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On minimum wage laws, don't follow Seattle's lead

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By Marcos Lopez

What happens when public policy hurts the very people it is supposed to help? Unfortunately, the city of Seattle is finding out.

A few years ago, Seattle decided to gradually raise its legally mandated minimum wage to $15 an hour by 2021. Supporters cheered saying it would help those struggling at the bottom of the economic ladder and bridge the gap of income inequality. In reality, increasing the legal minimum wage decreases the actual incomes of the working poor and makes it more difficult for young adults to find work.

According to a new study by the National Bureau of Economic Research funded by Seattle's government, low-wage workers in Seattle have actually seen a decline in their working hours since the minimum wage law went into effect. This matters of course, because fewer hours means a smaller paycheck.

How much smaller? Try $125 less a month. That's rent, a cell phone bill, or groceries for the month for a working mother living paycheck to paycheck. The explicit purpose of increasing the minimum wage is directly undermined by it.

The study comes as calls to raise the minimum wage here in Nevada intensify. In fact, during the most recent legislative session, three separate bills were introduced to increase the state's minimum wage laws. And even though all three bills eventually stalled, supporters have made it clear that they intend to ramp up the pressure when the Legislature reconvenes, and have said they will call for a referendum if they are unsuccessful in the legislative process.

But supporters of a minimum wage hike should keep in mind what Seattle is finding out the hard way. By increasing the cost of doing business, their proposals will likely decrease employment opportunities here as businesses could reduce employee hours and put off hiring additional workers. This could include teenagers and young adults that are trying to enter the workforce. As the Los Angeles Times notes, minimum wage hikes "could hurt opportunities, especially for black teenagers, one of the most vulnerable groups in America."

This is important context as the rest of the state is only beginning to climb out of the economic recession. Instead of making it more difficult for businesses to grow, expand, and hire, lawmakers should look for ways to ease the regulatory and taxpayer burden on those most responsible for creating jobs and economic opportunities.

Finally, when thinking about minimum wage laws, we should remember that minimum wage jobs are mostly entry-level; they are not intended as jobs for life. They are called "entry level" for a reason - they are a steppingstone to better paying jobs and even greater employment opportunities.

We know that it is entirely possible for a card dealer to rise his or her way through the ranks to become a casino floor manager. Or a busboy to manage a restaurant or a landscaper to own a landscaping business.

But this is only possible if the government does not get in the way by imposing rules and regulations that make it difficult for folks to catch a break and get their foot in the door in the first place.

The results are in from Seattle: minimum wage laws hurt the poor. This fact should guide policymakers who are prone to support well meaning, but incredibly misguided legislation, that will only hurt the very people it is intended to help.

Marcos Lopez is the Nevada field director for Generation Opportunity, a right-of-center advocacy group that is attempting to engage young voters. It is a nonprofit tied to Freedom Partners, which is funded by the Koch Bros. and others.

 

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