Thursday, August 25, 2016

Fight For $15 Meets Reality: D.C. Restaurants Lost 1,400 Jobs During First Half of 2016

In a shocking twist, D.C. is not exempt to the basic laws of economics.

By Eric Boehm, a reporter at Reason.com. Excerpts:
"Washington, D.C., is getting a real life lesson in economics as the city moves closer to implementing a $15 per hour minimum wage.

During the first six months of 2016, restaurants in D.C. shed 1,400 jobs. That's a 2.7 percent decline in food service jobs in just six months, the largest drop seen in that sector in more than 15 years. Even during the 2008 recession, restaurant jobs barely dipped before continuing a steady, decades-long rise in Washington.

Mark Perry, an economist and scholar for the American Enterprise Institute, says restaurant jobs are often "ground zero" for consequences of minimum wage increases. The minimum wage in D.C. increased to $10.50 an hour in July 2015 and climbed to $11.50 an hour on July 1, 2016, with further increases planned in coming years until the goal of $15 per hour is achieved.

It's telling that the decline in restaurant jobs appears to have struck only within the borders of the capital city, while restaurants in the Maryland and Virginia suburbs added 2,900 jobs during the first six months of this year.

"While it might take several more years to assess the full impact, the preliminiery evidence so far suggests that D.C.'s minimum wage law is having a negative effect on staffing levels at the city's restaurants," Perry wrote on his blog this week.

For the visual learners in the audience, here's how food industry job growth in Washington, D.C., compares to the city's nearby suburbs over the past decade:

American Enterprise Institute, Mark Perry 
American Enterprise Institute, Mark Perry"

"Supporters of higher minimum wages will claim there is little actual evidence of job losses when one state raises mandatory wages and nearby states do not. Almost always they will point to a single study looking at Pennsylvania and New Jersey that found no negative economic consequences for workers after the latter state increased the minimum wage by a few cents in 1992.

That study has been debunked, but even if you buy the premise that small adjustments in minimum wages might not have catastrophic affects, there's another problem: progressive policymakers are no longer pushing for small increases in the minimum wage."
See It's Simple: Hike The Minimum Wage, And You Put People Out Of Work for Gary Becker's views on the Card & Krueger study.

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