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The Seattle City Council yesterday unanimously raised the local minimum wage to $15 per hour, the highest in the nation.

The New York Times writes that "under the plan approved on Monday, the hourly wage will rise to $15 by 2017 for employers with more than 500 workers that do not provide health insurance, and by 2018 for those large employers who do. The minimum will be phased in through 2021 for smaller employers. In its early years, the law allows employers to include tips as part of a workers’ compensation in reaching the minimum, but that provision is phased out over time."

The Times also reports that "the vote, economists and labor experts said, accentuates the patchwork in wages around the country, with places like Seattle — and other cities considering sharply higher minimum pay, including San Diego, Chicago and San Francisco — having economic outlooks increasingly distinct from those in other parts of the nation. Through much of the South, especially, the federal minimum of $7.25 holds fast.

"Eight states plus the District of Columbia have already increased their minimum wages this year, the most to have done so in a single year since 2006, and at least eight other states and municipalities could put minimum wage ballot measures before voters by November. But it is the scale of ambition that is catching the attention of economists, labor leaders and business owners."

The story also notes that "Washington State already has the highest state minimum wage in the nation, $9.32, but more than 24 percent of Seattle residents earn hourly wages of $15 or less, according to the city, and approximately 13.6 percent of Seattle residents live below the federal poverty level."
KC's View:
The argument about an increased minimum wage seems pretty clear. Some people say that it will destroy businesses, forcing them to lay people off as a way of keeping their labor costs in line, which will have a negative impact on the nation's employment levels. And others argue that in the long run, people who make more money will have more money to spend, which will be good for the economy, and will lead to companies actually hiring more people to handle the increased business.

I guess we're gonna find out who is right.

There have been studies saying that we can already see the answer - that Washington State, with the highest minimum wage in the country, also has some of the highest job growth because of the health of its economy. (Of course, if more than 13 percent of Seattle's residents are living below federal poverty levels, there would seem to be limits on how effective a high minimum wage can be. Though, maybe we can attribute that high percentage on the high cost of coffee in Seattle…)

I actually think that it is entirely possible that both arguments will prove out … that there could be a negative short-term impact, but that the longer term prognosis actually is pretty good.

I got an email yesterday from an MNB reader saying that he'd never seen any evidence that increased wages lead to increased productivity … but that's certainly never been my argument. I do believe that there is a wage disparity problem in this country, and that to some degree it reflects an attitude that does not value work on the front lines as much as it values work in the executive suite. Which strikes me as both a value and a values problem.

As I've said here before … the income disparity issue is not one that can simply be solved by increasing the minimum wage. It strikes me as typical of this country that we look at real problems created by a vanishing middle class and the enormous (and growing) chasm between the top five percent and everybody else, and the argument focuses on the minimum wage. You can't boil down systemic cultural and socio-economic issues to a couple of bucks per hour. Not to say that a couple of bucks per hour can't have an impact, but it is a band-aid.