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
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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.

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