The argument against major raises to the minimum wage, notably in Washington – where the minimum is the highest in the country – sometimes runs to the ideological (government shouldn’t so regulate business) but focuses more on the practical.
That is: Higher minimum wages would have negative economic effects, especially in the area of the number of jobs out there. Raise the wage, the argument goes, and the business-wage monetary pie will be sliced fewer ways, cutting out some of the jobs.
The argument sounds sensible from a numerical standpoint, but it runs aground in several other places. One is that the amount of money dedicated to paychecks is not static: It varies as the need for workers goes up or down. A hamburger joint that needs to hire (let’s say) a dozen workers to meet the demand and keep the business operating properly isn’t going to suddenly drop to nine employees because wages went up. More likely, as is the case for any business when some part of the operation becomes more costly, the price of a burger and fries will edge up. Most of the time, customers little notice – less than they would if they weren’t getting their orders filled.
This comes back to mind with a piece in the Horse’s Ass blog, recalling the warnings of Andrew Friedman, a Seattle bar owner (it’s called Liberty, of course) warned that a $15 minimum wage meant “Local independent businesses WILL closed, many of your neighbors WILL be out of work.”
About nine months ago, the minimum wage was approved. A few days ago, some months after its effects had some time to settle in, Friedman had some business news. No, not the closure of Liberty, but rather the opening of second bar (the Good Citizen).
Sounds like more jobs have been created.
Albeit, for customers, probably a higher tab on the well drinks.