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Socialism Comes To Seattle
Submitted by Pater Tenebrarum via Acting-Man blog,
Seattle Bows to Demand of Socialist Councilwoman Kshama Sawant
Economic science has long shown that labor is not magically exempted from the laws of supply and demand. Therefore, minimum wage laws hurt rather than help workers, especially those with few skills or those just starting out, who are on the lowest rungs of the ladder. If one wants to raise youth unemployment and price unskilled workers out of the market, there is no surer way than introducing a minimum wage – especially one that is far higher than what the market can bear.
Note that a great deal of so-called 'pro labor' legislation that instituted wage minimums has only belatedly adjusted the legal minimum wage to levels the market economy was already able to provide, due to the increase in capital invested per worker. If the extent of the legally mandated minimum wage does not exceed what the market can bear, it mainly serves to polish the image of politicians, while the harm is at least limited. This is however not to say that there is no harm done at all by the introduction of such wage price controls, even if the levels seem reasonable.
After all, the economy is subject to frequent booms and busts under the current monetary regime, and if wages are inflexible to the downside, unemployment will tend to soar during the bust phases. The huge unemployment rates during the Great Depression were a direct result of president Hoover 'persuading' companies not to drop wage rates, in spite of a sharp fall in prices and a genuine money supply deflation.
Seattle is one of the few municipalities in the US boasting of an openly socialist council member, Ksahma Sawant. As the author of this article at Forbes rightly notes, it is quite astonishing that this purveyor of bad economics (she not only supports minimum wage laws, but also rent controls and it seems she wants Amazon to be nationalized as well) is actually teaching an economics course at the Seattle Central Community College.
As a politician, one of her central demands was the introduction of a $15/hr. Minimum wage in Seattle. The city council has now bowed to this demand, a decision that is likely to prove extremely destructive, especially to small businesses (interestingly, businesses have been allowed to 'phase the wage in over a three to seven year period', a fact that immediately belies the assertion that this legislation won't hurt business. If it is so harmless, why can it not be adopted right away?). NBC reports:
“The Seattle City Council on Monday unanimously approved a $15 hourly minimum wage — the highest in the nation.
The ordinance, which phases in the increase over time, passed a committee last week with a few changes. It would take effect next April and allow a sub-minimum wage for teens.
The ordinance was drafted by an advisory group of labor, business and nonprofit representatives convened by Seattle Mayor Ed Murray. It would phase in wage increases over three to seven years, depending on the size of the business and employee benefits.
The City Council voted 9-0 in front of a sometimes raucous audience that frequently interjected cheers, applause and shouts of "Shame on you!" as the council debated several changes to the measure. Seattle's higher minimum wage would surpass San Francisco's minimum of $10.74 an hour.
[…]
Some small business owners worry that a higher minimum wage could put them out of business.
Meanwhile, a group called 15 Now led by Socialist Seattle City Council member Kshama Sawant is collecting signatures for a ballot measure that would create an immediate wage hike for large businesses and a three-year phase-in for small business.
"Our victory is not complete, but we have fought until the last day, the last hour, against all the loopholes demanded by business," Sawant said before the council vote. "$15 in Seattle is just the beginning."
(emphasis added)
Ms. Sawant has actually studied economics, which makes this all the more astounding. Anyway, she and her followers are certain to be taught a real life lesson in economics now. Unfortunately, many small business owners and their employees will lose their livelihood as a result. Ms. Savant herself has of course nothing to fear in this regard, as her income is paid by taxpayers.
Kshama Sawant, raising her fist in the well-known socialist greeting
(Photo by Elaine Thompson, AP)
The Downward Spiral is Already Underway
Seattle seems eager to become the next Detroit. As 'United Liberty' reports, the negative effects of the minimum wage law can be ascertained already, as the $15 minimum wage has been introduced in advance in the Seatac suburb of Seattle. Predictably, the groups that suffer the most from the negative consequences of the new legislation are workers themselves and small business owners.
“The Emerald City may witness the economic dangers of hiking the minimum wage to $15/hour sooner rather than later. SeaTac, a suburb of Seattle, hiked the minimum wage for certain service industry employees to $15 at the beginning of the year, and there are already signs that the sudden increase is having a negative impact.
Earlier this month, Seattle voted to raise its minimum wage gradually to $15 by the year 2020. Unlike the SeaTac wage hike, Seattle’s hike will apply to all businesses.
