Alas, the unintended consequences of feel-good economic policies (aka Zombie Economics*) strikes again…
It’s a time-tested truism and the formula really is rather simple: If you want to watch jobs disappear, raise wages beyond their market value.
Such is the case in Washington DC, as the District’s bureaucrats continue to push the minimum wage to $15, it appears fast-food companies are not replacing workers who leave, which means there are less opportunities for the unemployed, many of them who are minorities.
In fact, as the American Enterprise Institute notes, unlike the surrounding suburbs in Maryland and Virgina where fast-food employment actually expanded, the District’s fast-food employment lost 1400 jobs—the worst reduction in DC since the 2001 recession.
New BLS data for restaurant employment in July for both the District of Columbia (city only, see dark line above, data here) and the surrounding suburbs in Virginia and Maryland (full DC MSA data here, the light blue line shows the MSA minus the city of DC) are displayed above and tell the story pretty clearly. Since the DC minimum wage increased in July 2015 to $10.50 an hour, restaurant employment in the city has increased less than 1% (and by 500 jobs), while restaurant jobs in the surrounding suburbs increased 4.2% (and by 7,300 jobs). An even more dramatic effect has taken place since the start of this year – DC restaurant jobs fell by 1,400 jobs (and by 2.7%) in the first six months of 2016 between January and July – that’s the largest loss of District food jobs during a 6-month period in 15 years. Perhaps some of those job losses were related to the $1 an hour minimum wage hike on July 1, bringing the city’s new minimum wage to $11.50 an hour. In contrast, restaurant employment outside the city grew at a 1.6% rate in the suburbs (and by 2,900 jobs) during the January to July period. [Emphasis in original.]
As other states and municipalities bend to the will of union-funded protesters and attempt to artificially raise wages by regulatory fiat, there is more evidence that, by doing so, may cost jobs.
* The term ‘Zombie Economics‘ as used herein refers to the fact that zombies are unthinking, instinctual creatures that only act based upon their own appetite. They do not use logic or forethought in analyzing their movements and, as a result, are often easily destroyed.
‘Zombie economics, as used herein, should not be confused with the left-wing theory by the same name propagated by Australian John Quigley.
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