The nation’s capital has been leading the way on the minimum wage front and the Fight for 15 crowd couldn’t be happier. Still, those not invested in the future of the unions and the Social Justice Warrior movement have questions which deserve answers. Just this week we looked at the effects of a $15 minimum wage on one small business owner in Ohio, but how about from the perspective of the workers? In DC there are a lot of food industry employers who hire plenty of lower wage workers, so that should prove to be a leading indicator when addressing the question. The District has already raised their minimum wage once recently and there’s more of the same on the way.
The American Enterprise Institute has run the numbers for us, and the initial results are not promising at all.
Cities and states around the country that are considering a hike in their minimum wages to $15 an hour might want to take a look at how that’s working out in the nation’s capitol. Despite what we hear from unions, the Fight for 15 crowd, and other minimum wage advocates, the evidence from DC’s restaurant industry – an industry often considered as “ground zero” for minimum wage effects – demonstrates that demand curves for low-skilled workers actually do slope downward.
New BLS data for restaurant employment in July for both the District of Columbia (city only, see dark line above, data here) and the surrounding suburbs in Virginia and Maryland (full DC MSA data here, the light blue line shows the MSA minus the city of DC) are displayed above and tell the story pretty clearly. Since the DC minimum wage increased last July to $10.50 an hour, restaurant employment in the city has increased less than 1% (and by 500 jobs), while restaurant jobs in the surrounding suburbs increased 4.2% (and by 7,300 jobs). An even more dramatic effect has taken place since the start of this year – DC restaurant jobs fell by 1,400 jobs (and by 2.7%) in the first six months of 2016 between January and July – that’s the largest loss of District food jobs during a 6-month period in 15 years.
One look at the graph tells the story.
What we’re seeing here runs along the same lines as the results in Seattle. Once their city minimum wage went up, jobs dropped off inside the city while employment numbers increased in the surrounding suburbs. The food industry was particularly hard hit, with a number of eateries either cutting back on staff and offerings or closing entirely. Fortunately for the workers, the new employment options weren’t too far away so some migration to follow the work was possible.
So far we’re seeing the same thing in DC. Jobs in the suburbs were already rising when the new $10.50 minimum wage in the capital took effect and they continued to do so, increasing from roughly 50,000 at that time to approximately 53,000 today. But inside the District the story was quite different. They had also been experiencing slow but steady job growth in the food service sector, but the total number of jobs has now fallen by more than a thousand from the peak number they reached last year.
It’s still fairly early to lock down definitive conclusions, but the initial trends are not promising. The people who are hit the hardest by these policies are not the rich, fat cat one percenters that the Left loves to talk about. It’s the workers living on the margins who Democrats claim to be helping. So far these policies are helping alarming numbers of them… into the unemployment line.