What is the worth of a job?
Well that’s determined by all sorts of variables – how much the person seeking the job is willing to take, how much the person wanting the job done is willing to pay, the scarcity or abundance of labor, etc.. And so in a free market, when a job is open it is up to the person seeking to have the work done and the person seeking a job to decide what it is worth to each of them. If they can reach agreement, then the job is offered to the person seeking the job. If agreement can’t be reached, then the job goes unfilled.
The bottom line is that no outside party can decide what that job is worth – in that mythical free market, that is. However, we don’t have a free market and legislators, trying to buy the good will of voters with other people’s money, often decide they know what every job is worth at a minimum. Thus the minimum wage.
Well this is anecdotal, I know, but it certainly seems to support every negative we here at QandO have been talking about for years. In the long run raising the minimum wage only raises the cost of labor. It does not change the worth of a job. Ever.
SeaTac workers are learning that the hard way:
Last January, SeaTac implemented a $15 per hour minimum wage for hospitality and transportation workers. The consequences to the drastic hike in wages are just beginning to be realized—and it’s not pretty.
“It sounds good, but it’s not good,” the woman said.
“Why?” I asked.
“I lost my 401k, health insurance, paid holiday, and vacation,” she responded. “No more free food,” she added.
“The hotel used to feed her. Now, she has to bring her own food. Also, no overtime, she said. She used to work extra hours and received overtime pay.
“What else? I asked.
“I have to pay for parking,” she said.
“I then asked the part-time waitress, who was part of the catering staff.
“Yes, I’ve got $15 an hour, but all my tips are now much less,” she said. Before the new wage law was implemented, her hourly wage was $7. But her tips added to more than $15 an hour. Yes, she used to receive free food and parking. Now, she has to bring her own food and pay for parking.”
SeaTac is a small city—10 square miles in area and a population of 26,909—with an economy almost exclusively defined by the Seattle-Tacoma International Airport. Five months into the implementation of a $15 minimum wage and it appears that a deep sense of regret has already flooded the city and workers who should have “benefited” from the terrible economic policy.
Meanwhile, as the largest city in the Pacific Northwest and one of the fastest growing major cities in America, Seattle is on the verge of following in SeaTac’s woefully unfit footsteps. Seattle Mayor Ed Murray’s $15 minimum wage plan includes a phase-in period of three to seven years and makes no exception for business type or size. Murray’s plan elicited back-lash from prominent Seattle businesses owners and economists alike.
Like we’ve said, increased costs associated with the job will likely be passed along to either the customer or the worker or both. Here you have two perfect examples of how perks that helped workers and were of value to them (and for which they didn’t have to pay taxes) fell victim to some interfering government body unilaterally raising the cost of labor. The worth of the job done didn’t increase at all. Consequently, businesses looked at ways to compensate for the increase in labor cost. As for the decrease in tips? Well people tip well because they know most waiters and waitresses don’t make much for a wage. However, when they’re making $15 an hour, suddenly there isn’t a great or compelling reason to “help them out”. Tips decrease. Why tip someone for doing their job when they’re making that kind of money hourly. And, just as likely, prices have gone up to cover this expense. Consequently, overtime is limited, etc.
Its not that this is something hard to figure out. But the socialists among us never get past the feelgood part of it, because, well, because math is hard and economics is absurdly hard … or something..