Business Review Board / Jul. 17, 2018

Minimum-Wage Sanity in DC?

Yes and no. Whereas the city seems clear-eyed in one respect, it is completely blind in another.

Because of consumer tips, minimum wages function a little differently in the restaurant industry. In Washington, DC, for example, tipped workers make a base income of $3.89 an hour, while gratuity fills in the gap — and sometimes more. However, last month District residents endorsed Initiative 77. Even though a meaningful number of industry workers frowned upon the measure, it nevertheless imposes an eight-year deadline for increasing the $3.89 minimum wage to $15 an hour for tipped workers.

Yet the fallout is crystal clear enough that even the city’s leftist council recently voted against the voters’ pernicious decision. As Investor’s Business Daily (IBD) rhetorically asks: “Why tip when the waiter is already making as much as everyone else?” Congress is likewise “taking steps to thwart the will of the people and block Initiative 77 from taking effect,” Reason’s Eric Boehm reports. “Rep. Gary Palmer (R-Ala.) is preparing to file an appropriations bill that would block the implementation of Initiative 77.”

In Boehm’s view, “It should tell you something that a Republican Congress and the city council of a heavily Democratic city like D.C. are on the same side of this issue — the same side that both management and employees were on during the run-up to the election.” True. But whereas the city council seems clear-eyed in one respect, it is completely blind in another. IBD observes:

The problem with the D.C. council’s move isn’t that it’s trying to overturn the will of the people, but that it isn’t applying its newfound understanding of economics more widely. This month, the minimum wage for nontipped workers in D.C. jumped from $12.50 to $13.25 an hour. It will reach $15 an hour in just two years, and then go up every year after that at the rate of inflation. This wage mandate, just like the one the council is trying to repeal, will also end up hurting the very people it’s supposed to help.

If the council is truly serious about abandoning economically destructive ventures, it will readdress other pernicious minimum wage laws.

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