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Why minimum wage increase in Seattle will not hurt the economy

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A new contentious topic emerged from the Occupy protests: minimum wage increase to $15/hour in Seattle. After analyzing much of the available data, I concluded that it is generally good for the economy. The Congressional Budget Office estimates that if the minimum wage nationwide is raised to $10.10/hour, every job that is eliminated as the result of the increase will be matched by 30 or more jobs with higher pay, also because of the increase.

Now, I am supposed to write about family and parenting, where this subject becomes personal. I believe that every employed person in this country deserves dignity and respect. Hard-working moms and dads come home and try to be the best parents for their kids, to put quality food on the table and to make their lives as carefree as possible. How are they to do this if they have to work two and sometimes three jobs just to afford housing and cheap, not very nutritious food? There is something wrong with this picture and we should fix it. Please find below the reasons why raising the wage floor to $15/hour will not have dire consequences and may even help local economy grow, creating more jobs.

Paul Krugman
Paul Krugman Jeff Zelevansky/Getty Images

Paul Krugman

Paul Krugman, a Nobel Prize winning laureate, an economics professor and an author, contends: “Now, you might argue that even if the current minimum wage seems low, raising it would cost jobs. But there’s evidence on that question — lots and lots of evidence, because the minimum wage is one of the most studied issues in all of economics. U.S. experience, it turns out, offers many ‘natural experiments’ here, in which one state raises its minimum wage while others do not. And while there are dissenters, as there always are, the great preponderance of the evidence from these natural experiments points to little if any negative effect of minimum wage increases on employment.” He said that at Princeton in 2013.

Seattle-Tacoma International Airport
Seattle-Tacoma International Airport Photo by Stephen Brashear/Getty Images

Seattle-Tacoma International Airport

Speaking of "natural experiments", as Mr. Krugman well put in the previous segment, there is one going on right now at a tiny city of SeaTac, where the main business is the international airport that serves a vast area to the north and south of Seattle. Voters there passed a $15/hour minimum wage initiative, and nothing bad happened. There were no layoffs or price hikes, instead, worker turnover decreased, which in turn increased profits of local businesses around the airport. Currently, the airport is exempt from the $15/hour requirement, and the case is pending review at the State Supreme Court.

Dick Cheney
Dick Cheney Joe Raedle/Getty Images

Dick Cheney

Do you remember this face? This is Dick Cheney accepting an award from ALEC, American Legislative Exchange Council. This organization is behind all the false data and attacks on $15/hour minimum wage, and they profit if it does not happen in Seattle. ALEC is funded by big money donors and spends this money fighting things like paid sick leave, unions and pay increases.  ALEC pushes for more deregulation of business and fewer rights for workers. It is worth noting that the National Restaurant Association, which fought the $15/hour initiative in SeaTac and is currently fighting similar attempt in Seattle is a member of ALEC.

Michael Bloomberg
Michael Bloomberg Brad Barket/Getty Images

Michael Bloomberg

In February 2012, former New York City mayor Michael Bloomberg said: “Raising the minimum wage will put much-needed cash in the pockets of more than 1.2 million New Yorkers, who will spend those extra dollars in local stores.” Nothing hits home like this quote. If people who are barely scraping the bottom get a boost in income, they will immediately spend this money and help the local economy by creating jobs.

 

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