Lawmakers incentivize higher wages without mandating them

In response to the Trump administration’s tax overhaul, Wells Fargo and Fifth Third Bancorp will raise their minimum wages to $15 per hour (“Corporations pledge to share the wealth,” Dec. 21). AT&T and Comcast also pledged to pay a $1,000 bonus to each of their U.S. employees. It’s a good example of how lawmakers can incentivize higher wages instead of universally mandating them.

This year, we saw an opposing example in Seattle. A team of city-funded economists at the University of Washington found that Seattle’s $15 minimum wage mandate had caused employee pay to decrease. That’s because the mandated increase in hourly pay was offset by a drop in work hours, when businesses with razor-thin profit margins couldn’t offset the labor cost increase with higher prices.

When employers have the freedom to manage their businesses, less-skilled workers benefit. But forcing employers to pay higher wages costs employees their jobs.