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Seattle, San Francisco and Los Angeles have all recently passed $15 an hour
minimum wage laws government mandated price floors that guarantee reduced employment opportunities for low skilled and limited-experience workers, especially minorities. But those $15 an hour wage mandates are getting gradually phased in over time. Depending on the size and type of employer, Seattle’s $15 an hour minimum wage won’t take full effect until 2021 for all workers, Los Angeles’s $15 an hour minimum wage won’t take full effect until 2021 for all workers, and San Francisco’s $15 an hour minimum wage won’t be in full effect until July 1, 2018.
1. If minimum wage increases to $15 an hour generate net positive economic benefits (benefits that outweigh costs) for those cities as minimum wage proponents would have us believe, then why wait until 2018 (San Francisco) or 2021 (Seattle and Los Angeles) to take full advantage of those alleged positive economic benefits? Why force low-skilled workers to wait for up to six years before they can get the full benefits of the $15 an hour wage, when they could capture those benefits immediately if politicians and minimum wage advocates weren’t being so stingy and cruel?
2. Further, if a $15 an hour minimum wage generates positive net benefits for workers, why make a distinction between employers with more than 500 (25) employees and employers with fewer than 500 (25) employees, like in Seattle (Los Angeles). Employees have no control over the number of workers their employers hire, so why discriminate against workers who are employed by small businesses and make them wait up to three extra years in Seattle and one extra year in Los Angeles to gain the full benefit of a $15 an hour wage?
Bottom Line: If a $15 an hour minimum wage generates positive economic benefits for workers as proponents believe, then there would be no logical or economic reason to delay those benefits, and the $15 an hour minimum wage should be implemented immediately for all workers and for any size employer. On the other hand, only if a $15 an hour minimum wage generates net economic losses as economic theory clearly predicts, would it make sense to delay the full implementation of the price floor and have it phased in more slowly for smaller employers. In conclusion, the phase-in schedule for $15 an hour minimum wage hike, and the distinction between large and small employers, is really an implicit admission that the minimum wage generates net negative economic losses, especially for smaller employers.
As Byran Caplan so aptly observed in 2013 in his post “Phase-In: A Demagogic Theory of the Minimum Wage” (emphasis added):
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.
Most non-economists never even consider the possibility that the minimum wage could reduce employment. But if minimum wage activists were as clueless as the typical non-economist, they wouldn’t bother with a phase-in, they’d go full speed ahead. 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.
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