Seattle’s new $15/hour minimum wage is making national news because it’s such a sudden and large increase. Washington state already has the nation’s highest minimum wage at $9.32/hour, but that wasn’t cutting it in Seattle, where costs have skyrocketed over the last five years or so. The median rent for a two bedroom apartment, for example, has climbed 90% over the last four years.
So I suppose it’s understandable that service workers feel insulted when they aren’t even paid enough to cover the rent of a modest apartment when working full time. However, the logic behind arguments for the minimum wage hike, which has been the favorite cause of socialist city councilwoman Kshama Sawant, is flawed. A common argument claims one of its benefits is that as the poorer people in Seattle make more money, they will spend more, thus boosting the overall economic health of the city.
But this is not necessarily the case, because most of the bills these poorer people pay go to national or international corporations that do not keep the money in the community. For example, I expect some people (the ones who keep their jobs) will use the extra money to purchase iphones and other electronic trinkets. Maybe they will buy them from local stores, but in all likelihood they will purchase them online, and then the associated bills will be paid to some company in California. The people who spend the most in the city are already making well above the minimum wage. Independent restaurants are too expensive for the working poor, for whom even fast food is a treat. But guess what? These fast food franchises will be the hardest hit, because even though they are run by independent franchisees, they are treated under the new law as large national companies. I expect businesses like Taco Bell, KFC and others to flee the poorer neighborhoods when they find their profit margins no longer viable due to higher labor costs, leaving the working poor with no choices at all AND fewer local jobs.
The primary beneficiaries of the minimum wage hike (in the short term) will be landlords, who will gleefully raise rent even higher than it already is, especially in the low-rent neighborhoods.
So the first people to take a big hit will be franchisees in low-income neighborhoods, and the low-income workers themselves, as they find jobs less plentiful and rent steadily rising.
The next group to be impacted will be independent restaurants who unfairly received a grace period of several years, as if some guy trying to bootstrap himself into the middle class by running a Subway franchise is a corporate monster while a bistro purchased with trust fund money catering to wealthy customers is the poor little underdog. What will these independent restaurants do? Well, it’s going to be tough for them, but since Seattle is a “sanctuary city,” I think we can predict who they are going to hire instead of local citizens: illegal labor paid under the table. I am certain that we will once again see an influx of illegal Latin American workers into Seattle’s restaurants, probably paid under the table at a rate significantly less than $15/hour. Isn’t that wonderfully progressive? More indigenous poor squeezed out of the labor market because they are “too expensive” to hire.
Finally the little convenience stores run by Asian immigrants, mainly Koreans, will take a hit. This is sad because they perform a vital community service. They do business in marginal neighborhoods where they have to put up with people most of us would prefer not to run into more than once a year on a daily basis. As they run these businesses, they perform a service for the neighborhood. I always liked these guys, and went to their well-run, clean stores all the time instead of driving to the nearest supermarket for small items. If they go out of business, the city’s walkability, much prized by the left, will be reduced substantially.
Even the big stores will have to make some painful changes. They will raise prices, automate more and cut security. At my local Safeway, just a few days before I left town, an old lady got beat up and robbed by a bunch of “youths” right outside the front door. Expect this to be a more common occurrence as stores cut back on hiring off-duty cops for security.
I know Seattle as well as anyone, and here I am looking back at my city and shaking my head. Once again, they’ve managed to change a “progressive” cause into a de facto war on the unfortunate. Fortunately, the rest of the state is growing impatient with this head-in-the-clouds brand of progressive liberalism, and is refusing to fund Seattle’s pet projects. As the working and middle class and small business tax base shrinks, Seattle will face tough choices, and I’m not sure they can count on their favorite billionaires to bail them out. They are trying some fairly radical experiments, and we’ll see how they work out. Somehow, I don’t think it’s going to end in an eternal hipster utopia.
