Baltimore Democrats Propose to Kill Even More Jobs
The Baltimore City Council instead of trying to help Baltimore residents up the economic ladder is conspiring to push them off of it.
Baltimore City is not exactly known for having a robust job climate. But a majority of the Baltimore City Council wants to put people out of work by raising the minimum wage to $15.00 and hour:
Baltimore would become the latest jurisdiction to require businesses to pay workers at least $15 an hour under controversial legislation City Councilwoman Mary Pat Clarke plans to introduce Monday.
The minimum wage in Baltimore would increase incrementally until it reaches the full amount by 2020, affecting up to 80,000 low-wage workers — about a quarter of the city’s workforce. Amid a nationwide push for higher wages, other cities and states already have passed similar increases.
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Baltimore doesn’t exactly have a robust job climate as it is, but this would be the straw that breaks the camel’s back when it comes to what job market does exist in Baltimore.
Clarke’s proposal is so out there, that it would even ensure that we all get bad service at restaurants too, because Clarke’s proposal would ban tipping:
Clarke’s proposal also would end tipping for servers and other workers in restaurants, who are paid $3.63 an hour in Maryland, increasing their base wage to $15 an hour too.
Here’s are a few unwritten facts about minimum wage increases such as this one.
Raising the minimum wage increases the cost of doing business. By increasing the wage, businesses have lower margins to make a profit or just to keep the lights on. If having three staff members now costs $30.30/hour with the state $10.10 an hour minimum wage, a business will either need to pay $45.00/hour to keep all three employees on board or they will cut an employee to keep paying the same as they did before the increase.
Prices will naturally increase too. For the businesses that do keep all of their staff employed, they will need to find a way to cover the nearly 33% increase in labor costs for those employees who are making the minimum wage.
Minimum wage increases cost jobs. In Seattle, where they introduced a $15.00/hour minimum wage, people were actually put out of work before the increase even went into effect:
As the implementation date for Seattle’s strict $15 per hour minimum wage law approaches, the city is experiencing a rising trend in restaurant closures. The tough new law goes into effect April 1st. The closings have occurred across the city, from Grub in the upscale Queen Anne Hill neighborhood, to Little Uncle in gritty Pioneer Square, to the Boat Street Cafe on Western Avenue near the waterfront.
The shut-downs have idled dozens of low-wage workers, the very people advocates say the wage law is supposed to help. Instead of delivering the promised “living wage” of $15 an hour, economic realities created by the new law have dropped the hourly wage for these workers to zero.
Advocates of a high minimum wage said businesses would simply pay the mandated wage out of profits, raising earnings for workers. Restaurants operate on thin margins, though, with average profits of 4% or less, and the business is highly competitive.
The prediction of Tim Worstall in Forbes turned out to be completely accurate:
Please do note though what is the prediction. Not that there’s going to be a wiping out of employment opportunities, nor that the economy of Seattle is going to become a howling wasteland. Rather, that less human labor will be employed at $15 an hour than would have been employed if the minimum wage had not risen to that amount.
Check out this piece from Investors Business Daily about how minimum wage hikes across the country from 2015 hurt jobs and wages.
And of course what Clarke and the Democrats on the City Council don’t think about is the fact that a minimum wage service job can, in many cases, be replaced by a machine. The folks behind Hardee’s are already looking toward an all-automated restaurant, and the short term costs of investing in robots would be offset by the savings in the long run on employees making $15.00/hour. That has an even longer term impact on the economy because it means there will be fewer entry-level jobs for young Baltimoreans to gain experience, work skills, and to make some money.
The Democrats on the City Council have clearly learned nothing. Instead of trying to lower taxes and promote pro-growth policies, they’re playing politics in an election year to cover their left flank immediately before a Democratic primary and give their liberal base what they think they want. Which means that the Democrats proposing this scheme are either too naive to understand the consequences of their proposal, or just don’t care about the residents that they serve.
Another in a proud list of bad ideas from the Democrats 50-Year War on Baltimore.