UW professor: $15 minimum wage “picks winners and losers”

University of Washington Professor Jacob Vigdor has some bad news for Seattleites/supporters of the $15 minimum wage. Vigdor, who was commissioned by the city of Seattle to head a study on the impacts of the $15 minimum wage law, painted a disturbing picture of the consequences during a radio interview with John Carlson.

According to Vigdor, Seattle’s $15 minimum wage places young, inexperienced and unskilled workers in “a tough position.” The reasoning makes sense: If businesses are going to pay employees as much as $15 per hour, they aren’t “taking a chance on a teenager, they are looking for a more experienced worker to fill that job.”

“You [an employer] need to be really sure you’re going to get your money’s worth out of this employee,” Vigdor said.

Essentially, the $15 minimum wage “picks winners and losers.” Vigdor explained:

“The good workers who are really skilled, experienced and productive will be more valuable than ever, they’ll keep their jobs, work more hours.  Employers need to have the more productive workers if they’re going to be paying that much.  The less productive workers, because they’re inexperienced or they just don’t have the good work ethic or habits that employers are looking for, they’re going to be on the short end of things.”

Unpaid internships are the new reality for young, inexperienced workers to gain work experience. Of course, that’s problematic for some families and students. Vigdor put it this way:

“Low paying jobs are the often first step up the ladder and by imposing a minimum wage, we’re basically saying we want people to be higher up the ladder and the way we’re going to do that is we’re going take away the bottom rung.  Some people are going to be able to climb all the way up to that second rung, but there are certain workers for whom if they don’t have a first rung they’re not going to have a job.”

The irony, of course, is that liberals like Seattle Mayor Ed Murray are trying to reverse the problems they created with new initiatives. As Shift reported, Murray is currently pushing the “Mayor’s Youth Employment Initiative” to encourage private businesses in Seattle to hire 4,000 young workers.

But, high youth unemployment is not the only consequence Vigdor identified. Proponents of the $15 minimum wage have been quick to declare victory by pointing out that Vigdor’s study showed no price increases as a result of the $15 minimum wage. But, Vigdor doesn’t agree with the quick jump to conclusions.

Many businesses have been unable to raise prices due to the fact that the market is simply too competitive. So, these businesses have been forced to find new ways to deal with the cost increases, including cutting hours and reducing benefits.

Notice that, once again, it’s workers who bear the brunt of the consequences.

“Any type of cut like that, it might help your business stay in the black but that’s not good for the workers,” explained Vigdor.

And, while the impacts of the $15 minimum wage must be measured using a variety of factors, it is not true that prices have not increases. Via the Washington Policy Center:

“What is more, Vigdor says that while grocery, retail and rent prices increased by just a couple of percentage points, prices in the restaurant and fast food industry, which rely heavily on minimum wage workers, have increased significantly.

“According to Vigdor, prices at fast food establishments, coffee shops and full service restaurants are an average of 9% higher than just a year ago.  He says this is not surprising given the labor-intensive nature of the food service industry.”

Advocates of the $15 minimum wage made a lot of promises. They painted a rosy picture in which workers would see a jump in their paychecks while assuring that no one would lose their jobs and hiring practices would remain healthy. That didn’t happen.

Vigdor wrapped-up the reality of the situation perfectly when he said:

“Minimum wage is often touted as way to address poverty, and working poverty; my professional opinion is that it is a two edge sword and sometimes it’s the bad edge of the sword that can dominate.”