfare agencies that do the work of the angels on a church-mouse budget.

Seattle’s (currently) booming economy could hold some of the potential losers harmless. Fingers crossed, everyone.

In the meantime, we can wonder why the magic number wasn’t, say, $12 – a level that might have delivered nearly as much poverty relief as $15 while holding down the job dislocation. Too cold for Goldilocks, apparently, but maybe just right for a place like Seattle.

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