Minneapolis’ Minimum Wage Hike Will Hurt The Workers It’s Supposed To Help

Minneapolis’ Minimum Wage Hike Will Hurt The Workers It’s Supposed To Help

Laws can demand doubling the pay for low-skilled workers, but there's no way to mandate how businesses will deal with unsustainable labor costs.
Greg Sorrell
By

Last Friday, the Minneapolis City Council approved a $15-an-hour minimum wage ordinance. The ordinance sounds good on paper—especially for workers at or near the poverty line, which for a single person is just over $12,000 per year. Via this minimum wage hike, these workers should see their annual income nearly double, even after taxes.

But the reality is nothing to be excited about. While laws can demand doubling the pay for low-skilled and inexperienced workers, there is simply no way to mandate how businesses will deal with such unsustainable labor costs. Small businesses are left facing some pretty unsavory decisions.

If they increase their prices, people will buy less and won’t be happy about it. Those of us who spoke out against Donald Trump’s hypothetical tariffs during the 2016 campaign warned about the devastating effect a 30 percent increase in Mexican imports would have on working families. The same is true under these circumstances: under this new ordinance, if businesses choose not to raise their prices, their profits would be greatly diminished. Existing businesses would be stalled, left struggling, and investors would be far less likely to invest in new businesses.

Minimum Wage Laws Have Unintended Consequences

So, while people are happily re-tweeting a video of Keith Ellison singing folk songs to celebrate Minneapolis’ new ordinance, employers in Seattle have been forced to cut nearly 4 million hours from low-wage workers per quarter under similar wage laws. Just as Obamacare created the “29ers”—workers who had their hours cut because businesses were forced to provide costly benefits to anyone working at least 30 hours per week—the wage mandate has resulted in Seattle workers losing $125 per month on average. That’s a key figure in a recent study showing that for 37 percent of Americans, an unexpected bill of $100 would be financially catastrophic.

Mandating high wages for all businesses, regardless of their business models, hurts the people progressive politicians seek to “help,” and once again confirms the prescience of Ronald Reagan’s nine most terrifying words: “I’m from the government, and I’m here to help.”

Minneapolis is already well acquainted with the repercussions of raising the minimum wage by legal force. In the fall of 2015, La Belle Vie—the single most important and influential restaurant in Minneapolis at the time—closed their doors forever after 17 years. Over the years, La Belle Vie had won countless awards and ushered in a new generation of chefs, who went on to open over a dozen more restaurants throughout Minneapolis. Sustained success is hard-won in the service industry. The average profit margin for a restaurant is just shy of 4 percent.

In August of 2015, Minnesota began instituting higher minimum wages without a tipped employee credit. By autumn of that same year, La Belle Vie had become unstable. It took less than four months for La Belle Vie to shutter its doors after being required to raise the wages of people who were being paid between $2-$5 per hour on paper, but were actually earning $25-$40 per hour in tips.

This newly-passed ordinance again includes no exceptions for tipped workers, which is, well, crazy because nearly three-fifths of all workers paid at or below the federal minimum wage are employed in the hospitality and leisure industry, with the vast majority of workers in restaurants. For most of these employees, tips supplement their hourly wages—which means they don’t need help. Minimum wage earners tend to be young. Despite making up one-fifth of workers paid hourly, people under 25 make up about half of those who earn the federal minimum wage. Just 2 percent of people 25 or older earn the minimum wage or less.

Selling Long-Term Sustainability For Short-Term Success

Liberal politicians have created a temporary shortcut to climbing the economic ladder, which is why 55 percent of Millennials favor a $15 minimum wage. But their promises cannot be kept without profits—profits and success that are demonized by the left, and held up as examples of greed to the 56 percent of our youth who have a positive view of socialism.

The willingness to accept long-term insolvency for immediate political benefit is a cornerstone of modern liberalism. While Keith Ellison is singing, small businesses are closing their doors. While Donald Trump and CNN are busy feuding, cities like Minneapolis are aggressively socializing wages and Millennials are applauding them for it. This should be of grave concern to any conservative. This is the result of a worldview built on whimsical sentiment, and resentment.

Young voters have been bewitched by Bernie Sanders—a man who has more houses to his name than meaningful pieces of legislation—into believing that commodities are rights. But the fact of the matter is that commodities cost money. My right to free assembly doesn’t cost someone else money. This is not the case with healthcare or minimum wage ordinances. Remember, Sanders won more votes among Millennials than Clinton and Trump combined.

And where is one most likely to encounter supporters of politicians like Sanders and Ellison? A record shop on Thayer Street in Providence; a book store in Lincoln Square, Chicago; a coffee shop in Five Points, East Nashville; a bar in Minneapolis, Minnesota; a thrift store in Boston; a riot in Berkeley, California. They are all drawn to these places because of the small businesses. Progressives advertise themselves as the champions of the poor. That is deeply misleading and dangerous.

Don’t ‘Pull Down The House Of Another’

Rather than teaching our youth to see what their neighbor has worked for, we ought to teach them to see the work they do. Abraham Lincoln once said, “Let not him who is houseless pull down the house of another; but let him labor diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built.”

We have the freedom to pursue our best selves, in our work and otherwise. In the long term, using government ordinances to bypass the experience that separates the rungs on the economic ladder is antithetical to laboring diligently, and is ultimately destructive to everything our youth are attracted to in places like Minneapolis. But in the short term, it does make for great bumper stickers.

Greg Sorrell lives in Nashville with his wife and children. He is currently working on his first book about overcoming addiction and liberalism. You can find more of his work at his website. You can find more of his work at his website www.watchwordpolitics.com and follow him on Twitter @gregsorrell.

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