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Law of Supply and Demand Upheld in Seattle Minimum Wage Case

It turns out that not every law liberals don’t like can be overturned by the Supreme Court.

In 2014, Seattle, following the instructions of liberal activists, agreed to raise its minimum wage to $15/hour.   It turns out this is doing exactly what every conservative, free market economist expected it would:  Reduce jobs and work hours for those making at or near the minimum wage.

A University of Washington study has found that the new law has resulted in an average net LOSS of $125 per month for low wage workers.

The lost income associated with the hours reductions exceeds the gain [in hourly rates],” the report says. “The average low-wage employee was paid $1,897 per month. The reduction in hours would cost the average employee $179 per month, while the wage increase would recoup only $54 of this loss, leaving a net loss of $125 per month (6.6%), which is sizable for a low-wage worker.

The economics aren’t complicated.   The real minimum wage is always zero.  Employers can always opt to hire less employees, have them work less hours, or use more automation, rather than paying entry level workers more than their labor is worth.  In Seattle, they are doing just that.

The only time a minimum wage law is harmless, is when its low enough that the “real” market minimum wage is higher than the law mandates.  In my rural Colorado town, in the midst of a fracking boom, fast food restaurants routinely advertise entry level positions a couple of dollars over the minimum wave.   We have an organic minimum wage that works considerably better than the state mandated one.

It doesn’t matter how many #FightFor15 hashtags you tweet, or how many rallies you hold.  Adam Smith still wins.   And sadly, in Seattle, low wage workers are losing.

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Darrick Johnson

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