Brian Bernstein Blog Post #1: Seattle's Minimum Wage Bill

The Seattle city government is at the heart of what could become a revolutionary policy change, in becoming the first city in the country to institute a new wage law mandating all employees to be paid at least a \$15 minimum wage.  The city ordinance, which passed in June, would constitute a 60% wage increase on the current minimum wage level in the city - a hike that small businesses simply cannot absorb.  In fact, in the midst of President Obama's push to raise the Federal minimum wage, in his case only to \$10.10, the Congressional Budget Office (CBO) forecasted that over 1 million American jobs would be lost.  While the ordinance would not be implemented all at once -- with a seven-year transition period until the role out would be completed across the board -- the ordinance would harm far too many small business owners in the region, with many either going out of business due to the payroll increase or having to move out of the area to locations where doing business would be more affordable.  Additional impacts of this large of a minimum wage increase would include a rising gap between the unemployment rates of high school graduates and college graduates (as employers looking for low-wage workers could now hire higher-educated workers to do work that was previously filled by the less-educated population), along with a decrease in non-wage compensation benefits (such as free parking or coffee at the office).  The only reason why any ordinance of this nature would ever be passed is due to a strong labor union backing, in this case from an organization of various labor unions called Working Washington.  

Unfortunately, for local businesses, efforts to put a referendum on November's ballot to repeal the new \$15 minimum wage laws have failed to get enough signatures, causing widespread outrage in the region.  While workers in the region will definitely have higher relative levels of income compared to their situation prior, businesses in the region will have to pass on much of these higher costs onto these same consumers whom are being paid higher hourly rates, effectively canceling out the impact of their wage increase.  Under the current terms of the referendum, businesses with fewer than 500 employees would have 7 years to increase all wages to the \$15 minimum, while businesses with more than 500 employees have to increase their wages in the next 3 years.  These categorizations are specifically flawed as small franchisees, who may own only a few franchise locations with under 100 workers total, are treated as large businesses, with their employee count aggregated with the business's international total.  In my opinion, the effect of this new \$15 minimum wage in Seattle would be far more catastrophic than the government has forecasted, resulting in a higher level of unemployment and higher costs for residents of the region.  Therefore, the government should seriously reevaluate this ordinance, potentially either decreasing the scale of the wage increase or providing subsidies to allow for local businesses to better absorb the necessary price increases.