A few years ago, Seattle decided to raise their minimum wage laws. Supporters cheered saying it would do much to help the city’s least-paid workers. But now according to a new study, it turns out raising the minimum wage is having some unfortunate unintended consequences for the very people it was intended to help.
Among the study’s findings is that Seattle business owners are reducing the hours for low-wage workers to cope with the increasing business costs caused by the minimum wage increase. As a result, some Seattle workers are taking home $125 less a month in income.
Now, we all know that better paying jobs are important to achieving the American Dream. That’s why it is so critically important that our economy offer jobs that allow the young, minorities, and all of us across this country, the ability to gain skills and experiences that lead to better, more fulfilling jobs. There is dignity in all work that creates value and that is why it is important to acknowledge how policies like a minimum wage are preventing individuals from accessing that first step up the economic ladder.
So while activists and labor unions across big cities continue to march in in the streets under the banner “Fight for 15” and media outlets editorialize in support of raising the minimum wage, there are plenty of signs to be cautious about minimum wage hikes. For example, The LIBRE Institute found that minimum wage hikes reduce employment, particularly for the young and workers with lower levels of education – two categories that are particularly pronounced in the Latino community.
Unfortunately, some surveys have found a wide margin of Hispanics support raising the minimum wage, particularly as a number of high profile politicians have ramped up their efforts reaching out directly to the Latino community.
However, when Hispanics are told that raising the minimum wage will lead to job loss, support for the proposal goes down substantially. This makes sense. After all, the vast majority of Hispanics in the United States want to work and provide for their families. Many are first generation Americans or immigrants who left behind their loved ones in search of economic opportunities here in the United States.
This is precisely why Latinos should be skeptical when politicians call for hikes to the minimum wage. If it sounds too good to be true, it probably is. Increasing the minimum wage inevitably leads to job losses and reductions in working hours for those trying to climb the economic ladder of success. These are concerns that are especially important for the Hispanic community, which faces an unemployment rate that is higher than the national average.
Instead of touting policies that provide short-term political gains but hurt economic mobility for the most vulnerable in our communities, lawmakers should look for ways to expand opportunity for everyone. The government can do this by making it easier for businesses to grow and expand, and create new and better-paying jobs.
We know from years of research that the free enterprise system and the free market have done more to lift billions out of poverty than any government mandate or economic redistribution scheme, like increases to the minimum wage.
The city of Seattle is providing the Latino community a cautionary tale of what happens when populist ideas take hold. As the “Fight for 15” continues its march in cities and towns across the country, the Latino community should stand firm to demand jobs - not short-term gimmicks.
Jorge Lima is the Executive Director for The LIBRE Initiative, an organization that espouses free market principles.