If you increase the price of a good or service, including labor, you reduce the demand. From Tyler Durden at zerohedge.com:
Just last week we noted that McDonalds launched plans to replace 2,500 human cashiers with digital kiosks like the ones below (see: McDonalds Is Replacing 2,500 Human Cashiers With Digital Kiosks: Here Is Its Math):
Of course, no matter how much anecdotal and/or hard evidence is presented to liberals on the negative consequences on higher minimum wages they simply can’t be convinced it’s a bad idea. Somehow, the basic economic concept that raising the price of good (i.e. wages) would somehow destroy demand (i.e. employment levels) for that good just does not compute in the minds of progressives.
Never the less, below is yet another study from economists at the University of Washington that reveals some fairly startling takeaways about Seattle’s minimum wage. Per the chart below, minimum wages in Seattle increased from $11 in 2015 to $13 in 2016 and $15 in 2017 for large employers.
To our total shock, the study found that higher minimum wages caused a 9.4% reduction to total hours worked by low-skilled workers, or roughly 14 million hours per year. Given that a full-time employee works 2,080 hours per year, that’s equivalent to just over 6,700 full-time equivalents who have lost their jobs, just in the city of Seattle, courtesy of moronic politicians who don’t seem to grasp basic mathematical concepts.
Our preferred estimates suggest that the Seattle Minimum Wage Ordinance caused hours worked by low-skilled workers (i.e., those earning under $19 per hour) to fall by 9.4% during the three quarters when the minimum wage was $13 per hour, resulting in a loss of 3.5 million hours worked per calendar quarter. Alternative estimates show the number of low-wage jobs declined by 6.8%, which represents a loss of more than 5,000 jobs. These estimates are robust to cutoffs other than $19.45 A 3.1% increase in wages in jobs that paid less than $19 coupled with a 9.4% loss in hours yields a labor demand elasticity of roughly -3.0, and this large elasticity estimate is robust to other cutoffs.