Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

How Seattle’s $15 Minimum Wage is Creating More Unemployment

  by    3   2

A new study by the Evans School of Public Policy and Governance shows Seattle’s minimum wage increase has also increased unemployment. No surprise there given what happened in Puerto Rico. Basic economics states the higher the price of something, the less that something will be purchased. In the case of Seattle’s experiment of increasing their minimum wage to $15 an hour, it seems that something was low-skilled jobs.

Seattle skylineAdmittedly, Seattle has experienced an economic boom since the city first instigated its stair-stepped wage increase. One of the city’s biggest growth sectors is in the labor market. However, according to the Seattle Times, “Much of that success, though, can be attributed to trends separate from the minimum-wage law itself, such as the growth of Seattle’s tech sector and its construction boom.”

Getting to the real impact of the minimum wage increase required analysts to exclude all other economic factors that would offset the inevitable job loss. To do this, the study created a fake or “synthetic” Seattle with “aggregated ZIP codes outside the city that had previously shown numbers and trends similar to ZIP codes inside the city.”

When employment numbers were compared from the “synthetic” to the real Seattle, there was a difference in employment numbers. According to the Seattle Times:

Pay for low-wage workers climbed more in real Seattle than in synthetic Seattle, while their employment rate and hours climbed slightly less.”

The difference points to the economic realities of bypassing the market and artificially controlling prices through government. According to Forbes, the difference in the findings between the real and fake Seattle prove the point:

Employment rates and hours climbed because [Seattle’s] economy is booming. But they climbed less in areas where the minimum wage was raised than they did in areas where it was not. The difference between those two is the employment lost to the higher minimum wage.”

The point here is not to paint Seattle as having a labor market on the edge of collapse because of the minimum wage. Rather the study’s findings are proof that minimum wage increases do negatively affect employment rates.

As Peter Schiff explains in The Real Crash:

So, what effect does the minimum wage have on employment? It eliminates from the job market any job that an employer thinks is worth less than minimum wage. For a few borderline cases, it will mean slightly higher wages, but their benefit comes at the cost of the millions who are out of work because the job they would have is now illegal.”

There are long term consequences that Seattle is likely to face in the future. Outlawing entry-level, low-paying jobs dries up opportunities for on-the-job training. This is exacerbated by recent regulations and forced paid internships. The road to the middle-class via hard work and sacrifice is full of regulatory potholes, put there by an over-regulating government penalizing employers.

Increasing low-earning jobs also forces employers to seek cheaper technological solutions. Simply put, if employers can’t afford to hire low-paid workers, they will look to replace them all together. This does nothing but punish the very people minimum wage laws purport to protect. According to U.S. A. News and World Report:

Raising the minimum wage is not the best way to fight income inequality because it will increase the rate of job automation that already disproportionately affects people with less education and lower incomes.”

Seattle’s economic boom is something the city should appreciate. Not every section of the country is so lucky.

Get Peter Schiff’s latest gold market analysis – click here for a free subscription to his exclusive monthly Gold Videocast.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

Arizona Governor Signs Bill to Repeal State Capital Gains Taxes on Gold and Silver

Good news for precious metals investors in Arizona. On Monday, Gov. Doug Ducey signed a bill into law that eliminates states capital gains taxes on gold and silver specie. It tax repeal will not only benefit Arizonans who invest in gold and silver, it will also facilitate their use as currency and undermine the Federal […]

READ MORE →

Moody’s Drops China’s Credit Rating as Debt Piles Up

The US government isn’t the only one piling up debt. We’ve reported on the ticking debt bomb in the US. Apparently, the timer is ticking in China as well. This week, Moody’s downgraded the country’s credit rating from A1 to Aa3, and changed its outlook from stable to negative. It was the first downgrade of […]

READ MORE →

Jim Rickards: Don’t Watch the Circus in D.C., the Real News Is Gold

Over the last few weeks, the media has fixated on whether or not firing FBI director James Comey and allegations of Russian collusion will turn into Donald Trump’s Watergate. But in a recent column, economic analyst Jim Rickards said that really isn’t the most significant thing that‘s happened. While everyone is focused on the Washington […]

READ MORE →

Trump, Watergate and Gold

Could Trump be facing his own Watergate? The president’s firing of FBI director James Comey in the midst of probes into the administration’s possible connections with Russia set off a political firestorm. There has even been talk of impeachment in recent weeks. While at this point, much of the rhetoric spinning around the Beltway is […]

READ MORE →

Everything’s Better in Gold! Even Toilets

Everything is better when it’s dipped in gold! So, how about a $1 million gold toilet? The rapper Birdman has one. He posted a photo of it on Instagram. And that’s just one of the crazy things coated in gold recently highlighted on CNBC’s “The Filthy Rich Guide.” Related

READ MORE →

3 thoughts on “How Seattle’s $15 Minimum Wage is Creating More Unemployment

  1. Kevin says:

    Not to mention the increase in retail prices that is inevitable to keep these businesses operating. How will that affect retirees on a fixed income and the poor. It teduces their purchasing power thus making the poorer than before.

  2. Nancy Brian says:

    Most people understand that the unskilled and young will not find jobs when the min wage is $15.00. It is especially critical that the wage stay below $8 in rural areas, small non resort towns, most of the Midwest and South. This is a STARTING wage for teens working at the PUT PUT business, picking up golf balls, sweeping, and other menial tasks.m minimum wage is a starting point. Each state and city should have a right to have a higher minimum if they wish. Get rid of illegals and the wage will float up anyway. Too many illegals suppress wages

  3. Favid says:

    Mom and pop business will fail. Big business can handle the cost of automation. More people on welfare. This experiment will break the back of hard working entrepenuers. It takes awhile for the business to close down. When a small business owners asset is the business, they will spend all of their savings before forced to close. Shame on politicians who risk nothing but this will ruin hard working peoples lives.

Leave a Reply

Your email address will not be published. Required fields are marked *