The Left/Right Crack-Up Over Seattle and the Minimum Wage

John Tamny

"You just follow the money. What happens is that you’re faced with a situation of shooting somewhere you want to shoot, versus somewhere you’d less rather shoot — and you get an extra three weeks of filming. It comes down to the fact that you have x amount of money to make your movie in a business where margins are really thin.” — Ben Affleck, on making films in Georgia over Hollywood, CA.

Few industries are more dominated by the left-wing political mindset than the film business. Despite the previous truth, filmmakers are ever in search of the lowest-cost way to produce their art. As the Affleck quote from above reveals in living color, lefty Hollywood follows the money, or better yet, the best tax deal. The super-rich industry that almost monolithically supports tax hikes on the rich is always and everywhere in search of the lowest taxes possible.

Taxes are a price, or a penalty levied on production. In that case it's no coincidence that so many movies are nowadays shot in Georgia. Hollywood’s best and brightest seek the lowest tax price (or better yet, the best tax incentive) to maximize profits in an industry defined by shrinking margins. The Peach State is very competitive on the tax front.

All of this is a reminder that when it comes to their verbal support for lofty wage minimums, the left speak with a forked tongue. Their commercial actions don’t match their redistributionist rhetoric. More important, their pursuit of that which most fattens their margins indicates that they well understand a broader truth that wage floors, or minimum wages are, in isolation, a barrier to work opportunity. High wage minimums price out certain workers must as high rates of taxation increasingly price out certain idyllic states — including California — as filming locales.

Stating what should be obvious, the minimum wage should be less than zero. Workers should be free to offer up their services at any price they want. This includes paying a business for the right to come to work. What movie aspirant wouldn’t pay Steven Spielberg to follow him around for a shoot, or for that matter, which aspiring entrepreneur wouldn’t pay Jeff Bezos a handsome sum for the right to shadow him at Amazon’s Seattle headquarters?

Speaking of Seattle, a recently released study by economists at the University of Washington (UW) indicated that a rising minimum wage in the Emerald City coincided with low-wage workers earning less money. Naturally members of the left questioned the study, while the right cheered it as validation of their belief in the minimum wage’s flaws. Arguably both sides missed the point.

About the existence of a minimum wage in Seattle, shame on the left for supporting that which restricts the right of businesses and workers to freely transact. The left’s support of wage floors is inexcusable.

As for whether or not the $13 wage floor limited work, it’s hard not to at least question the UW study. Figure that Seattle is booming. Presumably the bigger barrier to work there isn’t a mandated wage minimum as much as there’s a lack of low-wage workers relative to demand. Unknown is if the study revealed an exact correlation between rising hourly costs of low-wage workers and fewer work hours.

But even that’s not the point, and that it isn’t speaks to how the right routinely make the wrong argument against lefty intervention in the workings of the marketplace. Indeed, what if the same UW study had revealed rising earnings amid higher mandated wages? In a city like Seattle where two of the five most valuable companies in the world are headquartered, the latter would not be an impossibility. Would a different result have made the wage floors ok? When the right debate in terms of percentages, or in the case of the study, in terms of earnings, they’re to some degree handing the argument to the left as one about how to use government meddling to put people to work. But work is the easy part in a country like the US. The argument should solely be about freedom to transact. Always. Governments should have no say in how much businesses pay, or how much pay workers require in order to get up in the morning.

Yet the above argument is decidedly not the weakest one made by the right. The really silly one, one broadly offered by conservatives, concerns automation. Desperate to show they care more about low-wage workers than do interventionist lefties, members of the right constantly point to ongoing automation of low-wage work to show how cruel are wage floors. In fact, and if the correlation were real, automation would be the only reason to support that which is an offense to common sense.

Missed by a pandering right is that McDonald’s and other businesses that hire low-wage workers would be automating even if there was no minimum wage. More realistically, a total lack of a minimum wage would likely lead to even more automation. That’s the case simply because contrary to what right and left naïvely believe, low-wage workers are easily the most expensive for businesses to hire. Precisely because the work only rates low pay, and nearly always attracts the unskilled, few good workers want to stick with it for very long. As for those who do, that they would work for low wages for an extended period speaks to what lousy workers they are. Low-wage workers show up late, sometimes don’t show up at all, but most problematic is that they quit with profit-sapping frequency. Those who rate low wages are very expensive.

Henry Ford didn’t pay his employees above the market rate so that they would buy his cars, but instead did so because nosebleed rates of employee turnover at his eponymous company were costing him a fortune. Restaurants aren’t automating today to avoid paying minimum wages as much as the high rate of turnover among entry-level restaurant workers makes it too expensive to hire and train them at any price. Stating the obvious, automation speaks to freedom from the high cost of low wages.

So while the left’s support of the minimum wage is offensive, the right’s fight against what’s offensive perhaps explains why we still have wage floors. The right need to promote freedom of transaction while ever cognizant of the basic truth that businesses are desperate to automate away the work that only appeals to the least skilled. When they fight what is illogical with percentages and faux pandering, they’ve already lost.

John Tamny is Political Economy editor at Forbes, editor of RealClearMarkets.com, and a senior economic advisor to Toreador Research & Trading. He is author of the forthcoming (April 2015) Popular Economics: What LeBron James, the Rolling Stones and Downton Abbey Can Teach You About Economics.

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