Just over a week ago, I was at the Stranger with my fellow Port of Seattle Commissioner Position 3 candidates and the question of minimum wage came up. Both of my opponents are for increasing the minimum wage to $15, but I am not. It's not because I don't care about the minimum wage workers, actually that couldn't be more from the truth. Today I'm going to explain my views on minimum wage and why I believe it shouldn't be treated as a welfare program.
First for a little background. If you haven't heard, there will be a union backed initiative on the ballot in the City of SeaTac to raise the minimum wage to $15. This would increase the minimum wage from the highest statewide minimum at $9.19 to the highest minimum wage in the country. I believe this is largely union retaliation against the port because they don't require vendors and contractors to use union labor. There is also a legal grey area, can the City of SeaTac pass regulations that affect the Port of Seattle, which is another local jurisdiction of equal standing? For the sake of this discussion, I will assume it can.
There are several reasons given by the organizers for this proposed increase, so I will go though them one by one.
The first assertion is that workers should be a fair wage. What is a fair wage? I believe this is determined by negotiations between an employer and their employee. The labor union exists because the employees have grouped together to collectively negotiate. I think that is great, employees should be free to form unions to help with their negotiations. However, raising the minimum wage isn't negotiation. That is saying, under threat of force from the government you will pay me at least $15 per hour. (Ironically, the minimum wage increase exempts union contracts, which encourages the employer to force the formation of a union so they can negotiate a lower pay rate.) One thing not being accounted for is that there is no requirement to have any employees!
Sure, this would be great for the airplane fullers, the baggage handlers, and other essential airport staff. But what about the non-essential staff? Say, the restaurant workers. This could easily make it too expensive to keep restaurants open outside of peak hours. Because of the increased labor costs, you'd likely see many of the under-performing establishments close, and quite a few more severely limit their hours. Outside of the airport, affected businesses would likely shutdown. With such a localized minimum wage increase, it would be difficult to compete with businesses just two miles away. So far, we have better pay for workers, but fewer jobs and hours for the non-essential ones. So at best, essential workers are in the same place, and non-essential are only slightly worse, right?
Wrong. What would you do if you lived in South Seattle, were working at minimum wage, and knew you could hop on a light rail and get paid $15 an hour instead? You'd do it! There will be a huge bump in the number of people applying for jobs in SeaTac. Sure, not all of them will get them. In reality, the surrounding neighborhoods might even be forced to raise their pay to $11 or $12 per hour. If you haven't read The Grapes of Wrath by John Steinbeck I'd recommend doing so. That book does a fairly decent job describing the problem. See, when you have such a large group of people all competing for the same jobs, it becomes much easier for employers to mistreat their workers. You are immediately replaceable after all!
Also, don't forget what this does to unskilled applicants. See, if there are plenty of people applying for the job, and you need to get at least $15 per hour (plus various taxes and other employment costs) worth of value out of each employee, you're only going to be able to employee workers with $15 per hour skills. This significantly reduces the availability of jobs for those without experience. This might also explain why unemployment is so high for young people in this country. You can't gain experience without a job, and if all the jobs require experience your just out of luck.
The airport workers at San Fransisco International Airport (SFO) get almost $15 per hour, isn't it fair that the workers at Sea-Tac are paid the same? Quick, do a cost of living comparisonin between SeaTac and Burlingame. Oh right, you'd need to be making $23.46 per hour to have the equivalent pay as our $9.19 minimum wage. So, by the same argument we should drop our airport worker's pay down to $5.55 per hour. It's only fair that they get payed the same as their counterparts at SFO right?
Using a minimum wage to set a "fair" wage doesn't work. Not all workers are equal, and there is no chance to move up if the minimum is so high that you can't get into the labor market.
"Well ok, we don't want our workers to be living in poverty! Shouldn't we pay them enough so they can live?" Last time I checked, minimum wage was actually enough to rent a studio downtown, pay utilities, and buy food. Sure, it can't support a family, but hopefully you won't be in one of these entry level jobs forever. But that isn't what we are debating here. Above I asserted that raising the minimum wage reduced the number of available jobs and available hours. So, by increasing the minimum wage, we are actually increasing poverty. Sure, the people who keep their jobs will be better off. Isn't our real goal to ensure everyone has enough so they can live, not just those fortunate enough to find work?
UPDATE: Many people have read this article and determined that I am a socialist. I assure you, that couldn't be farther from the truth. This article is written on the premise that government must provide a social safety net. The following section describes the only way I believe government can provide that safety net without significant management overhead and corruption. I believe that safety net programs should be provided by private charity, however the majority of voting citizens disagree. Unless there is a mass change in sentiment, our government will be involved in social safety net programs for the foreseeable future.
If that is really the goal (and I think it is a noble goal to work towards, but I don't believe it is the role of the government) we should instead be considering a Basic Income. The idea behind a basic income is that every so often (say every pay period) the government cuts every citizen a check equal to the basic amount of income needed to live. This income should be enough to cover your rent, utilities, and food. You might have to live in a low cost location, but there won't be anyone without a place to sleep and food to eat. All of your earned income would then go to increasing your quality of life. This both ensures no one goes hungry even if they can't find work and preserves the incentive to work. Also, it would give employees significantly more leverage in negotiating their pay, as loosing your job wouldn't mean loosing all your income. Unfortunately the basic income concept is a little too socialist to be politically viable in our lifetime.
To conclude, I am not against working to raise our poorest citizens out of poverty. I also believe that there are workers being paid minimum wage who deserve more. But, I don't agree that raising the minimum wage in the City of SeaTac will achieve the desired goals. I think the group backing this initiative needs to spend some more time thinking about the unintended consequences and work to identify a solution without such disastrous consequences to our economy and inexperienced workers.