In Four More Months on Minimum Wage Increases, We Have Reached a Ceiling

The past year has made quite a difference in the lowest hourly amount American workers can legally be paid.  Before it, we were hearing about “the fight for $15,” with implications from those left of center that such a struggle was not only noble but just.  Now those calls have died down, and that quest doesn’t look worthy, even to many liberals.  What has happened to shift the tide?

In “The Minimum Wage Eats Restaurants” (The Wall Street Journal, May 9), marked as “Commentary,” Michael Saltsman presented data that 60 San Francisco-area eateries closed between September and January, and cited one owner as saying “there’s only so much you can charge for tamales.”  Saltsman cited a Harvard and Mathematica study connecting a $1 increase in the minimum wage with a 14% rise in the chance of a “3.5-star” restaurant folding, and concluded that better pay and benefits “don’t mean much if you can’t find a job.”  In contrast, though, The New York Times editorial board, in “Remember the promise of good jobs?” on June 13^th, while correctly in my view disapproving of the Fed raising interest rates, the presidential administration seeking to reduce top-bracket taxes, and the blocking of badly-needed for-inflation adjustments of mandatory overtime pay thresholds, tripped on issues of average pay not tracking productivity gains (why should it?), higher minimum wages when over 17 million Americans want to work and can’t find it, and a vain hope for “Republican leaders’ changing their ways.”

For 16 days in late June and early July, we had what might be called “dueling studies” on the outcome of Seattle’s minimum wage increases.  Fox Business, in “Study:  Seattle minimum wage hasn’t cut jobs” (June 20), started the ball rolling, naming a University of California at Berkeley research effort finding that, without, though, a look at how many additional jobs went uncreated, and citing a University of Washington effort determining that “the law appeared to have slightly reduced the employment rate of low-wage workers even as it boosted pay.” The New York Times also covered both in Noam Scheiber’s June 26^th “How a Rising Minimum Wage Affects Jobs in Seattle,” concluding that its labor market was unusually strong and that total earnings by workers in low-paying jobs actually decreased, as did The Seattle Times, in Jon Talton’s nicely titled June 27^th “Seattle’s minimum wage:  The plot thickens,” which noted that neither piece of research had yet been peer reviewed, but did not mention that automated solutions, which can be stated and sold in terms of the cost of labor being replaced, can forestall additional positions.  Three days later Holman W. Jenkins Jr. weighed in in The Wall Street Journal, opining that “Seattle Aims at McDonald’s, Hits Workers.”  Although he lost any claim to objectivity by not even mentioning the Berkeley study, he made good points, such as that President Obama’s statement “that a full-time job should be able to support a family,” when implemented through higher minimums, “was a way of saying that jobs that won’t support a family shouldn’t exist,” and that many countries allow “teenagers, trainees,” and “probationary hires” to be paid less.  Politically centrist USA Today, in July 5^th’s “In ‘Fight for $15,’ Seattle loses,” concluded the same, matching Yahoo Finance’s Rick Newman in June 26^th’s “A $15 minimum wage appears to be too high.”  The last straw, though, may have come from generally liberal Washington Post columnist Catherine Rampell, in “Feel-good ideas that need a hardhearted examination,” who concluded that a mandatory $15 minimum “would risk pricing a lot of people out of work,” such as in Mississippi, where half of workers were now paid below $14.22. 

One indication of a trend topping out is people not only refusing to join it, but rollbacks.  Fox News’s June 29^th “Maine restaurant workers successfully lobby to lower the minimum wage” recapped how servers arranged for defeat of new laws endangering their jobs by forcing employers to pay them the same minimums as non-tipped workers.  An even clearer sign of a tide turning is backlash reactions, such as the subject of “Missouri Republicans Lower St. Louis Minimum Wage from $10 to $7.70” (Yahoo.com, July 3^rd), implementation of a state law barring communities there from setting their own, higher, floors.  That is a questionable step, since one problem with state-level wage mandates is that they do not account for differing living costs, resulting in required pay being too high in some areas, too low (if you advocate meaningful minimum wages) for others, or both, and they prevent local governments from making decisions that should fall to them.  

In the context of the fight for $15 being seemingly on the way out, we probably won’t need to worry about something being assessed in the United Kingdom, a “Minimum wage push for gig economy workers” (Kamal Ahmed, bbc.com, July 10^th).  That is a good thing, since, in addition to removing this bottom rung on the ladder, such would require either determining maximum lengths of time these tasks would take or paying less effective workers more to complete them.  I do like the idea of officially designating them “dependent contractors,” between employees and independent agents, which while not as good as making them the same as company-hired would remove the pretense that they are free to work any way they want.  Yet they cannot viably have guaranteed hourly rates.  That would be bad – and, as I also believe that about higher national minimum wages, the shift in our views is positive.