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The NYT reports that in a unanimous vote, the Seattle City Council went where no big-city lawmakers have gone before, raising the local minimum wage to $15 an hour, more than double the federal minimum, and pushing Seattle to the forefront of urban efforts to address income inequality. "Even before the Great Recession a lot of us have started to have doubt and concern about the basic economic promise that underpins economic life in the United States," says Council Member Sally J. Clark. "Today Seattle answers that challenge." High-tech, fast-growing Seattle, population 634,535, is home to Amazon.com, Zillow, and Starbucks. It also has more than 100,000 workers whose incomes are insufficient to support their families, according to city figures and around 14% of Seattle's population lives below the poverty level. Some business owners have questioned the proposal saying that the city's booming economy is creating an illusion of permanence. "We're living in this bubble of Amazon, but that's not going to go on," says businessman Tom Douglas. "There's going to be some terrific price inflation."
(Score: 2, Insightful) by EQ on Thursday June 05 2014, @08:48PM
That's what's in question. Pricing it higher than its worth will make some job disappear - either to automation (think kiosks at the mcDonalds and automated drink and burger making machinery instead of min wage workers), or simply as the business that do not have the overhead close up. The big companies will not be hurt, they have fiscal reserves and other parts of the company to tide them over. Its the small businesses and local places that get hit hardest. They don't have the automation and capital reservers the big guys do. So they big guys price under them, drive them out of business. Then once the competition is reduces, up go the prices to a level fitting the costs. The end result is fewer but larger corporate employers at the bottom end, less diversity, and much slower job creation - because small and medium businesses do a majority of the job creation in the economy. So Seattle becomes more and more dependent upon fewer and fewer large companies. Who will use this leverage to extract favorable treatment. Also, if you live just outside the city limits, get ready for a surge of small businesses opening near you - they will gladly leverage the lower wages in the surrounding areas to sell to those in the higher cost city with good margins - and likely move out there themselves to avoid the coming problems in seattle, as the tax base shrinks and tax burden goes up with the departure and destruction of the small and medium business sector. So boom time for the burbs is owing, but not so much for the city itself short of large corporations doing well. Seattle, you asked for it, you've committed slow suicide - hope you enjoy only having box box retailers and megacorp stores to choose from - you've strangled the small entrepreneurs or else force them to find more favorable ground. Key measure to watch? Unemployment, and small business growth/shrinkage - despite Seattle thinking they exist in a bubble, they don't - surrounding areas can and will compete for businesses, and they've just been handed a huge advantage. Ask California how it feels to pass stupid laws that push companies into leaving for Texas.