In Seattle, Kshama Sawant ran for the City Council on a platform of a fifteen dollar minimum wage. During her campaign, she was greatly concerned with the issue of low wages. Now following her election, she is just as greatly unconcerned with the effects of this higher minimum wage.
When Seattle business owners complained to Sawant about the pressure of higher wages on their business, she retorted, “These are the poorest workers. They are going to spend their money locally. What are they going to do, fly to Paris for the weekend?”
What followed Seattle’s minimum wage hike was a thirty-two cent increase in weekly pay and a reduction in hours for the average worker, and a decline in the employment of other low-skilled workers.
Just what money will the poorest, now unemployed Seattle citizens be spending?
People seem to forget that we have tried this idea before, insofar as it has failed, and it will continue to fail. Aged faulty wine does not become any better when we pour it into a new bottle.
Take for example, the minimum wage law and the black community. Throughout the 1930s and 40s, the unemployment rate for 16 to 17 year old black males hovered around ten percent.
But since minimum wage hikes to keep pace with inflation, we have gotten used to unemployment rates for black males that age exceeding 30, 40, and even 50 percent. Just how are those unemployed black males spending the paycheck that they are not receiving?
The failures of the minimum wage law are hardly confined to just America.
In 2012, the seven European countries without a minimum wage mandate had an average unemployment rate of 7.9 percent and a teen unemployment rate of 19.5 percent. As for the 21 countries with a minimum wage mandate, the average unemployment rate was 11.8 percent.
Just as some have failed to realize the effects of a minimum wage law, some have also failed to realize the purpose of the minimum wage. The minimum wage represents the pay in an entry-level job that will provide a worker with a more valuable set of skills to earn more money in the future.
But what do you do if your set of skills is priced out of the market? How do you earn money then? Quite frankly, you do not. You remain unemployed, or simply retire from the labor force.
Seldom does this reality tarnish the vision of those pushing for a higher minimum wage.
There is nothing special in this respect by trying to meddle in the relationship between employer and employee. We would all like to see wages rise. The divide surfaces when those who want to see wages rise do not care who loses a job in the process.