A few days ago we wrote about the job losses starting to pile up in Seattle in the wake of that city's passage of a $15 minimum wage (see "Something "Unexpected" Happened When Seattle Raised The Minimum Wage"). In that post, we noted that seemingly no amount of empirical evidence would ever be sufficient to convince certain elected officials that setting artificially high labor rates would ultimately only serve to hurt the people at the lower end of the pay spectrum due to permanent job losses.
Seemingly no amount of empirical evidence can convince progressives that raising minimum wages to artificially elevated levels is a bad idea. Somehow the basic idea that raising the cost of a good ultimately results in lower consumption of that good just doesn't compute. Though it does seem odd that progressives in states like California lean heavily on higher taxes as a way to curb, for example, fuel consumption. Could it be that the left actually does understand the basic economics of the minimum wage debate but don't find the math behind it to be particularly "politically expedient" in certain instances?
Despite the futility of our efforts, we thought we would offer up one more example of minimum wage hikes killing jobs for low-income workers. This example comes from Washington D.C. For those not familiar, back in early June, the City Council of Washington D.C. passed legislation to raise the District's minimum wage from $10.50 per hour to $15.00 by 2020. Minimum wage in the District was already scheduled to increase to $11.50 in July 2016 and the remaining increase will be phased in over the next 4 years.
On the back of that increase, Mark Perry, of the American Enterprise Institute, decided to take a look at how the restaurant industry (often one of the hardest hit industries by minimum wage hikes given the disproportionate share of employees working for minimum wage) in Washington D.C. has responded to the minimum wage hike there. Perry took a look at BLS labor data for restaurant jobs in Washington D.C. compared to surrounding suburbs.
The picture pretty much tells the story:
BLS data shows that restaurant job growth in D.C. basically stopped for a period of time after the July 2015 minimum wage hike to $10.50. Then, after a brief period of growth in early 2016, D.C.'s restaurants actually started to shed a number of jobs heading into the July 2016 increase to $11.50. Meanwhile, restaurant jobs in suburbs surrounding Washington D.C. continued to grow in line with their recent history. As Perry points out, "The last time DC experienced restaurant job losses in five out of six consecutive months was 25 years ago in 1991, and the last time 1,400 jobs were lost over any six-month period was 15 years ago during the 2001 recession." Per the American Enterprise Institute:
New BLS data for restaurant employment in July for both the District of Columbia (city only, see dark line above, data here) and the surrounding suburbs in Virginia and Maryland (full DC MSA data here, the light blue line shows the MSA minus the city of DC) are displayed above and tell the story pretty clearly. Since the DC minimum wage increased in July 2015 to $10.50 an hour, restaurant employment in the city has increased less than 1% (and by 500 jobs), while restaurant jobs in the surrounding suburbs increased 4.2% (and by 7,300 jobs). An even more dramatic effect has taken place since the start of this year – DC restaurant jobs fell by 1,400 jobs (and by 2.7%) in the first six months of 2016 between January and July – that’s the largest loss of District food jobs during a 6-month period in 15 years. Perhaps some of those job losses were related to the $1 an hour minimum wage hike on July 1, bringing the city’s new minimum wage to $11.50 an hour. In contrast, restaurant employment outside the city grew at a 1.6% rate in the suburbs (and by 2,900 jobs) during the January to July period.
If expensive cities like Washington D.C. and Seattle are already having a difficult time digesting even the initial phases of their proposed $15 minimum wage we fear how a similar federal wage hike might impact less expensive states in the Southeast and Midwest portions of the country where current minimum wages are much lower.