When Paying More Requires Paying Even More

The Seattle City Council is learning a very hard lesson about how free market economics works.  Seattle is one of those cities that instituted a $15 an hour minimum wage based on the argument that it would be a “living wage that would eliminate poverty in the community”.  The only thing that the higher wage has created is an explosion of homelessness in the city.

 

Low-skill workers hoping to capitalize on artificially high compensation are flocking to Seattle in hopes of landing one of those “living wage” jobs–but are finding that there is no demand for their limited services–as companies looking to manage expenses are getting by with the fewest employees necessary.

 

The homelessness is then exacerbated by more people making more money who can then afford to rent in the city–tying up more of the housing stock.  And today’s millennial worker is supplementing their income by offering up spare bedrooms on sites like AirBNB–allowing them to rent places that have more space than they need–but provide them with a nice source of income.  Big companies like Amazon and Starbucks have brought more people to the city who are looking for that “urban lifestyle” leading developers to replace what had been low-income housing stock with fancy new places on bus routes and near their jobs in a process that used to be called “urban renewal” but is now known as “gentrification”.

 

But don’t worry, the Seattle City Council has come up with a grand scheme to fix all of these problems–they are instituting a “head tax” on workers.  Not all workers, mind you–just those who work for the largest corporations in the city: the aforementioned Amazon and Starbucks.  For every employee that they have, those companies will have to pay the city 275-dollars a year–with the revenue ostensibly to be used to “address homelessness”.  Amazon and Starbucks will not be allowed to take this extra tax out of employees’ checks–instead it must come from net profits.

 

Seattle officials sprung this head tax after Amazon had committed to expanding their corporate operations in the city.  It will be interesting to see if owner Jeff Bezos–a known liberal who is always demanding that government “do more”–goes through with those plans now that he is the one footing the bill for government “doing something, or if he decides to take his billions of dollars of business (and thousands of employees) somewhere else.  If he did, the Seattle City Council will have addressed their homelessness issue–not just the way they expected–as the young professionals leave, urban renewal dies and those looking for an easy ride move onto the next city with Democratic leaders that require employers to pay $20 an hour or mandate health care coverage or allow legal public urination, drug use and sanctuary city status.

 

It’s simple supply and demand.  Not that today’s “New Socialists” would understand that.

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