Tuesday, June 03, 2014

Seattle Minimum Wage Hike Already Hurting Businesses

SeaTac, a suburb of Seattle, recently decided to raise the minimum wage to $15 an hour and United Liberty tells us that employers in SeaTac have had to cut employee benefits to stay in business after the dramatic raise. In an interview with a publisher from Northwestern Asian Weekly, one employee describes how her company had to cut her benefits to counter the skyrocketing cost of wages: “I lost my 401k, health insurance, paid holiday, and vacation,” she responded. “No more free food,” she added. The wage hike is already hurting Seattle businesses, even though it has not been implemented yet.

The Washington Policy Center chimes in as well, showing how the minimum wage hike has discouraged small business expansion and kept small business owners from opening new businesses or hiring new workers.The Seattle Times also notes, “At the Clarion Hotel off International Boulevard, a sit-down restaurant has been shuttered, though it might soon be replaced by a less-labor-intensive cafe.
Interestingly enough, Amy Martinez starts the article off by declaring that, “For all the political uproar it caused, SeaTac’s closely watched experiment with a $15 minimum wage has not created a large chain reaction of lost jobs and higher prices…”

She justifies this dubious claim by noting that, while a small sit-down restaurant has closed, “…the nearby Cedarbrook Lodge…is undergoing a $16 million expansion.”

And therein lies the rub.

The Cedarbrook Lodge is 4.5 star luxury hotel and a minimum wage hike affects a 4.5 star luxury hotel very differently than a little mom and pop restaurant. This fact represents one of the strongest cases against raising the minimum wage: big businesses can shrug off minimum wage hikes. Mom and pop shops? Not so much. The argument can even be made that a minimum wage hike is an indirect form of corporate welfare, since it cuts into the competitive ability of big businesses’ smaller competitors.

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