Minimum Wage Increase in Seattle
Jack Gross
3/12/2020
I read an article from CNBC called “Seattle passed a $15 minimum wage law in 2014. Here’s how it’s turned out so far” and it was very interesting. The article talked about how when higher wages were offered many workers decided to work less, which seems fairly counterintuitive. It seems reasonable to assume that workers would want to work more when there are higher wages offered. This paper focused on one specific restaurant, Dick’s Drive-In, a small local burger joint. Because of the higher labor costs they had to raise the prices for the first time ever. The changes in wages made Dick’s costs go up even though they already paid workers more than that because they had to raise their wages in order to have more of a draw towards workers. Unfortunately this experiment hasn’t proved conclusive either for or against increasing minimum wage nationwide as some businesses benefited and others fell due to this increased competition. Economists have been talking about the positives and negatives of raising minimum wage to no avail. Some economists have pointed out that many workers with low paying jobs ended up earning less pay because they reduced their hours. Others have pointed out how that is not true for the more experienced workers in those low paying jobs and they ended up actually making more money. There isn’t even consistency with businesses, some, such as Fire and Vine Hospitality haven’t had any difficulty with the wage increases. A different company, Sitka & Spruce had to close down after trying to cope with the increased wage by passing the costs to consumers. Other restaurants are having to try and remodel their business to be less labor intensive so that they don’t have as many workers (or hours) that they have to pay. Unfortunately for restaurants, these wage increases have made it much more difficult for restaurants to stay in business and many are having to close down.
3/12/2020
I read an article from CNBC called “Seattle passed a $15 minimum wage law in 2014. Here’s how it’s turned out so far” and it was very interesting. The article talked about how when higher wages were offered many workers decided to work less, which seems fairly counterintuitive. It seems reasonable to assume that workers would want to work more when there are higher wages offered. This paper focused on one specific restaurant, Dick’s Drive-In, a small local burger joint. Because of the higher labor costs they had to raise the prices for the first time ever. The changes in wages made Dick’s costs go up even though they already paid workers more than that because they had to raise their wages in order to have more of a draw towards workers. Unfortunately this experiment hasn’t proved conclusive either for or against increasing minimum wage nationwide as some businesses benefited and others fell due to this increased competition. Economists have been talking about the positives and negatives of raising minimum wage to no avail. Some economists have pointed out that many workers with low paying jobs ended up earning less pay because they reduced their hours. Others have pointed out how that is not true for the more experienced workers in those low paying jobs and they ended up actually making more money. There isn’t even consistency with businesses, some, such as Fire and Vine Hospitality haven’t had any difficulty with the wage increases. A different company, Sitka & Spruce had to close down after trying to cope with the increased wage by passing the costs to consumers. Other restaurants are having to try and remodel their business to be less labor intensive so that they don’t have as many workers (or hours) that they have to pay. Unfortunately for restaurants, these wage increases have made it much more difficult for restaurants to stay in business and many are having to close down.
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