In yesterday’s “Labor and Workforce Development Committee” Washington’s best-in-the-nation minimum wage was under attack yet again.
The latest offensive came in the form of three bills, introduced by Rep. Cary Condotta, which would:
- reduce the minimum wage for tipped workers,
- lower automatic cost-of-living adjustments (COLA) that track inflation, and
- suspend the minimum wage COLA when unemployment is above 7.5%.
Rep. Condotta, for his part, argues in favor of the bills because “the cost of labor is driving [restaurants] out of business.” His evidence to back up this statement, as he points out, is not empirical, but rather “on the ground” experience: “We can talk about theories and we can listen to all the think tanks talk about what they have to say – I’m on the ground,” said Rep. Condotta at the hearings.
Perhaps Rep. Condotta doesn’t rely on the empirical evidence because it doesn’t support his theory. Recent research proves there is no significant impact on employment numbers resulting from minimum wage increases.
In addition, Rep. Condotta’s statement that the cost of labor is driving restaurants out of business is inaccurate. The cost of labor – the minimum wage – is stable and rises with inflation. But commodity costs such as dairy, coffee and food have far outpaced inflation, and Rep. Condotta himself points out “restaurants are facing a 9% increase in food costs.” Certainly increased costs are cutting into employers bottom lines, but they’re cutting into everyone else’s too!
See, it’s not just business owners who are paying higher costs for bread, milk and butter – so is everyone else. Rising commodity prices – which are borne by everyone – should not be used as a surrogate for cutting the minimum wage, especially when costs for food, health care and gas are rising. That’s poor economic theory, and a recipe for more economic insecurity for working people.
Those who argue for a reduction in the minimum wage would do well to remember that employees are customers, too. Nearly every dollar of the minimum wage is pumped back into the economy because few workers can afford to save – creating a multiplier effect that ripples throughout the local economy. When the minimum wage is cut, economic activity also decreases.
People earning minimum wage don’t have wiggle room in their finances – their proverbial “belts” have already been tightened. Cutting the wages of the people struggling to get by will only hurt our economy, and likely lead to more working people utilizing government assistance to make ends meet.
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