Effects of Minimum Wage Hikes

The effects of the increase in minimum wages is beginning to rear its ugly head in places like Washington, DC, Seattle and Los Angeles.  This comes as no surprise because when the minimum wage increase, cost have to be cut somehow or prices have to be increased.  In this case a reduction in the hiring of low wage jobs is going to have a tremendous effect on those who are just getting into the work force such as teens and young adults who need a job to get them through college.  In addition because the job market is so bad at the moment, competition is fierce for most jobs even if an individual is over qualified for a specific job.  Below is an article from Daily Signal that goes into greater depth on the issue.

Data shows a downhill economic trend for six big U.S. cities that hiked the minimum wage to $10 or more an hour in 2015.

“Chicago, Oakland, San Francisco, Seattle, Los Angeles and Washington, D.C.—all on the leading edge of the push for big minimum wage hikes—all show worrisome job trends,” wrote Jed Graham of Investor’s Business Daily.

An analysis by Investor’s Business Daily shows that these big cities are going through a period of adverse job effects in fields such as restaurant and hotel employment.

Graham highlights in his article that preliminary data possibly links the increased minimum wage to job decline but added, “The data aren’t, for the most part, stark and reliable enough to amount to smoking-gun proof.”

 “It’s getting harder and harder to argue that high minimum wages don’t destroy many jobs, as advocates claim,” Salim Furth, a research fellow in macroeconomics at The Heritage Foundation, said.

“These are early data—we’ll get better numbers over the next year —but they show frighteningly consistent job loss across different cities from different parts of the U.S.”

Both the Chicago ($10-an-hour minimum wage) and San Francisco and Oakland ($12.25- and $12.55-an-hour minimum wage, respectively) areas have sunk to five-year employment lows in the leisure and hospitality fields.

Investor’s Business Daily reports that after a $15.37-an-hour mandate for hotels with 300 or more rooms in the Los Angeles area, hotel jobs declined, while the rest of California saw a growth in hotel and motel jobs.

“This early evidence is particularly bad because most researchers believe that minimum wages take effect slowly,” Furth said. “They destroy some jobs, but they prevent the creation of even more jobs later on. Prospects may get much worse for the unemployed in these progressive cities.”

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