For decades, some have argued that it’s an economic law: if you raise wages, jobs are reduced.
But evidence is coming in showing that raising the minimum wage actually boosts state economies compared to states that don’t raise it. Instead of a zero-sum game, where somebody has to lose if somebody else wins, new thinking and new evidence shows that boosting the spending power of low-wage workers helps lift the entire economy of a state.
Washington state has the highest minimum wage in the nation, and Seattle recently voted to raise the wage floor to $15 an hour. Seattle is also the fastest growing city in the nation.
Local entrepreneur Nick Hanauer wrote in Politico.com recently that those two things are not a coincidence. He says rich business owners like him shouldn’t see economics as a zero-sum game, where workers have to lose for the wealthiest people to win, but that the way to create wealth is to make sure ordinary people can be good customers.
From Hanauer’s post:
If workers have more money, businesses have more customers. Which makes middle-class consumers, not rich businesspeople like us, the true job creators. Which means a thriving middle class is the source of American prosperity, not a consequence of it. The middle class creates us rich people, not the other way around.
Hanauer goes on to say:
We’ve had 75 years of complaints from big business—when the minimum wage was instituted, when women had to be paid equitable amounts, when child labor laws were created. Every time the capitalists said exactly the same thing in the same way: We’re all going to go bankrupt. I’ll have to close. I’ll have to lay everyone off. It hasn’t happened. In fact, the data show that when workers are better treated, business gets better. The naysayers are just wrong.
Most of you probably think that the $15 minimum wage in Seattle is an insane departure from rational policy that puts our economy at great risk. But in Seattle, our current minimum wage of $9.32 is already nearly 30 percent higher than the federal minimum wage. And has it ruined our economy yet? Well, trickle-downers, look at the data here: The two cities in the nation with the highest rate of job growth by small businesses are San Francisco and Seattle. Guess which cities have the highest minimum wage? San Francisco and Seattle. The fastest-growing big city in America? Seattle.
Fifteen dollars isn’t a risky untried policy for us. It’s doubling down on the strategy that’s already allowing our city to kick your city’s (butt).
