Minimum Wage Experiment

It is a statement that many will disagree with but in my opinion it is the truth. A minimum wage has no place in a free market and it will do more harm than good. Back in 2015 the city of Seattle began an experiment. They decided to give in to the popular demand sweeping the nation and raise their local minimum wage well above the Federal standard. The raise would happen over many years and eventually hit $15 an hour. A couple years later and the shock waves from this decision are already being felt.

According to a University of Washington study employers reacted to this change by cutting hours and hiring fewer workers. The minimum wage currently stands at $13, still $2 away from its final target but already employers are taking these steps in reaction to the change. The number of hours worked has dropped by 9.4% and the number of available low wage jobs has dropped 6.8%. I’m not sure why anyone would have expected anything different to happen.

Companies are going to protect their bottom line and the Government can’t change that. If you require employers to raise wages then they will trim benefits, hours, employees, raise prices or whatever else it takes to keep the business profitable. No matter how the argument is framed business owners are simply looking out for the well being of their business.

You can’t have a free economy and at the same time force employers to pay their employees a certain wage. It will always lead to unintended negative consequences. I understand how it seems like a good idea but businesses doesn’t have a magical money tree in their back yard that they can access for the increased in cost. The government doesn’t either even if they think they do but that is beside the point.

I wonder what will happen when the full $15 goes into effect. You might start seeing more and more machines and robots taking over. For example replacing cashiers with ATM like machines or apps on your phone, the latter we’ve already seen a lot of. This is simply the natural evolution of things but now hastened by governmental overreach. It is a harsh reality but an economic truth no matter if we like it or not.

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