But 15 minutes south near the Seattle-Tacoma International Airport, employees are already seeing the negative effects of such a hike. A February report from the Seattle Times revealed:
“At the Clarion Hotel off International Boulevard, a sit-down restaurant has been shuttered, though it might soon be replaced by a less-labor-intensive cafe… Other businesses have adjusted in ways that run the gamut from putting more work in the hands of managers, to instituting a small “living-wage surcharge” for a daily parking space near the airport.”
[…]
“Are you happy with the $15 wage?” I asked the full-time cleaning lady.
“It sounds good, but it’s not good,” the woman said.
“Why?” I asked.
“I lost my 401k, health insurance, paid holiday, and vacation,” she responded. “No more free food,” she added.
The hotel used to feed her. Now, she has to bring her own food. Also, no overtime, she said. She used to work extra hours and received overtime pay.
What else? I asked.
“I have to pay for parking,” she said. I then asked the part-time waitress, who was part of the catering staff.
“Yes, I’ve got $15 an hour, but all my tips are now much less,” she said. Before the new wage law was implemented, her hourly wage was $7. But her tips added to more than $15 an hour. Yes, she used to receive free food and parking. Now, she has to bring her own food and pay for parking.
[...]
The Washington Policy Center, a free market think tank, said the passed-but-not-yet-implemented wage hike is already affecting small businesses in Seattle:
“After decades in Seattle, Northwest Caster and Equipment recently made the difficult decision to move the business to unincorporated Lynnwood, according to a report by KOMO news. The owner of the family business blames Seattle’s increasingly difficult business climate for the move: “It just seems like increasingly the city’s become a more difficult place to do business.”
The city’s proposed $15 minimum wage was tops on the list of complaints. “If I’m going to bring someone in on an entry level, I’d prefer to start them out where I’d like to start them out, rather than having that dictated to me.”
A commercial property landlord echoes those concerns about the $15 minimum wage, noting several tenants have signaled they may not renew their leases if it becomes law: “It’s just too expensive to operate in the city.”
And in a story today, KUOW reports that small businesses throughout the city are panicking over the super high minimum wage. Multiple small business owners told KUOW they are holding off on opening new business or expanding their current business in Seattle, while others said they are delaying plans to hire new workers.”
(emphasis added)
The problem with minimum wage laws is not only that they are economic nonsense bound to lower growth and destroy job opportunities for young and unskilled workers. A major problem is that they represent an infringement of liberty. As Dr. Machan writes on this point:
“[...] being entitled to a minimum wage is actually unjustified, even if the law affirms it, because it violates the rights of individuals to trade freely—one of the implications of their right to liberty. If people freely enter into an employment relationship that specifies certain work provided for a certain wage, this isn’t something the law may void, since it is their right to do so; the minimum wage law violates this right.”
Most people look at minimum wage laws only from the perspective that they force employers to pay a certain wage to the least productive employees. They forget that they also force workers not to offer their labor services below the prevailing minimum wage rate. And yet, such workers undoubtedly exist, especially in light of the fact that they may otherwise simply not find any employment at all.
Conclusion
Seattle's city council has made a grave mistake by bowing to the demands of the socialist faction. Many small businesses will be forced to close or move somewhere else. Since small businesses create the vast bulk of new jobs, the Seattle city council may eventually not only find itself with a shrinking tax base, but also a growing unemployment rate. This can be expected to be accompanied by rising crime rates and growing strains on social services.
Politicians cannot repeal the laws of economics. They might as well try to repeal gravity or order the sun not to shine. And yet, basic economic lessons seemingly need to be retaught over and over again. Unfortunately, this usually happens at a great cost, as these interventions inevitably cause misery for countless people.
Socialism – ideas so good, they have to be mandatory.
(Cartoon by: Mike Lecter)
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Next up: Seattle Council Bureaucrats vote themselves a FAT RAISE since wages are rising so fast in Seattle prefecture.
Seattle Council Bureaucrats decide to lower THEIR Pay to the unanimously agreed upon 'Living Wage' of $15/Hr.
The fact that the Council 'public servant' Bureaucrats are paying THEMSELVES 400% of their proposed 'Living Wage' in part from money expropriated from People making LESS then a 'Living Wage' should be a clue as to what is really going on...
Minimum wage is socialism and no maximum wage is heaven on earth? What a douche you are.
IF $30/hour x 50 weeks = $30,000/Year is a 'Living Wage' then why are the Seattle Council Members paid 400% more than a 'Living Wage'?
Why don't the Seattle Council Members concider lowering their own compensation and the compensation of ALL Other Bureaucrats and Civili Servants to this 'Living Wage' so that People making a less than a 'Living wage' might keep more of that deficient wage rather than be taxed so highly?
