Minimum Wages

For John, BLUF:  If you jack your prices, folks will look for alternatives.  Nothing to see here; just move along.

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Reason Magazine (libertarian) has an article by Reporter Brian Doherty about the decision by Seattle to raise the minimum wage to $15 per hour.  Mr Doherty raises the question of if the bump in the minimum wage is resulting in a drop in employment.  The post references a chart at an American Enterprise Institute that shows a definite down-tick in employment in Seattle this Spring.

The InstaPundit notes that "The Laws of Economics haven't been repealed."

I think the minimum wage increase works for food servers and others if we, the customers, are willing to pay.  However, some customers have to actually budget their money, even if it is only in a rough way.  When someone says to themself (or to their spouse) "I think the prices at X are just a little too high" that is an economic decision.  The person is going to look a little down scale or is going to look for another option or is going to eat at home.

The fundamental question is if the Middle and Lower Middle Class families have the marginal dollar free to pay the extra wage.  The cost per person is going to be small, but when it becomes noticeable it may change spending habits.  Time will tell.

For those who say it should come out of company profits, I like that idea, but if the investors find that there is more profit in other investments, then that will adversely impact jobs, over the long run.  Everyone is looking for an edge.

Hat tip to the InstaPundit.

Regards  —  Cliff