Reality Checks & Minimum Wage

Please see this article by the Manufacturing Industrial Council of Seattle (MIC)—Reality Checks & Minimum Wage. It details the recent results of a survey of “a cross section of Seattle industrial firms with more than 1,100 employees engaged in seafood processing, metal fabricating, machining, and logistics.”

The article includes this passage: “Two of the companies that participated [in the survey] expanded their Seattle production facilities in the past 12 months. Representatives say their companies probably would not have expanded here if they knew the minimum wage might be raised to $15 for entry-level workers. Their reasoning has nothing to do with rhetoric and everything to do with costs. Seattle is already an expensive location for industrial firms, and far cheaper alternatives are available in nearby suburbs.”

This survey shows that entry-level jobs are truly a first step toward higher-paid jobs later. And failing to recognize the importance of preserving entry-level jobs jeopardizes not only the availability of such jobs to those who need them, but also the viability of local economies. Companies will simply locate where costs are feasible. This is in fact a lesson-learned from minimum wage laws—they have no effect on regulations outside of their own jurisdiction and thus do harm to the very people they are intended to help, while also harming their own local economy.

Where high-minimum wage jobs are difficult to relocate, many are replaced by automation. See this short video by the Employment Policies Institute:

When recent minimum wage increases were imposed on American Samoa the impact to their economy was severe. Yet, this didn’t harm the economy of competing labor markets, such as Georgia in the United States, where they constructed an automated tuna canning plant, or Thailand where labor costs in fish canneries are only 75 cents/hour. Minimum wage laws either eliminate entry-level jobs through automation, of displace those jobs to places where labor costs are lower. The rules of economics can’t be repealed by the good wishes of social reformers.