Seattle, it seems, has become the new epicenter in the highly charged debate over the minimum wage and whether government-mandated pay increases are ultimately good for the workforce, for business, and for the free market.
As Western Journalism reported in mid-March, a number of businesses in Seattle — especially small restaurants — are facing severe financial hardship and even closure as a result of the city council’s approval of a $15-per-hour minimum wage that goes into effect over the next several years.
The pay hike imposed on businesses by the council’s progressive majority is having the proverbial unintended consequences, as minimum-wage employees talk of benefit losses that have accompanied the wage gains.
A cleaning woman who works in a hotel near the airport was asked by a reporter what she thought of the new law:
“It sounds good, but it’s not good.”
“Why?” I asked.
“I lost my 401k, health insurance, paid holiday, and vacation,” she responded. “No more free food,” she added.
The hotel used to feed her. Now, she has to bring her own food. Also, no overtime, she said. She used to work extra hours and received overtime pay.
Now, The New York Times reports on a Seattle-based business whose new, self-imposed minimum wage policy is beyond stunning and may well mean that this business will be inundated with employment applications.
Just this week, Dan Price, the founder of Gravity Payments — a credit-card payment processing firm he started in 2004 — announced to his staff that the new minimum wage at his small business would be $70,000 a year.
“…Mr. Price surprised his 120-person staff by announcing that he planned over the next three years to raise the salary of even the lowest-paid clerk, customer service representative and salesman to a minimum of $70,000.”
That works out to approximately $33 per hour, more than double what the city’s government-mandated minimum wage will be when it has climbed to the peak.
“Is anyone else freaking out right now?” Mr. Price asked after the clapping and whooping died down into a few moments of stunned silence. “I’m kind of freaking out.”
The difference, of course, between what the Seattle city government ordered by law and what private business owner Dan Price instituted by choice goes to the heart of any rational examination of the minimum wage and its impact.
As the Times article notes, the move by Gravity touches upon another hot-button issue, in addition to minimum wage. “Mr. Price’s…unusual proposal does speak to an economic issue that has captured national attention: The disparity between the soaring pay of chief executives and that of their employees.”
The Gravity boss says he will pay for the staggering wage hikes for his employees in a way that would no doubt please populist politicians advocating “economic justice” and redistribution of wealth.
“…by cutting his own salary from nearly $1 million to $70,000 and using 75 to 80 percent of the company’s anticipated $2.2 million in profit this year.”
It will be interesting to see how Dan Price’s high-flying wage structure fares as unanticipated market forces inevitably affect his company’s fortunes.
The long-term question, certainly, is whether those forces of Gravity will bring Price’s lofty plans crashing back to Earth.
This post originally appeared on Western Journalism – Informing And Equipping Americans Who Love Freedom