Minimum Wage Laws Kill The $5 Footlong
Article by FLN Staff.
Fathom the irony of raising wages to help the working poor, and making it harder for them to buy lunch. If you can, you probably aren’t affiliated with the city of Seattle, where a Subway franchisee cannot afford to offer the $5 foot-long because of Seattle’s labor laws. Indeed, when they raised their minimum wage, they made it harder for poor people to buy sandwiches. Basic economics tells us that human labor is a business’ largest expense, and any increase in labor cost will necessarily be reflected in the price of a product, particularly where the margins are narrow.
Don’t take our word for it; the University of Washington determined that in spite of the minimum wage increase, 2016 low wage earners had $125 less per month. That means the wage increase amounts to a regressive tax, taking money from those who were upwardly mobile on the wage scale but still poor, and giving it to those on the bottom rung of the ladder. Poor people are demonstrably faring worse because of Seattle’s intervention into the market because of course, increased prices equal increased expenses that all must pay, no matter how poor.
Throw in the soda tax, and suddenly the low-margin sandwich shop with high urban operating costs compounded with these additional regulations may not stay in business. These policies are starting a vicious cycle of poverty and unemployment, rather than the virtuous cycle the wage hike was meant to spark. As we have established, Seattle is immune to this tragic irony.
Image Credit: By David Shankbone (Own work) [CC by 3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons