Oct 26, 2015

Seattle’s $15 Minimum Wage Kills 700 Jobs In Booming State

By on Monday, October 26, 2015

The economy’s humming along pretty well up in Washington State –especially the restaurant industry – except in one notable area.
While the state itself has gained 5,800 job since the beginning of the year, in Seattle – where they recently passed a $15 minimum wage, 700 jobs have been lost.
The American Enterprise Institute looked at the state of restaurant jobs since the city passed the massive increase – the current minimum wage is $9.47 per hour.
Even though it doesn’t go into full effect until 2017, the reverberations are being felt today.

“One likely cause of the stagnation and decline of Seattle area restaurant jobs this year is the increase in the city’s minimum wage,” the report said. “It looks like the Seattle minimum wage hike is getting off to a pretty bad start. Especially considering that restaurant employment in the rest of the state is booming, and nearly 6,000 more restaurant workers are employed today than in January.”
Seattle was the first city to pass a $15 minimum wage – backed by most Democrats, including Hillary and Bernie Sanders. Los Angeles and San Francisco followed suit and other major cities are currently debating it. In New York State, Gov. Andrew Cuomo said he plans to try to raise the minimum wage there as well.
A minimum wage increase certainly is good for employees who get it. But when companies’ payroll costs skyrocket, it’s inevitable it will lead to either price increases or massive layoffs – or both. Restaurants are notoriously low-margin, competitive industries, so they try to absorb the additional costs, usually by firing employees.
The impact minimum wage increases have on workers and employers is in dispute. Critics often argue increasing the minimum wage, especially as high as $15 an hour, will hurt the poor by limiting job opportunities. The problem is businesses need to offset the extra cost of labor by either raising prices or cutting workers. It is particularly troublesome for low-profit industries like restaurants who struggle much more to absorb the extra costs.

Supporters, though, say wage will help the poor by allowing them to afford basic necessities. The increased purchases would than stimulate economic activity. Fight for $15 has been the main advocate behind the push. The union-backed group has utilized rallies and media marketing campaigns in its efforts.
Job losses can happen even before a minimum wage goes into effect, like in Seattle.
Moody’s reports that in anticipation of these increases, companies must both bring their current employees up to the future minimum and consider the labor costs when hiring new employees.


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