by Dr. Roy Cordato
Senior Economist, Emeritas
The state of Washington has the highest minimum wage in the country at $9.32 an hour. Consequently, the state has the third highest teenage unemployment rate in the country at 30.6 percent. This is almost 10 percentage points higher than the national average of about 21 percent.
But the city of Seattle, which has the 10th highest teenage unemployment rate among large MSAs in the country at 31.4 percent, can’t leave bad enough alone. The city council has just increased the minimum wage for workers trying to find a job within the city’s borders to $15 an hour. Of course the minimum amount that an employer will have to pay an employee, i.e., the minimum amount the employee’s skills will have to be worth, will be well above $15/hr. This is particularly true if it is a job that requires 30 or more hours per week of work and is for a company, maybe like a McDonald’s or a Walmart, with more than 50 employees. If this is the case, the worker’s minimum compensation, over and above the $15 per hour, will have to include health insurance. With the employer’s portion of Social Security, which adds about $1.12 per hour to the cost, plus unemployment insurance and whatever mandated benefits might exist in the state of Washington, the minimum per hour cost of hiring someone, possibly to flip hamburgers at a McDonald’s or to be a cashier or a person to unload the trucks and stock the shelves at a Family Dollar, could easily be over $19 an hour.
So imagine that you are a 17- or 18- year old African American kid who just graduated from an inner city Seattle school — or maybe you even dropped out — where the education that you received was not so great, and you are out looking for your first job. That is, you are out looking for a chance to bring home an honest paycheck and at the same time get some experience so you can begin climbing the economic ladder in an attempt to make a success out of your life. Here’s the problem: Because of your poor education and lack of experience, your work related skills are only worth $10 an hour to employers. This doesn’t mean, of course, that with hard work and some on the job training your skills won’t improve and you won’t be able to command a higher wage eventually, but for now $10 an hour is all your skills are worth. At a cost of $15 or $19 an hour, who will hire you? The answer, of course is no one. So not only are you doomed to be unemployed, at least legally, but you are blocked from gaining the skills through on the job experience and training that will allow you to better yourself over time, all in the name of progressivism. Thank you, City of Seattle.
Someone who explains these effects better than I is economist Walter Williams.
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