It sounds like the Council Members are paying themselves a 'Living Large Wage' in part by expropriating money from Persons making less than a 'Living Wage'.
'Seattle to become the next Detroit'. I had no idea that Detroit was brought low by Minimum Wage. I always thought that Detroit was destroyed by the short-sighted stupidity of US car makers protected for too long by an over generous state. Silly me.
never happen NOT famous last words this place on the suface is THRIVING
Recap of the stupidity in this thread:
1. Ayn Rand had any kind of coherent and cohesive life philosophy which lead her to a happy and successful life.
2. Labor wages are dictated simply by the 'law of supply and demand.' Freshman econ students hopefully can give a more coherent and intellectually intelligent response.
3. 'Capitalism' rules! Socialism sucks! I have no idea what this even means and talking in such generalities means nothing.
4. Why not raise the minimum wage to $30 or $100/hr etc? I had an econ professor in my PhD program throw someone out of the class for such partisan nonsense instead of actually trying to evaluae the marginal effect and what effects it might have.
5. Market will regulate itself and there is no to little reason for 'fair labor' laws. Yeah sure. My grandfather experienced that firsthand in the 30s during as a wildcat strike leader in his textile mill in PA. He got put in the hospital after he got hit on the head by an iron rod which gave him a nice scar for the rest of his life, his house got firebombed, and the police did nothing because big shock in Reading, PA, they were in the take of the large industrialists including the Reading Railroad who are vehemently anti-organized labor and had been for a long time.
6. Businesses will should ideally just compete on the quality of their good/services. And the 'best man should win' and a complete other raft of idealistic nonsense.
The fact that your grandfather got hit in the head and his house firebombed, terrible as they are, have nothing to do with the existence of labor laws. Those actions were undoubtedly contrary to existing law in relation to violence.
There may well have been a problem about the application of the law against violence. If so, why would you then assume "labor laws" to prohibit the same thing would be enforced?
The fact that your "econ professor" threw someone out of their class for raising that reasonable question suggests your professor was highly partisan and not willing to engage in rational discussion.
You don't seem to grasp the basic fact that this misguided and completely warped notion that labor is free to negiotate with capital owners in a straightforward manner. It is why hardcore Rand advocates and any advocate of a 'pure capitalistic' system are idiots are the irony is they are just as foolish as the 'socialists' as they mock on the left.
Labor laws aren't generally enforced in the US? Are you seriously making that statement?
Yeah the econ professor threw the person out of class (Univ of Michigan) becasue the student constantly went on tangents and other issues that had little/nothing at to the discussion or the problem set. No one in this debate about the minimum wage is even arguing for a $30/rate let alone a $100/rate. It is a complete non-starter and a waste of everyone's time to focus on nonsense.
You don't seem to grasp the basic fact that breaking and/or not enforcing laws is not inherent nor limited to capitalism.
Plus if you would really want to fix it, you would need to call for the uniform judicial application of the rule of law (and I'm still waiting for someone to point out concisely how Ayn Rand argued against that.)
Further, declaring something ($30/hr minimum wage) a "non-starter" without giving the slightest indication why, or what level would just by shy of becoming a non-starter for that matter, is clear indication you do not possess the arguments to defend that statement.
There is a marginal impact of minimum wage increases on employment and yeah minimum wage impacts small businesses a lot more than large businesses but if large businesses want to put small competitors out of business focusing on the minimum wage isn't the way they do. They do it through several other means including licensure, inspections, and a host of other means usually which have a much higher price tag than a marginal raise in the minimum wage.
The Great Emerald City, of the '50's. 60's and 70's, changed during the early 80's and, over the next 30 years became puke green. Maybe that's why it's one of the model cities for Agenda 21. The people there are a sad commentary reflecting everything that has gone wrong in this country.
puke green
It's teal!
well, i dunno they whined and moaned here when they took the state out of the Liquor business....they gnashed their teeth and pissed and groaned when smoking was outlawed at bars and cafes.......lets wait to see if the sky falls before we yelp and weep any louder. Persoanlly i find it hard to beleive that anyone could iive on $15/hr....the policies of Trillions for 'endless war' and TBTF is what will destroy small business
The US is a democrtic society where people can vote money for themselves. What is wrong with free money, ha ha ha !
