- - Tuesday, September 5, 2017

ANALYSIS/OPINION:

It’s easy to be generous with someone else’s money. Politicians get away with it because the average American does not understand fundamental economics. Raising the minimum wage by law is popular because many people think no one has to pay the costs. When someone posts a reminder of how the world works, the ignorant scream.

Not long ago, the Oceanaire Seafood Room in the nation’s capital followed the lead of some restaurants elsewhere to include this notice in not-so-fine print at the bottom of customers’ receipts: “Due to the rising cost of doing business in this location, including costs associated with higher minimum wage rates, a 3 percent surcharge has been added to your bill.”

One wounded Oceanaire diner posted a photograph of his bill on a blog with his complaint. “I have no problem paying high prices to support better wages,” he wrote, “but I do have a major problem with this sort of deceptive business practice.”

The poor fellow does not understand the obvious, which is that the practice, which has since been discontinued, was not “deceptive” at all, but a clear example of full disclosure. Nevertheless, some of the readers of the blog (few of whom no doubt had never dined at Oceanaire) joined in the spirit of elevated dudgeon. “If you don’t agree with D.C. labor laws or the cost of rent, then leave,” another commenter wrote. “Take your political statement and shove it.”

“Just raise prices if you need to, don’t try to slip this in under the radar,” one commenter chimed in. The notification was hardly “under the radar.” If the surcharge had been “under the radar” it would have been invisible to the naked eye. The note at the bottom of customers’ receipts was further reproduced on placards throughout the restaurant.

Such reaction reflects the widespread ignorance of how the economy and free enterprise work. Oceanaire, like all restaurants this side of soup kitchens, is not in business to subsidize appetites of the hungry. The object of a restaurant owner is to make a living.

The restaurant could have raised its prices, but teaching basic economics is a good and effective thing to do. What likely sticks in the craw of the ignorant is that saying out loud how economics works punctures a sacred cow, the notion that minimum-wage increases have no unhappy consequences.

A new study by six University of Washington economists found that an incremental raise in the minimum wage to $15 an hour in Seattle, enacted to cheers and applause three years earlier, led employers to cut payrolls, postpone hiring and reduce the hours of employees. The price paid by low-wage workers in Seattle outweighed the benefits by a ratio of 3-to-1.

The 63-page report estimates that the average low-wage worker in Seattle lost $125 a month, and many of these workers lost their jobs. “Basically, what we’re doing is, we’re removing the bottom rung of the ladder,” economist Jacob Vigdor, one of the authors of the study, told The Washington Post. The law of unintended consequences is always enforced, and usually without mercy.

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