Seattle’s Minimum-Wage Hike Is Sure to End in Disaster

Common sense and sound economic analysis say a $15 minimum wage will cost the community jobs and workers much-needed opportunities.

Carrie Lukas is the managing director of the Independent Women's Forum. 
National Journal
Carrie Lukas
Add to Briefcase
Carrie Lukas
Aug. 8, 2014, 1 a.m.

The an­nounce­ment soun­ded like the premise of a feel-good sum­mer movie. High school­ers in Seattle set to start work­ing in ice cream shops and sum­mer camps are giv­en a raise by their City Coun­cil. Em­ploy­ees and em­ploy­ers alike will en­joy the sum­mer of their lives, since all those young­sters will have more money in their pock­ets to spend at loc­al busi­nesses, as well as make memor­ies on warm, starry nights.

That may be a good trail­er, but it hardly cap­tures the real­ity of how Seattle’s new min­im­um-wage law will play out for real-life teens and the oth­ers seek­ing work in that city’s lower-pay­ing in­dus­tries.

Real­ity check No. 1 is that there are already far too few min­im­um-wage jobs for high school­ers and those with few skills or lim­ited edu­ca­tion. As the Em­ploy­ment Policy In­sti­tute re­cently re­por­ted, in the Seattle area the un­em­ploy­ment rate for 16- 19-year-olds with less than a high school dip­loma sits at a shock­ing 31.4 per­cent. That means that al­most one in three teens look­ing for work — note that they are seek­ing po­s­i­tions that pay the cur­rent min­im­um wage, not $15 an hour — can’t find an open­ing. Their in­ab­il­ity to find a job today doesn’t just mean less money for movies and go­ing to the beach this sum­mer. It means they won’t start a work his­tory and gain the valu­able skills and ex­per­i­ence that are ne­ces­sary for fu­ture jobs, ones that pay more and start them to­ward long-term ca­reers.

Seattle is far from the worst job mar­ket for youth in the coun­try: River­side, Cal­if., and Port­land, Ore., have youth un­em­ploy­ment rates in ex­cess of 50 per­cent. That means that for every high school­er lucky enough to have a job, there’s an­oth­er scour­ing want ads.

At least, Seattle isn’t the worst youth job mar­ket yet. The city could earn that du­bi­ous dis­tinc­tion once the min­im­um-wage hike be­gins to kick in. Cer­tainly some cur­rent work­ers will be bet­ter off un­der the new law and will en­joy a boost in take-home pay. Yet oth­ers will find them­selves join­ing the ranks of the un­em­ployed as busi­ness own­ers try to make due with few­er work­ers be­cause they can’t af­ford high­er em­ploy­ment costs.

Sup­port­ers of the min­im­um-wage in­crease may sin­cerely hope that this policy will stim­u­late the eco­nomy or at least do no harm in terms of job cre­ation. Yet com­mon sense and sound eco­nom­ic ana­lys­is warn oth­er­wise. The Con­gres­sion­al Budget Of­fice — a non­par­tis­an re­search en­tity — es­tim­ated that the Demo­crats’ pro­posed fed­er­al rate hike to $10.10 per hour would res­ult in 500,000 few­er jobs na­tion­wide. Seattle youth be warned: The city’s min­im­um-wage hike will in­ev­it­ably push em­ploy­ment in the same dir­ec­tion, leav­ing few­er job op­por­tun­it­ies for those start­ing out.

Nearly half of those work­ing min­im­um wage are 24 or young­er, ac­cord­ing to fed­er­al data. These young work­ers typ­ic­ally are not the only bread­win­ners in their house­holds, and the vast ma­jor­ity live in homes with an an­nu­al in­come of $42,000 or more, ac­cord­ing to a 2013 re­port by the Her­it­age Found­a­tion.

But, this law will also shape the lives of many adults who are re­spons­ible for fam­il­ies. Pro­ponents of the high­er min­im­um wage have ar­gued that the new man­date will par­tic­u­larly help wo­men, who ac­count for two-thirds of min­im­um-wage work­ers. This stat­ist­ic also sug­gests that wo­men will also be far more vul­ner­able to the po­ten­tial job losses cre­ated by the new min­im­um wage. Na­tion­ally, wo­men also ac­count for nearly two-thirds of part-time work­ers, po­s­i­tions that are also are more likely to pay the leg­al min­im­um. As em­ploy­ment costs rise, busi­nesses will be temp­ted to cut and con­sol­id­ate part-time po­s­i­tions in fa­vor of few­er, more highly skilled work­ers. That’s bad news for those who need or prefer part-time sched­ules to bal­ance their work and fam­ily re­spons­ib­il­it­ies.