I live on an island a stone throw from Seattle. My wife hired two overweight women to get rid of the weed from the garden and they charged $22 an hour. A promise of geting it done in two days turned into a week with no end in sight. My wife complained they took long lunch breaks and afternoon tea break to just sat there enjoying the view. I got rid of them and pulled the weeds in two HOURS. Then I have to pick up the weed they left on the side of the road.
Work ethic ? What work ethic ? People take advantage of you if you let them. And I bet they do not pay tax on the wage neither. My collague , who deviced a model for brain tumor, gets paid less than $22 an hour.
you don't need a minimum wage to do socialism right
you need to provide people with a living wage
I see where the bitch is an import {from India}. Don't we have enough of our own commies without having to bring in more from overseas? Oh, but diversity is our strenght! Immigrunts add so much to our country! Hey, they don't call it the left coast for nothing. What did you expect. And just today, the kenyan is talking higher taxes ON THE RICH to pay for reduced student loan payments. These people are all cut from the same cloth, and it is a red banner.
"Economic science has long shown..........."
economic science?
once we aspired to improving people's lives, now we accede to driving them deeper into poverty. 7 dollars an hour and dependent on free food and tips, capitalism at its finest
Amusing vitirole from some individuals on here for a wage rise of a few Dollars more. The US economy is screwed for far greater reasons that what poor people get.
Yes, usual story blame the helpless to justify having no minimum wage, sounds great until YOU actually have to go for another job and find you are competing against immigrants etc who have the same skills and will work for half of what you will work for, you end up with a population that can never buy a home and ends up living from week to week....just what your employer wants.
It's often said that one picture can tell a thousand words. That cartoon fits the bill perfectly.
This might be the ultimate in an entitled society. I deserve to make $15 an hour flipping pink slime burgers and picking my nose! Clearly this is how great societies are built!
She's a cute babe. Too bad she's a commie bitch.
First shipment of robo burger machines to Seattle in 5-4-3-2-
As it should be.
Says a lot about a man's state when technology that can replace him and improve efficiency is witheld out of the need of goodwill and welfare.
I don't need some under/over-educated dumbass flipping my burgers. I'd just as well defer the job to AMD, ARM, or Intel.
The world doesn't owe you anything for slipping out of your mother's vagina. Prove your worth.
Buy stock in robotics companies...they love forced high wage and HC...makes their products extremely cost efficient.
The image where the fat man steals from less-fat people, to explain "socialism" is kind of ironic.
It's like pointing at the sky and yelling it's colored red.
"...and allow a sub-minimum wage for teens."
In other words - more cocknballz where the youth can be even more exploited by socialist tyrrany.
EAT THE YOUNG!
Can't you hear the diesel bus engines revving in LA ready to take anyone that wants to work for double pay up in Seattle. Free bus ticket North to the promised land of pot and coffee.
Calling all white supremacists....you got a new target in Seattle....look at that smug brown face and remember it well.
The law of supply and demand? Does it apply to the marginal rumneration rate of CEO's of major companies? Dick Fuld earned about $500 million over twenty years at Lehmann. Do you think it would have been impossible to find someone with suitable skills without paying more? Do you think the extra $3-4 million paid to CEO's over the last few years means they did the work of 250 part-time employees that could have hired for the same money, in addition to their regular work? Does commerical real estate tank when there is a 25% vacancy rate for office space? [NO]. Things are not as simple as some people make it seem.
We will not, in our lifetime, ever have upward market pressure on wages (thus not including teachers, doctors, lawyers and about 50% of all jobs) for regular type jobs that encompass the vast majority of the labor force: automation and robots are only at the beginning of an S-curve that will skew the powers of production so heavily in favor of capital over labor that only a third of the population will have gainful employment (it's not that much over half right now). Ironically, our powers of production will be greater than ever, but there will be no call to actually produce more as half the population lacks the means to consumer or produce.
What will Starbucks do? Are the Barista's making more than 15 bucks an hour? Maybe they are as I have no idea but I wouldnt' think so. Seattle restaurants must be thrilled. Hostess, wait staff, dishwasher all making 15 bucks an hour at a minimum. Hmmmm.... I can't imagine that will be good for business. Extrapolate those increases to the cost of food at that point I don't see too many eating out. Damned sure will cut the tips from 20% to next to nothing. It will be a good test case I suppose but I would be careful of what I wished for if I were one of the one's depending on $15 per hour though having no discernable skill. If it leads to half of those minimum wage workers losing their jobs all together, is that considered a victory?
Always suspicious of a great new law (victory) that takes years to enact as opposed to beginnig effective immediately . If it's a no brainer great idea why wait?