For expedient political gain, Denver Mayor Michael Hancock and Councilwoman Robin Kniech want to harm entry-level workers by pricing them out of the market. If they succeed, Colorado Springs and other cities should become sanctuaries of free-market labor by promising to avoid such shenanigans.
The mayor and councilwoman this week proposed setting a minimum wage of $13.80 throughout the city starting in January. It would go up to $15.87 a year later. If they get their way, they’d better hope for a permanent end to cyclical recessions.
There is no mystery as to how this plays out. Seattle’s minimum wage went to $15 in 2017. This created a perception of City Council members caring deeply about low-wage workers. By legislative fiat, the council simply demanded a considerably higher wage. If this really works, one wonders why they were so stingy. They might as well demand $30 wages for fast-food work. Or $50.
Of course, it just doesn’t work that way. When the council demanded employers pay $15, they priced portions of the labor force beyond the market’s ability to pay. As such, employers cut back on labor.
A study of Seattle’s minimum wage found employers citywide “reduced hours worked in low-wage jobs by 6-7 percent, while hourly wages in such jobs increased by 3 percent…” It means a net payroll decrease for the minimum wage workforce. Workers overall were better off financially before the minimum wage increase, but the politicians continue getting credit for caring so much.
Denver will not be magically immune from the effects of pricing labor too high. Consumers will pay only so much for burgers and fries or other goods and services provided by entry-level work. When employers cannot raise prices to consumers high enough to cover labor costs, they will cut back on labor.
They will automate their kitchens and add kiosks to interact with customers. They will do whatever possible to avoid paying overhead their products and services cannot support. We see more machines with every minimum wage increase.
Politicians know this, but they don’t seem to care. They know a minimum wage hike sounds good and ingratiates them to the public. They also know the public won’t link robotic hamburger flippers and order-taking kiosks with the minimum wage. A busy electorate’s cognitive dissonance allows them to wrap harm in a pretty package.
Colorado’s unemployment rate is below 3%. Nearly anyone who wants a job can get one. A proliferation of “help wanted” and “accepting applications” signs reflects a market in which employers compete for employees. No one gets to exploit workers in a bull economy with wages that unfairly undercut the value of their labor.
When employers and workers are free to negotiate free-will arrangements, the market creates and sustains jobs for people in countless circumstances. Not all people looking for work expect a job that supports a household.
Some workers are young, live with parents, and are perfect for low-skilled, low-demand work that is not worth $15 an hour. What about them, Mayor Hancock? Jobs barely worth the state’s minimum wage of $11.10 an hour simply won’t exist after a government makes them cost $15 overnight.
The Denver City Council should reject this bad idea as an attack on low-skilled work, entry-level jobs and the people who need them.
If it passes, Colorado Springs should become a sanctuary city for free-market labor and employment.
The Gazette Editorial Board
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