A minimum wage hike resistance is growing.
Last month, business and government leaders in Elk Grove Village, Ill., met to decide whether to join the growing number of cities opting out of dramatic minimum wage increases at the county level.
Barrington, Oak Forest, Rosemont and Tinley Park have all opted out of Cook County’s forthcoming $13 starter wage. In California, Gilroy, Los Gatos, Morgan Hill and Saratoga have similarly opted out of Santa Clara County’s speedy $15 minimum wage timeline. Other cities, towns and villages in the country are following suit.
What are these city leaders seeing that other states and localities have missed? Perhaps it’s the destructive effects of their neighbors’ good intentions.
The stories of job loss and business closures caused by big wage hikes are a far more powerful check on policymakers considering starter wage increases than basic economic logic. Personal stories tap into the anger and sadness — emotions necessary to change perspectives — whereas another economic study usually doesn’t register.
With that in mind, I’ve decided to share some recent stories of minimum wage harm with the hope of convincing policymakers to join the resistance. Sadly, I don’t have enough room to highlight all the recent consequences. What I have chosen to illustrate are examples of the recent fallout in only two states — Arizona and Washington. (For a more complete list of stories, visit Facesof15.com.)
In Flagstaff, Ariz., which passed a $15 starter wage on Election Day, numerous small businesses have recently been forced to lay off employees, cut hours or close altogether because of the associated labor cost increases. Satchmo’s BBQ had to lay off two employees. Cultured Yoghurt dessert shop and Country Host restaurant have both shut down. And Hozhoni Foundation, which provides care for people with disabilities, said it will also close this summer and lay off its 150 employees if it cannot get additional state funding to cover the minimum wage’s costs.
Across the state of Arizona, which passed a $12 starter wage on Election Day, similar consequences are occurring. Schlomo and Vito’s New York Delicatessen and Pizza Kitchen in Tucson is closing, laying off 43 employees, because of the 49 percent wage hike. Owner Dean Greenberg said, “I hired so many kids that I coached that is what’s sad.”
Jeremy Barnes, owner of software-testing company Digital Dream Forge in Scottsdale, is looking to move his business to another state, terminating most of his 50 employees in the process, because of the wage hike. In the words of Erin Holmes, manager at 414 Pizza in Tempe, “The increase sounded like a great idea before but now when it comes down to it, we just can’t absorb it.”
A similar rude awakening to the effects of minimum wage increases is also occurring in Washington state, which passed a $13.50 starter wage on Election Day. Mothers who supported the wage hike are seeing their day care price tag skyrocket. Costs at Advent Lutheran Child Care in Spokane Valley have increased by 30 percent, or $150 per child per month.
Similar dramatic price increases are occurring at nearby Parkview Early Learning Center. Country Kids day care in Yakima plans to close and lay off its 23 employees in 2018 when the next phase of the wage hike takes effect. Owner Lawrence Fournier doubts “there will be any privately owned child care centers in Washington within two or three years” largely because of the mandated wage hikes.
Small business across the state are shutting down because they can’t contend with the politically driven wage rates. O’Doherty’s Pub in Spokane, Louisa’s Caf in Seattle and Walker’s Pet Supply in Mount Vernon have all closed, with the owners citing the state’s wage increase as a determining factor. Animal Crackers toy store in Gig Harbor is looking to sell to an owner-operator who can be exempt from the new minimum wage or close altogether. Spiro’s Pizza & Pasta in Port Orchard has laid off an employee to try to absorb its costs.
Numerous Washington small businesses are also cutting hours to try to absorb the employment cost increase. Nostalgia House Bakery in Port Orchard, North Town Coffeehouse in Selah, Jalapenos in Bellingham, Luna’s Bistro also in Bellingham, and Tattered Page bookstore in Mount Vernon have all cut employee hours because of the wage hike. Last year, a city-commissioned University of Washington study on the effects of Seattle’s minimum wage hike found that the employment rate and hours for starter employees had fallen as a result.
So much for proponents’ Pollyannaish claims that big minimum wage hikes don’t have negative consequences. And understand, if it hasn’t already occurred to you, that price increases are not the easy answer to big-government-dictated wage rates. If that option were so accessible these stories would not exist. And keep in mind these 20 stories are just recent effects from only two states. They are just a taste of the current carnage.
And these lost jobs (as well as those that will not be created) are opportunities that go beyond the loss of a paycheck. They cut off the valuable first rung of the employment ladder that propel people with low skills toward careers and away from government dependency and violent crimes.
It’s often said you’re either part of the problem or part of the solution. If you want to be part of the latter, forward this article to your friends and peers. Only with a more informed electorate can we expect rational economics to be the political default option.
• Richard Berman is the president of Berman and Company, a public affairs firm in Washington, D.C.