How’s that $15 per hour minimum wage working out?

Seattle raised the minimum wage to $15 an hour in 2014.  Some economists (myself included) predicted higher unemployment rates and closing businesses at that time.  Such economists were treated with derision.  14 months later comes the news that we were right all along:

$15 per hour, hell, why not $50 or $100?

A very important lesson in economics is being learned — the hard way — for many restaurant workers in Seattle as the impending $15 minimum wage hike is resulting in a record number of restaurants across the city closing.

Seattle’s minimum wage is set to jump to $15 on April 1st leaving many restaurant owners with no other option but to close their doors.

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The Washington Policy Center writes that:  “closings have occurred across the city, from Grub in the upscale Queen Anne Hill neighborhood, to Little Uncle in gritty Pioneer Square, to the Boat Street Cafe on Western Avenue near the waterfront.”

Of course, restaurants close for a variety of reasons. But, according to Seattle Magazine, the “impending minimum wage hike to $15 per hour” is playing a “major factor.” That’s not surprising, considering “about 36% of restaurant earnings go to paying labor costs.”….

“Washington Restaurant Association’s Anthony Anton puts it this way: “It’s not a political problem; it’s a math problem.”…..

Restaurant owners, expecting to operate on thinner margins, have tried to adapt in several ways including “higher menu prices, cheaper, lower-quality ingredients, reduced opening times, and cutting work hours and firing workers,” according to The Seattle Times and Seattle Eater magazine. As the Washington Policy Center points out, when these strategies are not enough, businesses close, “workers lose their jobs and the neighborhood loses a prized amenity.”

A spokesman for the Washington Restaurant Association told the Washington Policy Center, “Every [restaurant] operator I’m talking to is in panic mode, trying to figure out what the new world will look like… Seattle is the first city in this thing and everyone’s watching, asking how is this going to change?”

You can’t fight the Iron Laws of Economics.  And one of those laws is that increasing the minimum wage results in higher unemployment.

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Categories: Bad News Everyone!, Econ 101, Economic Illiteracy, Government Shenanigans, Killing the economy, Minimum Wage, Oops, Unemployment

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