Seattle economics adviser
Okay, I have to admit it: I was wrong about the choices facing business owners when a jurisdiction mandates a minimum wage increase. On several occasions, I’ve written something like the following:
Labor is a cost, because the business owner has to provide wages and, often, benefits that cost him more money. When a government mandate increases that cost, the business owner has three choices: pass the cost along to the customer, who may decide it’s too much and stop shopping there; cut employee hours and stop hiring to save on labor costs, thus costing potential jobs and putting a burden on workers still employed; and, finally, just decide it’s not worth it anymore and close up shop. In the low-margin bookseller business, Borderlands’ owner chose the last course as the only one viable.
Well, it seems I didn’t figure on one other possibility: employees demanding to work fewer hours.
Evidence is surfacing that some workers are asking their bosses for fewer hours as their wages rise – in a bid to keep overall income down so they don’t lose public subsidies for things like food, child care and rent.
Full Life Care, a home nursing nonprofit, told KIRO-TV in Seattle that several workers want to work less.
“If they cut down their hours to stay on those subsidies because the $15 per hour minimum wage didn’t actually help get them out of poverty, all you’ve done is put a burden on the business and given false hope to a lot of people,” said Jason Rantz, host of the Jason Rantz show on 97.3 KIRO-FM.
The notion that employees are intentionally working less to preserve their welfare has been a hot topic on talk radio. While the claims are difficult to track, state stats indeed suggest few are moving off welfare programs under the new wage.
A minimum wage is a form of economic redistribution and welfare, taking money from business owners and giving it to the employees in the name of “fairness” and “justice.” The idea, as averred in the last quoted paragraph, is to help get people off government aid. Good intentions, no?
Well, we all know what’s said about using good intentions as paving material. Like so many welfare programs, the minimum wage creates a perverse incentive to not increase one’s income, for fear of losing desirable benefits. Dan Mitchell of the Cato Institute has a wonderful chart and post explaining this very problem, what he calls a “poverty trap.” By raising the minimum wage, in addition to all the other problems it causes, Seattle is creating its own poverty trap, one that encourages people to work less.
Now how, I ask progressives, is that “progress?”
PS: Read the whole article for other problems caused by Seattle leftists’
good intentions arrogant, economically ignorant self-righteousness.