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Seattle Minimum WageEssay

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Policy

There are a number of potential benefits for a $15 minimum wage policy in Seattle. The city highlights a few of them. In particular, the city (2014) notes that the policy will "help low income workers and families in their communities," and this occurs by boosting the wage of workers who otherwise would make significantly less. With higher take-home wages, they will be better able to provide for their families, having greater buying power. The policy is therefore a transfer of wealth from the broader Seattle community, which will have to pay higher prices, to low-wage workers.

While some businesses argue that the policy will hurt them, businesses in low-wage areas may well see an increase in their revenues, because of the greater spending power of the workers who live in their areas (Hanauer, 2013). Rising wage inequality in absence of escalating minimum wages reduces the buying power of consumers in general. Thus, when the buying power of consumers increases, this creates more revenue for businesses. In some cases, that revenue will not be enough to offset the higher wages, but in the case of many businesses it will be.

Naturally, the politicians will benefit as well, if the policy is popular. There will be a political bump, in particular if the people harmed by the policy are not harmed to any great degree.

2)

A $15 minimum wage will be harmful to some members of the society. In principle, the harm is to be spread out among a larger group of people, to the point where the harm is not all that noticeable, but the benefits will accrue to a smaller group of people and will be noticeable. Some business owners have immediately argued against the law, noting that it increases their costs but is unlikely to increase their businesses, since they cater to a target market that already makes more than $15/hr (Meyers, 2014). With an increase in expenses and no corresponding increase in wages, either the owner makes less or has to cut costs. If cutting costs means laying off staff, that harms those people. Myers (2014) argues that owners will be forced to cut all non-essential staff, but that ends up being an argument in favor of the $15 minimum wage being more economically efficient, which by most economic models it is not.

Customers of course will be impacted, because they will face higher costs associated with any goods that are associated with low-wage labor. This again will have knock-on effects. If the good has low price elasticity of demand, like gas, the consumer will have less money to save or spend on discretionaries. If the good is discretionary, such pints of IPA, the consumer may curtail consumption, harming all businesses involved in creating, distributing and retailing that product.

In SeaTac, there in anecdotal evidence that where the increase in minimum wage took hold, low-wage workers who had benefits lost them (Ng, 2014). Granted, many low-wage workers never had benefits to begin with, but health care benefits in particular as a massive expense so if a worker loses those, it could more than offset the higher wage increase. Those Obamacare plans aren't that cheap. This complaint seems legitimate, because there is not much in the Seattle plan to my non-lawyer eyes that protects the benefits that employees are currently receiving from being cut to pay for their wage increases.

3)

Seattle will probably not suffer for the higher minimum wage all that much. First, the city is rich and can afford it. Prices will not increase as much as predicted, either. It is accepted that prices will increase, but because surrounding communities have lower wages, prices in Seattle on many goods will be somewhat sticky. The price of a latte might increase, because nobody from Capitol Hill is going to drive to Renton for a coffee, but for goods that are transportable prices will be sticky in Seattle because of competition from those surrounding communities. Seattleites will pay the higher prices, more or less, because they can afford to, and because they are unlikely to substitute their hip urban neighborhoods for suburban ones on the basis of a slight increase in the price of a pizza. There will still be a negative economic impact, but with the wage increases phased in gradually and the impact spread over… [END OF PREVIEW]

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