Business Review Board / March 14, 2016

Seattle Provides a Lesson in Economics

Minimum wage hikes are killing the city’s jobs market.

The downside to Seattle’s eventual $15 minimum wage was already becoming evident as early as last August (the hourly pay increase, originally to $11 but incrementally rising to $15 over the next few years, went into effect in April). Data obtained by the American Enterprise Institute’s Mark J. Perry revealed “[t]he loss of 1,000 restaurant jobs in May following the minimum wage increase in April.” Well, the American Enterprise Institute has a fresh analysis that gives an even broader picture of the employment issue. A New York Post editorial offers the details:

> The AEI study, worked up from Bureau of Labor Statistics’ monthly surveys, shows that, between April and December last year, Seattle saw the biggest employment drop in any nine-month period since 2009 — a full year into the Great Recession. The city unemployment rate rose a full percentage point. Before the minimum-wage hikes begin, Seattle employment tracked the rest of the nation — slowly rising from the 2008-09 bottom. But it started to plunge last spring, as the new law began to kick in. Furthermore, Seattle’s loss of 10,000 jobs in just the three months of September, October and November was a record for any three-month period dating back to 1990. Meanwhile, employment outside the city limits — which had long tracked the rate in Seattle proper — was soaring by 57,000 and set a new record high that November [emphasis added].

Ouch. Not exactly utilitarian. The editorial was published as a warning to Gov. Andrew Cuomo, who wants to emulate on the East Coast what obviously isn’t working on the West. Hot Air’s Jazz Shaw observes, “Capitalism is a complicated beast and it’s very regional in nature. The minimum wage for one area may make sense while being far too low or too high when transplanted elsewhere.” Moreover, “Top down management of the capitalist system will not work because the beast operates under immutable laws which you can’t change by waving a magic wand.” Not if only someone could effectively explain that to Hillary Clinton and Bernie Sanders.

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