Monday, June 01, 2015

Raising minimum wage is a win-win. You wish

The Seattle Times investigator does not investigate today, he just glances. The FYI Guy Gene Balk looks into the impact of Seattle’s higher minimum wage, which is now $11 with an option for smaller employers to pay $10 with $1.00 in benefits. Source: Seattle

He finds that higher pay will allow minimum-wage workers do afford better places to live. It’s a win-win situation. Heaven on earth. Wrong!

Wrong because he either willfully or ignorantly ignores what happens when more people are willing and able to pay more for rent. The increased demand with the same supply will cause rents to go up. It’s the law of supply and demand = Econ 101. Doesn’t Balk know the very basic law of supply and demand?

So a few months from now Balk and every City Council member will angrily investigate why greedy property owners have raised their rents. The answer is staring him in the face. Supply and demand is called a law because it always works.

Seattle Times

Photo: Seattle P-I

3 comments:

Bruce B said...

Just calling something a "law" doesn't mean that it always works without regard to any other factors. Indeed some "laws", such as the "law of averages", are actually fallacies.

Some complications involving supply and demand are explained here: http://horsesass.org/there-is-no-law-of-supply-and-demand/

There are other flaws in your post: You have not rebutted the claim that minimum wage workers will be able to afford better places; they will have more money so they can pay higher rent for better places. And contrary to your implication, supply -- both total supply and supply at any particular rent level -- is not fixed.

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