Activists accelerate push for $15 minimum wage. Economists identify consequences.

Seattle Mayor Ed Murray has named a 23-member task force to make recommendations on a $15 minimum wage for the city. It’s a broad group, with representatives from business and labor, raising speculation that a clean recommendation may be out of reach.

Murray acknowledged that consensus between labor and Seattle’s business elite might be difficult to reach.

“There’s going to be strong disagreement among the individuals who agreed to participate,” Murray said. “I don’t know what the outcome will be.”

Yet, the effort begins as a good faith attempt to bridge the divide,

Business groups have been skeptical of big hikes in the minimum wage. But committee member Bob Donegan, speaking in part for the Seattle Metropolitan Chamber of Commerce, insisted “everything’s open; nothing’s decided.”

Murray has set an ambitious timeline, calling for a recommendation within four months and City Council action by the end of July. The most prominent face of the $15 minimum wage campaign, socialist Councilmember Kshama Sawant said in her statement on joining Murray’s task force, that she’s more impatient than that.

Given the laws governing placing an initiative on the ballot, I and the campaign are proposing that the Advisory Committee changes its deadline to the beginning of April rather than the end of June to produce a recommendation. A deadline of June, whether intended or not, would have the effect of making a ballot initiative impossible as the 21,000 valid signatures would need to begin to be collected no later than April. Given how critical this issue is for working people it is not acceptable to take away their democratic right to publicly debate and decide – including by a popular vote if necessary.

Good faith efforts notwithstanding, the activists behind the measure show little interest in delay or compromise. Sunday’s rally left little doubt about their goals and tactics.

“When we win $15 an hour, it will be because we kept up the pressure,” SEIU 775’s Sterling Harders told a cheering crowd, “and that is why SEIU 775 and Working Washington support” (Working Washington was the labor-backed group behind SeaTac’s $15 minimum wage initiative.) “This is the most important thing that my organization will be working on,” King County Labor Council executive secretary Dave Freiboth enthusiastically added.

…SEIU 775, the Labor Council, and other unions are backing, a campaign preparing to launch a minimum wage ballot measure “if the politicians fail,” promises Socialist Alternative political director Phillip Locker.

Murray has said he does not want the issue on the ballot, a position shared by many in the business community and on the task force. The activists, however, appear not to share the goal.

The Seattle Times coverage of the rally provides some important context:

Anthony Anton, the [Washington Restaurant Association] president and CEO, said that “lost in the conversation” is that restaurants here “already have the highest labor costs in the country” at 36 percent of sales, in contrast to 33 percent nationwide.

He said that matters a lot in an industry with a 4 percent margin of profit.

Those higher labor costs have clear consequences, including lower staffing in Washington full service restaurants, as we noted in our report on SeaTac’s Proposition 1.

Murray, conflating issues that ought not to be combined, calls his task force the Income Inequality Committee. Inequality, however, is neither the focus of the $15 wage campaign nor is it the most pressing issue facing the city, state, or country. Nobel Prize-winning economist Gary Becker, says it best in a recent post:

The biggest problem for the American economy currently is not the level of redistribution, but the slow rate of growth because of depressed investments. Greater investment in technology and capital is a necessary ingredient of better growth. Some of these investments may reduce the demand for less skilled labor. This indicates that the best policies are those that increase investments and at the same time add to the earnings of lower income individuals and households. Greater investment in education and other human capital of those who do not invest a lot in themselves would be a prime way to do both.

One last word from economist Mark Perry on the effects of the wage hike.

You can make it illegal for an employer to pay an unskilled worker less than $7.25 or $10.10 per hour, but you can’t legally force private employers to hire entry-level workers at those artificially-high, government-mandated wages, and you can’t prevent employers from reacting to higher minimum wages in ways that hurt unskilled workers like: a) cutting existing workers’ hours or laying them off, b) reducing non-monetary forms of compensation, and c) investing in labor-saving equipment that substitute automation for unskilled workers.

Policymakers cannot afford to disregard the stark consequences of wage demands on the very people they represent.

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