Ros-Lehtinen’s bad bet on $15

Original Article:

  • Author: Michael Saltsman

  • Publication Date: October 2016

  • Newspaper: The Hill

21It’s not uncommon for politicians to make election-year decisions based on poll numbers rather than principles. But even by this relaxed standard, Florida Rep. Ileana Ros-Lehtinen’s recent endorsement of a $15 minimum wage demonstrates remarkably bad judgment.

Before giving additional credence to the policy ideas of her purple-shirted friends in the SEIU, Ros-Lehtinen should educate herself on their merits.

That education starts by consulting the experts. Last year, the University of New Hampshire surveyed 166 U.S.-based labor economists, the majority of whom self-identify as Democrats, and 5 out of 6 responded that a $15 minimum wage would reduce youth employment levels. Nearly three-quarters opposed its overall implementation.

Even prominent left-of-center economists and alumni of the Clinton and Obama administrations, including University of Maryland economist Katharine Abraham and Georgetown University economist Harry Holzer, are on the record opposing $15.

Their opposition stems from their knowledge of the economic consequences of the policy. The minimum wage is one of the most studied concepts in economics, and according to a recent review of the economic literature published by the Federal Reserve Bank of San Francisco, the best research points to measurable job loss for the least-skilled employees following a wage hike. If you don’t want to take the Fed paper’s word for it, ask the non-partisan Congressional Budget Office: Its 2014 report on minimum wage impacts drew on 60 different studies and reached the same conclusion.

More recently, a “gold-star” team of economists at the University of Washington delivered their first report on the job market impacts of Seattle’s $15 minimum wage experiment. The report only covered the early phases of the increase, and its conclusions were measured and modest. Still, one of the team’s findings was that Seattle’s wage hike reduced the employment rate for the entry-level workforce relative to areas that did not embrace Seattle’s approach.

But perhaps the clearest way to illustrate the consequences of dramatic minimum wage increases is by pointing out the dozens of stories of reduced job opportunities in places that have recently pursued them. In September alone, roughly one-quarter of restaurant closures in the Bay Area were at least partially a result of high minimum wages and labor costs.

We could run through dozens of real-world examples of business closures, layoffs, and reduced hours as a direct consequence of recent minimum wage hikes. (They’re all available

But let’s just look at one that really drives the point home: Sterling’s Family Childcare is a daycare center in a low-income neighborhood in Oakland, Calif., where affordable daycare options – like many places in the country – are limited. When Oakland’s minimum wage increased from $9 to $12.25 last year, the owner Muriel Sterling faced additional labor costs which could not be absorbed by price increases given her clients’ fixed incomes.

In order to absorb the costs and stay in business, Sterling had to reduce employee hours and end a free rides service for children in the community whose parents couldn’t transport them to a safe environment outside of school. Her story is emblematic of what many low-margin, labor-intensive small businesses that service a fixed-income clientele are facing in places that have adopted major minimum wage increases.

The endorsement of the Fight for $15 surely won Ros-Lehtinen some plaudits from the SEIU. And like “free health care for all” or “soak the rich,” it’s an easy but irresponsible message to deliver on the campaign trail. But Ros-Lehtinen — who claims to be concerned about an “ever-increasing tax and regulatory burden” — should know better.