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Northwest Voices

Seattle Times letters to the editor

August 6, 2013 at 7:08 AM

From fast food to Whole Foods, Seattle debates wages

Simple supply-and-demand

Seattle police officers arrest Zachary Heim for sitting a circle of protesters with hands interlocked, blocking the road outside McDonalds as fast food workers rally against "wage theft," by their employers in Seattle, on Thursday, Aug. 1. [Marcus Yam, The Seattle Times.]

Seattle police officers arrest Zachary Heim for sitting a circle of protesters with hands interlocked, blocking the road outside McDonalds as fast food workers rally against “wage theft,” by their employers in Seattle, on Thursday, Aug. 1. [Marcus Yam, The Seattle Times.]

There is much consternation in Seattle over “living wages” for low-wage workers. [“Northwest Voices: Fast-food worker,” Opinion, Aug. 3.]

Some people think these low-wage workers should, in essence, get off their bums and improve their own prospects. [“Northwest Voices: Fast-food restaurant wages,” Opinion, Aug. 2.] Others think employers should simply pay them more. [“Guest column: Show respect for fast-food workers with sufficient pay,” Opinion, August 1.] Even the mayor has chimed in, recommending that some businesses be prevented from expanding because they don’t pay “living wages.” [“McGinn’s stance on wages ups stakes in mayoral race,” NW Sunday, July 28.]

Rosalinda Guillen, executive director of Community to Community Development, demonstrates with hundreds of migrant workers employed by Sakuma Brothers Farms at worker housing in Skagit Valley on July 24. [Erika Schultz, The Seattle Times.]

Rosalinda Guillen demonstrates with hundreds of migrant workers employed by Sakuma Brothers Farms in Skagit Valley on July 24. [Erika Schultz, The Seattle Times.]

Despite all the consternation, though, no one, least of all the mayor, is thinking much about why wages are low.

Despite Seattle’s supposedly booming economy, wages are low for a simple reason: The supply of workers for unskilled labor jobs is much greater than the demand for those workers. If employers simply pay more, they’ll have to get some of that money back by raising prices.

The large supply of excess labor means no one has very much money to spend, which means fast-food prices can’t increase much without reducing sales and profit margins. Reduced sales and lower profit margins means fewer jobs and downward pressure on wages.

However, there is a way out of this pickle. If the demand for labor grows, the excess labor pool will shrink, and wages will rise. Thus, the mayor’s efforts to force higher wages by threatening to prevent businesses from expanding will have the exact opposite effect. It will decrease employment opportunities, increase the excess labor pool and put further downward pressure on wages.

James Harvey, Lake Forest Park

Comments | More in Economy, Seattle | Topics: economics, labor, living wage

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