Fight for 15 update: Seattle employment craters

posted at 5:01 pm on March 13, 2016 by Jazz Shaw

Science! (Is economics really a science? I’ve long felt it should be taught alongside astrology or some related field.) In any event, the continent sized Petri dish which is the American jobs market has been the subject of much speculation since the Fight for Fifteen muscled its way into the presidential campaign debate. It’s a very populist position which the Democrats have been riding like rocket. At the same time, people who actually study such matters have been warning that it would backfire spectacularly, particularly if it was implemented in a rush. Job availability is subject to the same laws of supply and demand as anything else, and jacking up wages almost always has to result in fewer jobs. Last year I published a piece which summarized the findings of a number of analysts who had come to that conclusion and drew considerable flack for it.

Liberals weren’t interested, however. Even the Obama administration had the Department of Labor publish some “myth busters” on the subject, assuring all the citizens that everything would be just fine and everyone would get a pony.

Myth: Increasing the minimum wage will cause people to lose their jobs.

Not true: In a letter to President Obama and congressional leaders urging a minimum wage increase, more than 600 economists, including 7 Nobel Prize winners wrote, “In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market. Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front.”

Much of our debate last year centered on the city of Seattle, which has boldly lurched into new minimum wage territory. They’ve already increased the rate to one of the highest in the nation inside the city borders and are on track to have everyone at fifteen dollars an hour by next year. So how’s that working out for them?

Man, sometimes I really hate it when I’m right. (NY Post)

The AEI study, worked up from Bureau of Labor Statistics’ monthly surveys, shows that, between April and December last year, Seattle saw the biggest employment drop in any nine-month period since 2009 — a full year into the Great Recession.

The city unemployment rate rose a full percentage point.

Before the minimum-wage hikes begin, Seattle employment tracked the rest of the nation — slowly rising from the 2008-09 bottom. But it started to plunge last spring, as the new law began to kick in.

Furthermore, Seattle’s loss of 10,000 jobs in just the three months of September, October and November was a record for any three-month period dating back to 1990.

A city of that size, previously tracking the employment rate curve across much of the nation, lost 10,000 jobs just between September and November. And most of them were at the lowest end of the pay scale. We don’t know how many more were lost in the three months since then, but those numbers will be finalized soon and they are going in the same direction. That’s a massive number of jobs for a single city of that size.

But wait, you might say. Fluctuations in employment are frequently regional in nature. This could just be because that part of the country happens to be doing worse.

Oh, really? Then how do you explain this?

Meanwhile, employment outside the city limits — which had long tracked the rate in Seattle proper — was soaring by 57,000 and set a new record high that November.

Businesses in the suburbs were thriving and adding jobs. Not just a few, either. Tens of thousands of new jobs were created as employers escaped the steep labor costs in the urban center and traffic increased for owners charging lower prices.

At this point can we finally dispense with all of the expert papers from liberal economists ensuring us that every liberal idea that comes down the pike simply must be a winner because it was thought up by people they approve of and it makes the unions happy? Is not the pursuit of “science” reliant upon the data coming out of the test labs at some point? You’re murdering the job market in Seattle in front of everyone’s eyes and yet the same policies are being pushed on the campaign trail by Democrats as a prescription for the entire nation.

Capitalism is a complicated beast and it’s very regional in nature. The minimum wage for one area may make sense while being far too low or too high when transplanted elsewhere. Top down management of the capitalist system will not work because the beast operates under immutable laws which you can’t change by waving a magic wand.


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