It’s also bad news for minor­ity youth, who tend to have few­er edu­ca­tion and few­er job op­por­tun­it­ies. A high­er min­im­um wage makes it less likely a busi­ness own­er will take a chance on them. The na­tion­al un­em­ploy­ment rate in March 2014 for Afric­an-Amer­ic­an teen­agers was al­most double the rate for whites, a jaw-drop­ping 38 per­cent. That’s un­likely to re­verse if the coun­try fol­lows Seattle’s lead and makes hir­ing young work­ers more and more ex­pens­ive.

Pro­ponents of min­im­um-wage hikes want to cast them­selves as cham­pi­ons of the rights of the little guy, people and or­gan­iz­a­tions fight­ing against greedy cor­por­ate Amer­ica. Yet it’s im­port­ant to keep in mind what min­im­um-wage reg­u­la­tions are at their core: laws that pre­vent free people from en­ter­ing in­to con­tracts to trade work for wages be­low what gov­ern­ment says is best. Mak­ing it il­leg­al for people to find work and ex­per­i­ence hardly seems com­pas­sion­ate. Many fam­il­ies re­cog­nize that skill-build­ing po­s­i­tions are of­ten worth more than what they pay, which is why un­paid in­tern­ships re­main a staple for middle-class youth — in­clud­ing, quite likely, the chil­dren of Seattle City Coun­cil mem­bers. Don’t young­er Amer­ic­ans from less for­tu­nate cir­cum­stance also de­serve skill-build­ing op­por­tun­it­ies? Boost­ing the min­im­um wage will only fur­ther re­strict it.

Lack of em­ploy­ment, not low wages, is the biggest factor cre­at­ing poverty today. In 2012, just un­der one in 10 work­ing-age adults liv­ing in poverty had full-time, year-round work, while two-thirds had no work at all, ac­cord­ing to the most re­cent census data avail­able (see Table 18). Rais­ing the min­im­um wage will do noth­ing to help those who lack em­ploy­ment and can make their prob­lems worse.

If Seattle’s City Coun­cil wants to help people in need, then this new min­im­um-wage law should end up on the cut­ting-room floor in­stead of part of the city’s story. It should be re­pealed im­me­di­ately.

Car­rie Lu­kas is the man­aging dir­ect­or of the In­de­pend­ent Wo­men’s For­um.

HAVE AN OPIN­ION ON POLICY AND CHAN­GING DEMO­GRAPH­ICS? The Next Amer­ica wel­comes op-ed pieces that ex­plore the polit­ic­al, eco­nom­ic and so­cial im­pacts of the pro­found ra­cial and cul­tur­al changes fa­cing our na­tion, par­tic­u­larly rel­ev­ant to edu­ca­tion, eco­nomy, the work­force and health. Email Jan­ell Ross at jross@na­tion­al­journ­al.com. Please fol­low us on Twit­ter and Face­book.

What We're Following See More »
Doesn’t Express Confidence in Marino
Trump to Declare Opioid Emergency Next Week
3 minutes ago

After initially promising it in August, "President Trump said Monday that he will declare a national emergency next week to address the opioid epidemic." When asked, he also "declined to express confidence in Rep. Tom Marino (R-Pa.), his nominee for drug czar, in the wake of revelations that the lawmaker helped steer legislation making it harder to act against giant drug companies."

Trump Still Considering Yellen For Fed
7 hours ago

"President Donald Trump plans to formally interview Janet Yellen this week about potentially staying on as Federal Reserve chair, two people familiar with the matter said...Many Republicans on Capitol Hill want Trump to move on from Yellen, whose first term ends in February, and choose a more traditionally conservative Fed chair."

Trump Noncommittal on Marino
7 hours ago
Manchin Asks Trump to Drop Marino’s Nomination for Drug Czar
9 hours ago
McCaskill Will Introduce Bill in Response to “60 Minutes” Scoop
9 hours ago

In the wake of Sunday's blockbuster 60 Minutes/Washington Post report on opioid regulation and enforcement, Sen. Claire McCaskill (D-MO) has introduced legislation that "would repeal a 2016 law that hampered the Drug Enforcement Administration’s ability to regulate opioid distributors it suspects of misconduct." In a statement, McCaskill said: “Media reports indicate that this law has significantly affected the government’s ability to crack down on opioid distributors that are failing to meet their obligations and endangering our communities."


Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.