Creating Unemployment 101: Seattle Minimum Wage Case Study
While most people think that ZeroHedge is trash news, they did report on this rather factually.
The University of Washington (located in Seattle, FYI) has been doing a study on minimum wage. They published their findings for Seattle this month, which you can read in detail if you are so inclined, or don't believe me.
- Minimum wage per hour was increased from $9.47 to $11 in 2015
- Minimum wage per hour was increased from $11 to $13 in 2016
After the $13 wage:
- Reduction of low wage jobs by 6.8%
- Those who retained their jobs were working less hours (9.4% less)
- Low-wage workers on average saw a reduction of $125 per month (6.6% drop in income)
Less people working for less hours and taking home less pay.
Positive intended outcome? Well, I will let you be the judge of that.
You may want to bookmark this page to re-visit at the next GE (and the next, and the next...) when certain *cough cough not saying who cough cough* politicians keep coming back to this notion of minimum wage.
Legislating a minimum wage is the same as legislating unemployment, period.
The minimum wage OBVIOUSLY does not create any prosperity. If it did, why stop at $13 an hour? Why not $20? $50? $100? $1000? Now that question is gonna keep minimum wage advocates up all night.
This is the sad reality that you don't want to hear: Some people's work are not worth $13 an hour. Heck some people's work aren't even worth $5 an hour. In fact, some people can be rather worthless.
Yeah I said it. It had to be said.
"Orh hor, GMGH so facked up, so insensitive." Well, is microwaving burgers and shaking salt on fries worth 13 USD an hour? You tell me.
I don't merely oppose the minimum wage. I detest it. It is forced unemployment and encourages discrimination.
I'm not stupid. I know the arguments for minimum wage. But that doesn't mean that they are good arguments. Every time I talk to minimum wage advocates, I feel like I'm stuck replaying the beginner's tutorial of some shitty economics game.
The idea that business owners should share profits with employees is complete nonsense to me (if businesses want to, good on them, it could be a strategic HR move, but it is by NO means an obligation). An investor gets profit sharing AS WELL as loss sharing. An employee is not an investor, but a stakeholder. Employees still get paid even if the company doesn't sell anything.
You can't be an employee and expect zero downside but all the upside. By opting for salary, you trade away profit and loss sharing in exchange for a stable salary. Not happy with it? Become an entrepreneur / investor and get both the upsides and the downsides then. You can't have everything without giving up anything.
However, from a governmental and social point of view, I understand why it is important not to have unemployment for citizens, especially given the context of a competitive and fluid global workforce. This is especially so if you have citizens that are low-skilled, have high expectations, or the dangerous combination of both. In SG, I think the the government has made very smart decisions by choosing to tackle this through quotas, levies, education subsidies and workfare. Workfare for the low income is the next best thing since kaya toast. It's basically almost like minimum wage, but paid by the government (the people who want it) and not by businesses (who would otherwise find alternatives than hiring these people). I find this a fantastic solution that solves both unemployment benefits and the minimum wage in a very elegant way.
On the topic of competition, just a heads up and friendly reminder that your competitor might not only be from overseas - undercutting your salary and working twice as hard - they might also be faceless and have the ability to work 24/7 at the cost of $0.2072 per kWh.
If you can't beat that "damn foreigner", what do you think are your odds against a machine?
Personally, I believe the solution to unemployment is continuous improvement. The Red Queen hypothesis. But you can do whatever you want to do, I'm not forcing my beliefs on you. Just sharing my thoughts.