SEATTLE’S MINIMUM WAGE CRASH: $15 to ZERO! Profits Tumble!
November 16, 2014 By Bill Chandler
Seattle, Washington, one of the strongest remaining bastions of liberal philosophy left in the country, passed a phased-in $15 minimum wage law earlier this year. The highest minimum wage in the country. The vote was unanimous and the throng outside cheered, but for many this is a loss from which they will never recover. It is a blow to the profitability of businesses that they just can’t take.
Even the left-leaning Seattle Times expressed concern wondering if Seattle had indeed “gone too far.”
According to the National Review Hotline, Kathrina Tugadi owner of Seattle’s El Norte Lounge, no longer hires musicians for her restaurant, she said she can’t justify expenses that don’t directly “add to the bottom line.” And, she says, hours will have to be cut: El Norte Lounge plans to stop serving lunch and only serve dinner.
“I am concerned about my business and others in the community, but it isn’t just about any one business. It’s about how the entire economic community,” she said. El Norte may be unable to remain open once the ordinance is fully in effect, she said. Even Pagliacci Pizza, a Seattle-area pizza chain, is moving its call center and some of its production facilities outside the city. That’s a lot of job loss, a lot of new people with a new wage of ZERO.
Socialist Council-member Kshama Sawant was the main proponent of the $15 ordinance. She and her supporters denied that the policy change would hurt businesses in the city. In one interview, Sawant said there need be “no unintended consequences.”
“No Unintended Consequences?” Who is she kidding? There are always consequences. In this case the consequences are the businesses that are downsizing, closing and failing, jobs that are lost, and most of all, people whose new hourly wage is ZERO. No unintended intended consequences? Are our politicians really that . . . stupid? Yes, I said it, Stupid. Do they really think taxes are irrelevant, businesses are omnipotent and that they can be drained in the name of politics without “any intended consequences?”
Do our politicians really not understand that our standard of living is the direct result
of one thing . . . the vitality of our businesses?
She went on to state that “any additional costs could come out of ‘extravagant profits’ rather than consumers pockets.” You have got to be kidding me . . . squared! Extravagant profits? Tell that to all the entrepreneurs out there who are trying desperately to make ends meet. Explain that to the mortgage companies they are trying to pay. And please pass that on to those on the street who’s job no longer exists. And, by the way:
where do you think every paycheck every employee has ever received came from?
Yes, Kshama, they came from business, all of them. And where do you think these businesses came from? They came from regular people like you and I who took a chance, rolled the dice, worked hard and were able to provide the people with something of value. All of them, that is where every single business you deplore came from.
You may think there are no intended consequences, but survey results tell a different story. Seattle Time contracted with a survey research firm to contact businesses in a broad range of industries likely to be impacted by the law. These are not businesses you’d describe as extravagant. Not surprisingly, nearly 70 percent of respondents in Seattle said that the $15 minimum wage is causing a “big increase” in their labor costs, and over 60 percent planned to pass on what they could to customers through higher prices.
But, according to Michael Saltsman, research director at the Employment Policies Institute, “price increases are not a silver bullet. After all, were businesses able to raise their prices at will without reducing sales, the minimum wage would be an afterthought. Customers have a choice: If prices increase, they could dine out less often or see one fewer movie a month. That’s why businesses are forced to adapt to a compulsory wage hike in other ways.”
In Seattle, 42 percent of surveyed employers were “very likely” to reduce the number of employees per shift or overall staffing levels as a direct consequence of the law. Similarly, 44 percent reported that they were “very likely” to scale back on employees’ hours to help offset the increased cost of the law. That’s particularly bad news for the Seattle metro area, where the unemployment rate for 16- to 19-year-olds is already more than 30 percent — due in part to Washington state’s already-high minimum wage.
Perhaps most concerning about the $15 proposal is that some businesses anticipated going beyond an increase in prices or a reduction in staffing levels. More than 43 percent of respondents said it was “very likely” they would limit future expansion in Seattle in response to the law. One in seven respondents is even “very likely” to close a current location in the city limits.
Yes, it it always sounds good to give people more free stuff, but once again, everything has a price. I asked a group of sixth graders what they would do. It only took them a few minutes to determine that their only choices were to; fire some employees, raise prices, or go out of business. They also concluded that people won’t come to your store if you charge too much. If sixth graders grasp this, what is wrong with our politicians?
Seattle is the first city in the country to pass a $15 minimum wage. Survey results suggested it will be the first city to find out why it was such a bad idea.
No matter how badly we would like it to be otherwise, there are always a consequences,
and 2+2 will always equal 4.