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home : opinions : opinions   May 24, 2016

6/18/2014 10:07:00 AM
Column: Minimum wage in real life?

Kevin Caufield
NT Reporter

Illinois voters may be asked to vote on an advisory referendum in November to raise the state’s minimum wage to an even $10 per hour. The current minimum wage is $8.25.

This proposal will for the next several months generate the same age-old debates about minimum wage since the first minimum wage law was voted in by Congress in 1938.

With that said, I’d rather steer away from the academic debate and focus on real-life examples of how minimum wage laws affect society.

There’s an incorporated area of hotels, restaurants and other businesses surrounding the Seattle-Tacoma International Airport called SeaTac. Within SeaTac’s jurisdiction are about 6,300 employees that are estimated to have been directly impacted by SeaTac’s minimum wage law that went into affect Jan. 1.

SeaTac’s minimum wage is $15 per hour — the highest minimum wage in the United States — but it’s only mandated for employees of large businesses. No mom-and-pop type places.

Needless to say, economists from across the country have been studying closely the effects the law has had on this city.

So far, recent media reports have centered on the following results:

- Job applications have surged, but no one is hiring. Instead, managers and employees have been burdened with taking on more responsibilities to combat the added labor costs.

- One hotel was forced to close while others have cut employee benefits, overtime, paid vacation, holiday pay, free food and free parking.

- Some layoffs have taken place. Business owners have halted plans to hire more and new businesses looking to build in SeaTac have stopped.

- Ironically, area public parking garages now come with an added “living-wage surcharge,” implemented by the same SeaTac city council that voted in the minimum wage law. Apparently, the city was having a hard time finding the money to pay the newly increased wages of its minimum wage employees.

When considering minimum wage increases it is important to understand that when governments force businesses to pay higher wages, benefits or taxes, those business owners in a free society will do everything within their ability to maintain a healthy profit.

And when the weight of government becomes too burdensome businesses might shut down or move to where it makes financial sense (eg. Wisconsin, Indiana).

Many politicians use political straw man concepts like “income inequality” or “social justice” as justification to implement progressive ideals such as income redistribution via minimum wage increases.

But the reality is that raising the minimum wage doesn’t create a better society. It favors the minimum wage employee briefly, but ultimately only favors the political constituencies of the redistributors. What’s left is a citizenry more firmly seduced under a crony capitalist rule led by an oligarchy as opposed to a constitutional republic as the founders intended.

Additionally, progressivism left unchecked demonizes those who produce wealth and innovation that benefits society most and serves as an example of why minimum wage laws only encourages stagnation and makes living poorly comfortable.

If Illinois passes a $10 minimum wage I wouldn’t expect a significant change. It’s the old adage about how to boil a frog without it jumping out of the pot. Slowly turn the heat up and allow it to adjust to the new water temperature before it realizes it’s cooked.

Some businesses may leave the state, but most likely the price of a Big Mac or other goods will climb, negating the pay raise. And some employees will lose their jobs or other benefits. Ultimately, we’ll be back here in the next four to eight years discussing the next minimum wage increase, and the high number of people out of work.

I do wonder what would happen if Illinois dropped its minimum wage and allowed free market supply and demand principles to take over?

Perhaps that’s where our focus should be?

Reader Comments

Posted: Saturday, June 21, 2014
Article comment by: ronwood61

Mr. Caufield is again letting his "right wing" bias show again. He is skilled at slanting and omitting information. The Seattle $15 minimum wage goes up in steps, $10 and $11 next April and 3 to 7 years, depending on employer size, to reach the top wage. Sea-Tac has adopted the top $15 immediately but it only affects 1/4th of their 6300 people. And while one hotel has closed, another has started a massive multi-million dollar expansion. We are living in a supply and demand economy so, as long as people want a product or service, people will be employed to provide it regardless of their wages.
Nationally we had 8 minimum wage increases in the 70's, 2 in the 80's, 4 in the 90's, and 3 in the 2000's. The same arguments came with each of them and did not come true. Millions of people earning our current minimum wage qualify for and receive welfare which costs all of us in the taxes we pay to subsidize them. Let their employers pay them enough that we will not make up the difference.

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