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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

January 17, 2014 at 10:46 AM

Vote: Should Seattle raise the minimum wage?

One of the most important issues facing the city this year will be the push to raise the minimum wage to $15 per hour. If the minimum wage had kept pace with productivity, it would have been $21.72 an hour in 2012, according to the Center for Economic and Policy Research.

Instead, the federal minimum wage is $7.25 and $9.32 in Washington, the highest in the nation. The purchasing power of the minimum wage peaked in the 1960s and has been falling ever since.

While a relatively small cohort works for the actual minimum, a raise to $15 would sweep far more people upward.

For advocates, it’s a matter of social justice at a time of historic inequality as well as good economics — workers with more disposable income will create more demand for goods and services. Much research has found that at least modest increases in the minimum have no discernible effect on employment (for an example, see here).

Opponents say raising the minimum wage will kill jobs and wound small companies. Workers with the least skills would not be hirable at higher costs and so the people the measure most claims to help would actually be hurt. Also, franchise owners, often operating on very thin margins, would face the weight of a higher wage, not the highly profitable fast-food corporations.

What do you think?

This Week’s Links:

People upset with David Brooks, who’s tired of the inequality debate | Economist’s View

QE and gross financial flows to developing countries | Econobrowser

Stores confront new world with less foot traffic | Wall Street Journal

Student loans: The next big threat to the U.S. economy? | BusinessWeek

Desperately seeking demand in 2014 | Macrobusiness

Advocates for workers raise the ire of business | NY Times

Wal-Mart case seen as key test in struggle over labor rights | Reuters

The roots of shadow banking | Vox

 

Today’s Econ Haiku:

Hawks economy

To create a depression

In San Francisco

 

 

Comments | More in Income/wages | Topics: minimum wage

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