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The same Seattle City Council that passed a $15 an hour minimum wage ordinance a few years ago and assumed that a large increase in wages for low-skilled workers would have no negative employment effects just approved a new large tax on sugary drinks such as soda pop assuming that it will reduce consumption of those beverages.
Conclusion: The Seattle city council understands the Law of Demand when it comes to sugary drinks, but ignored that economic law when it passed the $15 an hour minimum wage law. Or perhaps the council members did have some understanding of the negative employment effects of a $15 an hour minimum wage, and that’s why they decided to phase-in the minimum wage increases over many, many years. As Bryan Caplan explained several years ago in a post titled “Phase-In: A Demagogic Theory of the Minimum Wage” (my emphasis):
If you raise the minimum wage to $15 today and low-skilled unemployment doubles overnight, even the benighted masses might connect the dots. A gradual phase-in is a great insurance policy against a public relations disaster. As long as the minimum wage takes years to kick in, any half-competent demagogue can find dozens of appealing scapegoats for unemployment of low-skilled workers.
The fact that activists’ proposals include phase-in provisions therefore suggests that for all their bluster, they know that negative effects on employment are a serious possibility. If they really cared about low-skilled workers, they’d struggle to figure out the magnitude of the effect. Instead, they cleverly make the disemployment effect of the minimum wage too gradual to detect.
Alternatively, if the Seattle city council had gradually phased in its new sugar tax over a ten-year period like it did for the $15 minimum wage (for some employers), the effects of that higher tax would be minimal.
Proposal: If a city council really believes that a higher minimum wage will generate net benefits for the local community, it should enact such a law to take effect immediately. After all, why wait to get those supposed benefits? The Fight for $15 crowd should also demand that those laws, when enacted, take effect immediately. Why delay the benefits of higher wages for low-skilled workers when they could get those benefits sooner?
Q1: Are there any valid arguments that would lead to the conclusion that the Laws of Supply and Demand apply somehow differently to sugary beverages than to unskilled labor? If so, let’s hear about those arguments….
Q2 (new): Doesn’t a gradual phase-in of a higher minimum wage over periods as long as ten years implicitly confirm that minimum wage advocates know there are negative employment effects of a higher minimum wage?
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