Minimum Sanity in Seattle: A City Council Unmoored from Reality
Impose absurd burdens on businesses, and they will either trim back their workforce, limit that workforce’s benefits, impose new costs to consumers, or enact some combination thereof.
Having lived in the Seattle area for more than half a century, my family has enjoyed some wonderful meals at Ivar’s Salmon House and other Ivar’s restaurants. It’s a summertime tradition for us to gather for chowder and fried clams at the little Ivar’s outlet at the southern end of Lake Washington.
So, when National Public Radio aired a report last week that Ivar’s was raising its minimum wage to $11 per hour, while simultaneously raising prices by 21 percent and eliminating tips for its servers, I listened closely.
Dan Weisman of Marketplace Morning Report closed his report with this line: “The end of tipping — a move the architects of Seattle’s minimum wage law may not have seen coming.”
YA THINK? The “architects” of what eventually will be a mandatory $15 per hour minimum wage, the Seattle City Council, are the usual assortment of professional agitators — government lawyers, gay rights activists, “advocacy journalists,” old Ralph Nader loyalists, Democratic Party hacks and a member of “Socialist Alternative, in solidarity with the Committee for a Workers’ International, which organizes for working-class interests on every continent.”
One guy was a financial counselor and another sold insurance for a while. There is one fellow who served as a police detective and small business owner as well as a “global anti-poverty activist.” That appears to be the sum total of the business experience of this collection of well-meaning “community activists,” all of whom seem to have drawn their livelihoods from government entities funded largely through the taxes of businesses with which these activists have had virtually no professional experience.
The business climate in what was once the jewel of the Pacific Northwest, nicknamed “The Emerald City” because of the natural beauty surrounding it, is going from bad to worse. Slate’s senior business and economics correspondent, Jordan Weisman, is hardly a conservative, yet he has noted the potentially devastating danger of Seattle’s minimum wage mandate:
While the fight for $15 has made for great politics — in Seattle, both mayoral candidates only adopted the idea last year after it was popularized by a socialist city council candidate, Kshama Sawant, who ultimately won her race — it’s built on dubious economics. The truth is, nobody has any idea what would happen if the minimum wage jumped that high. But there are good reasons to worry that results would be ugly.
And now the national media are wondering how a company that raises prices 21 percent, eliminates tipping and hikes its hourly wage is going to compete after the insistent progressives of Seattle’s political leadership impose a ridiculous burden on it. Really?
At the Family Research Council, one of our most prominent concerns is the way ordinary families are making it in the current economy. With sluggish economic growth, this concern is only growing. But the outcomes of tight business budgets can be counterintuitive. My colleague Dr. Henry Potrykus of our Marriage and Religion Research Institute has argued that the data show that “when corporate budgets are tightest and businesses are failing more frequently, firms do not rid themselves of their more expensive labor, married workers. Instead, less-expensive singles lose jobs more frequently.”
Why would businesses shed less expensive workers when budgets are tight? Remember that employers are human beings. Many are probably more hesitant to fire a long time employee with several kids and years of experience than to lay off a few unexperienced 19 year olds with no dependents. Unfortunately, a steady job is just what many young workers need to grab the bottom rung of the economic ladder. This may help explain the high unemployment of black male teens, who are most likely to be hurt from a hike in the minimum wage.
Reality exacts a price: Impose absurd burdens on businesses, and they will either trim back their workforce, limit that workforce’s benefits (e.g., no tips), impose new costs to consumers (e.g., a 21 percent hike in prices), or enact some combination thereof.
Another colleague, FRC’s CFO Paul Tripodi, has worked for several major corporations and is a sharp observer of the business climate. As we discussed the news about Ivar’s, he noted that many restaurants are installing electronic-ordering devices at their tables. What’s to stop Ivar’s and many other Seattle restaurants from simply eliminating waiters altogether?
These basic facts have eluded the Seattle City Council, which is only beginning to feel the effects of its attempt to disrupt reality with its petulant ignorance. To paraphrase my friend and old boss, former Congressman Bill Sali (R-ID), you can pass a law to repeal gravity, but it might not be a good idea to try jumping off a cliff.
Schwarzwalder is Senior Vice President of the Family Research Council and the former director of corporate communications for the National Association of Manufacturers.