Earlier this week, a study from the University of Washington indicated Seattle’s $15 minimum wage hike did not help low-income workers. Instead, it ended up costing them $125 per month on average.
Supporters of higher minimum wages have long tried to wish away the basic economic principle of supply and demand. When the price of labor is artificially increased by a minimum wage law, the demand for labor goes down, as does the supply of jobs.
As a result of Seattle’s law, which started incrementally raising minimum wage prices three years ago, employers have been forced to reduce their employees’ hours or cut jobs altogether. Young people and low-skilled workers have been hit the hardest.
It’s often said that high-cost cities like Seattle should be in the best position to deal with a high minimum wage. The fact that the policy doesn’t work here doesn’t bode well for the policy’s proponents in other cities.
While their methods are misguided, advocates for minimum wage increases are correct in their concerns about stagnating wages and weak buying power. Far too many people are still living paycheck-to-paycheck and struggling to make ends meet. But the solution isn’t to raise the minimum wage – it’s to get big government out of the way.
American families can break free of their struggle only when the economy is thriving and the right opportunities are available. Higher taxes, burdensome mandates, the Affordable Care Act and a host of other sweeping government regulations limit the ability of employers to give raises, hire more people, and create the opportunities Americans – especially young people – need.
You can read the full study by the University of Washington here.