Saltsman: Silver lining for wage activists

Michael Saltsman

The post-election silver lining for left-wing activists and labor unions at Thanksgiving get-togethers this holiday weekend is that minimum wage ballot measures were passed in Arizona, Colorado, Maine, and Washington.

But upon further examination, even this silver lining is tarnished. Labor unions and big liberal donors poured millions into these campaigns hoping that they would act as a vehicle to drive turnout for Democratic candidates.

Yet this strategy turned out to be a flop. Of the 20 U.S. Senate races where the Republican incumbent was on the record voting against a $10.10 federal starter wage in 2014, only two lost their seats — one of whom was expected to lose anyway. These results are consistent with an EPI/Google consumer survey poll that finds most voters don’t base their voting decisions on candidates’ minimum wage positions.

Some childcare centers in Washington, which voted to raise its minimum wage to $13.50, are being forced to significantly increase their prices as a direct consequence of the labor costs associated with the wage hike. Advent Lutheran Child Center in Spokane Valley is raising prices by $140 a month per child, with families not realizing the negative impact the hike would have on their pocketbooks.

Price increases aren’t always an option to absorb minimum wage costs because consumers can simply decide to stay home. Megan Turner, who owns Cool Beans Coffee in Spokane, says that the starter wage mandate may at worst force her to close her business. At best, “We will have to require more out of our baristas, hire fewer workers, and raise prices.”

In Colorado, which voted to raise its minimum wage to $12, Steve Kanatzar, managing partner of The Airplane Restaurant in Colorado Springs, plans to cut back on labor costs by having his cooks report to work an hour later each day. “You can get diced tomatoes, cooked chicken, steaks that are already cut,” Kanatzar told the Denver Post, indicating that the starter wage hike may now make the cost-benefit of using prepared food worthwhile.

The state’s school districts as well as those in Arizona also face a cost squeeze from the wage mandate, as thousands of custodians, cafeteria workers, and other support staff are affected. “School funding is already inadequate,” said Kirk Vsetecka, HR director of Colorado’s Widefield School District 3, “and this just exacerbates the problem.”

In Maine, which also passed a $12 wage, Steve DiMillo, owner of DiMillo’s on the Water in Portland, explained that the wage hike’s application to tipped employees — a 220 percent wage hike for employees who already earn up to $35 an hour — will cost the restaurant over $600,000 a year. This cost increase threatens his employees and the future of his family’s restaurant. Raising prices dramatically isn’t an option, says DiMillo. “There’s a limit to how much people want to pay for a bowl of chowder and a beer.”

These stories come as no surprise to those who have been following the fallout of dramatic starter wage increases elsewhere in the country. In California and New York, which both passed $15 minimum wages earlier this year, dozens of small businesses have been forced to lay off staff, reduce hours, or close entirely at least partially as a result of mandated increased labor costs.

For other states looking to follow suit by raising their starter wages, these stories should serve as a wake-up call. And for labor unions and activists, there’s not much to be thankful for as the consequences of dictating wages play out this Thanksgiving.

Michael Saltsman is research director at the Employment Policies Institute.