Seattle is in Need of Some Sound Economic Policy
Seattle, one of the largest cities in the United States and the fastest growing, has been in the national news cycle with two big stories this past month, and both dealing with economic issues. The first was a recent study conducted by the University of Washington on the affects of the minimum wage increase in Seattle and how poorly it has affected those lower wage earners. The second story that came out just in this last week is about how the Seattle City Council voted unanimously to have an income tax on the rich, those individuals making $250k a year and married couples making $500K. Both of these articles and recent events in Seattle worry me, as it seems clear that the majority in Seattle don’t understand basic economic forces, if they did I would find it hard to believe that these two issue would have come up. Not only is the lack of economic knowledge troubling but also the blatant attack on their neighbors via the strong arm of the government, that is truly what I find more disturbing.
First to be discussed will be the minimum wage issue. A few years back Seattle voted to increase the minimum wage to $15 per hour. This increase would be established in phases, not all at once, over the next few years. As businesses adjusted to the new mandatory increase in the cost of labor, changes had to be made, by passing some of the cost onto the consumer and also by making cuts elsewhere in the business. These cuts in the business usually would come form where the increase in cost came from, labor. As a result of these cuts a few things have happened. The total hours worked by minimum wage workers has fallen, the amount of total earnings among these workers has also fallen and yes if you would have guessed that the total number of minimum wage full time workers has fallen too you would be correct. Again we have a law intended to help a certain group of people but did the exact opposite of that, it harmed them. Much of these conclusions could have and already have been determined before this law was voted on and put into place. Economists from the Austrian school of economics have been telling us these unintended consequences will happen when minimum wages are increased by force of law and not the market place for labor. How many more times do we need to see this? Businesses closing, more unemployed youth, increasing unemployment in minorities and low skilled laborers. The groups that need to most help aren’t getting it, they are being forced out of the labor market. More on the outcome of the study can be found here.
On to the income tax that the Seattle City Council voted on earlier this week and the horrible moral argument that many progressives will push for this kind of legislation.(link) The tax, as previously mentioned, would only tax “the rich” in the city of Seattle. Many that supported this law had signs that they carried saying, among other things, “Tax the Rich” on them. One supporter at the council meeting claimed she would be happy to pay more in taxes and she feels the rich should too. Funny though how she didn’t meet the $250k threshold. It should also be pointed out that nothing is stopping ANYONE from writing out a check to the Seattle government…. Nothing. Not that this revelation about being able to write a check to the government stopped anyone from screaming that the rich need to pay their fair share. This issue about the social contract has been brought up before here at Coffee Break Liberty and the issues brought up then still apply now. It is not OK or any form of justice to have the government attack your neighbor on your behalf. This is not an issue of “how will something get paid for” but rather an issue of morality. It is immoral to attack your neighbor, period. Back to Seattle though specifically, this is how you will drive those that are being fleeced outside the city limits. This isn’t hard to understand. Many will make that move for the cost savings while others will make the move to outside the limits because they feel they should be treated fairly too. Thats the fair share.
I will end this one by bringing up a point to those that constantly complain about a privileged minority and feel that the government should treat them more harshly. I’ll use the 1% in this case. If those that changed the phrase “1%” to the word “Jew” how much would that person sound like they would fit in during the early 1930’s in Germany? If all it takes is to change a word or two in a rallying cry that anyone uses to make that person sound like a Nazi, we should take note and steer clear of that line of thinking. Keep our moral compass pointed in the right direction can be hard at times but if we live our lives based upon principles that stand up in all cases we are off to a great start. The finish line may seem far away but this is a war of inches. He have been loosing inches for over 100 years, its time to take some and out liberties back, one inch at a time.
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Keep that coffee warm for us.
LWS
