Heartland’s Steve Stanek talks with Erin Shannon, director of the Center for Small Business at the Washington Policy
Center, about Seattle’s recent minimum wage increase. The Seattle City Council unanimously voted to require all employers to pay all employees at least $15 an hour. Shannon explains the detrimental results of such a policy.
Shannon begins by addressing the consequences of this policy within Seattle’s city walls. Not only will businesses be forced to downsize in order to counteract the 60% increase in payroll costs, but many will be forced to close their doors entirely. In addition to this inevitable economic downturn within the city, Seattle based businesses will no longer be able to expand into nearby locations. Shannon references a particular restaurant’s plans to open another branch in a neighboring town. The looming increase in the restaurant’s cost of operation has left it unable to expand into neighboring areas, and therefore unable to bring jobs and economics development to nearby towns. Seattle’s new policy will not only be detrimental to the city itself, but it will also hurt neighboring locations.
Stanek asks Shannon about the rising popularity of automation in businesses. Shannon goes on to explain that the increase in the mimim wage will push businesses to automate in order to offset the cost of paying employees. Self checkout at grocery stores and order-it-yourself programs at restaurants are ways in which businesses can save money by not paying an employee. Put simply, machines taking people’s jobs is bad for the economy. Seattle’s new policy forces employers to downsize, people to lose their jobs, and economic development to slow down.
Stanek goes on to bring up employee benefits. Shannon confirms his understanding that benefits like free food, free parking, paid vacation, etc. add up. Employees can not only expect to see these benefits disappear with the increased wages, but they can also expect to see less hours with equal expectations. Employers can longer afford to offer their servers free meals, free parking, or the hours they would like. In fact, there are already reports of waiters and waitresses being disappointed by the wage increase. On top of the disappearance of benefits, servers could see a reduction in tips. People know servers are now getting paid $15 an hour, so they might decide a 10% tip is good enough. Seattle’s increase in its minimum wage might prove to be just as bad for employees as it is for employers.
Steve Stanek and Erin Shannon discuss The Seattle City Council’s decision to increase the minimum wage to $15 an hour, and the detrimental consequences that come with such a policy. Seattle’s economy is undoubtedly in for a rocky ride as employers will need to continue downsizing in order to keep their businesses alive.
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