A group of economists recently released a research paper that suggested Seattle’s increase to a $15/hour minimum wage has had a negative impact on the lowest skilled workers. It would seem the market clearing rate for unskilled labor out there is around $13/hour. Up to that level, hourly workers largely benefited from the gradated rate increases, in aggregate. Past that, the report implied the well-intended $15 minimum wage has had some ironic consequences on a decent segment of the local unskilled workforce.
Intuitively, this makes sense.
A major problem with the debate about minimum wage laws is it assumes companies pay workers for their time. They don’t. They pay them for the economic value of their labor, and time is simply a way of measuring it. We can legislate an hourly price floor all we want, but we can’t dictate the actual hourly value of individual workers. If someone is worth, say, $12/hour to an employer, the government can mandate $15/hour all it wants. That person will eventually be out of work, because no business is going to continually pay them more than they are worth.
(Read the full article as previously published in the Montgomery Advertiser on July 10th, 2017)