Don’t raise the minimum wage: it’s counterproductive
November 6, 2017
Chances are, at some point, you’ve tried to help someone and ended up hurting them instead. Whether it’s offering someone advice or lending someone homework that happened to be wrong, these mistakes are a part of life. But they reveal an important lesson: intentions don’t always equate to results.
This lesson is the very reason that the Montgomery County Council should reject Bill 28-17, the “Fight for $15” bill. The unfortunate reality is, raising the minimum wage to $15 is a cure worse than the disease: it will only end up harming the people it hopes to help.
Raising the minimum wage will increase labor costs for businesses, and it’s unrealistic to believe that they’ll just sit back and take the extra costs. A higher wage will force businesses, especially smaller ones, to cut down on employees and their hours to compensate for their losses.
In Seattle, where legislators passed a bill similar to the one the council is considering, we’ve already seen these unfortunate results. After raising its wage from $9.32 to $13/hr, the average worker’s hours have decreased by nine percent, which translates into an average loss of $125 a month per worker, a nonpartisan University of Washington study found. Overall, the authors estimated that the higher wage cost the city 5,000 jobs.
Furthermore, many businesses will look to raise the prices of their goods if cutting payroll doesn’t fully make up for increased labor costs. If Montgomery County raises the minimum wage, “we’ll just end up raising the prices of the product there a little bit to cover some of those expenses,” Bethesda Bagels owner Steve Fleishman said. “It’s a shame, but that’s what ends up happening: we end up passing it along. As a business owner, you can’t end up eating all these expenses and not have it go somewhere.”
The result will be that even if some workers have more money in their wallets, they are afforded less for the same dollar, and in the end, their quality of life won’t change. Those who don’t have jobs, or have lost their jobs, will find it even harder to afford basic necessities.
Because of these problems, a strong majority of US-based economists—72 percent—oppose a $15 minimum wage, according to a nonpartisan 2015 University of New Hampshire survey.
The bill’s proponents argue that because the bill would increase the wage gradually, the effects of unemployment wouldn’t be as pronounced. But the fact that the increase takes several years doesn’t affect a business’s decision calculus. Paying workers $15 an hour four years from now is almost as undesirable as paying them $15 an hour tomorrow. Although the harmful effects of a raised wage may be delayed under this bill, they will still materialize.
I’d like to believe in a $15 minimum wage. I’d like to believe that it would provide every worker with a livable salary, reduce income inequality and boost the economy. But as much as I would like all these wishes to come true, the facts are clear: a $15 minimum wage will only make life harder for the people its proponents are trying to help.