Stephen Cavell closed his recent letter opposing the minimum wage with “I don’t know what to do.” By the time I had read to that point, I had already figured that out about Cavell. The “authorities” that Cavell named (Thomas Sowell and the Hoover Institute) are on the record as being 100 percent opposed to any social policy that helps the poor. These folks have been claiming that the minimum wage would be the end of the world for decades and have been wrong every time. They have previously also claimed that affordable healthcare is killing poor people. Hah.
The opinions stated by Cavell appear to have come from a University of Washington study from 2017 that showed a significant decrease in average wages after the 2016 wage increase. Problem for Cavell: The study was recently revised and shows a much lower impact than initially observed. The study has various flaws including the fact that — for some reason — it left out any businesses with more than one location (like McDonald’s). Since such businesses employ about 40 percent of Seattle, this skewed the findings (to put it mildly).
This is how the minimum wage works and why we need one. Conservative economic theory is based upon a number of fictions. One of the primary ones is that the market will take care of everyone because we can all negotiate the highest price for our goods or services. In theory, someone seeking a job will merely demand a certain salary and then negotiate with the prospective employer until they reach mutually agreeable terms. If you have ever interviewed for a job, you know that this is nonsense. Business owners are in an infinitely stronger bargaining position than their individual employees. That’s why unions exist. The minimum wage is supposed to guarantee a fair living wage for all.
I have owned or operated several companies. If your business can’t afford to pay workers $7.25 per hour, you are doing something wrong. If the minimum wage had merely kept up with inflation over the decades, it would be about $10 per hour now.
The minimum wage in Louisiana is $7.25. If one assumes a single parent with one child working full time with no paid vacation or holidays, take-home pay would be $15,080. The federal poverty level for the same family would be $16,460. Do you think it is fair for someone to work a full-time job and still live in poverty? I don’t.