The Corner

The ‘Living Wage’ Stops Workers from Earning a Living

When I lived near Brixton in London in the 1990s, the Ritzy Cinema had a reputation for being very earnestly left-wing, showing the sort of documentaries that the class warriors who staffed the People’s Republic of Lambeth (and no-one else) flocked to see. By all accounts it hasn’t changed much, and its staff have recently made headlines calling for a “Living Wage” over and above the UK’s national minimum wage of about $10.50 an hour. Even Monty Python cast members supported the picket line set up during the live screening of their recent concert.

The Ritzy employees have gotten their way, and will now be paid $14.20 an hour. Well, some of them. The cinema’s management has announced there will be staff layoffs as a result, with about a fifth of the workforce losing their jobs.

Any serious student of the economics of the minimum wage could have predicted this. As it happens, I’ve just written a long-ish piece (along with my colleague Ryan Young) for the Washington Examiner on the effects of the minimum wage, with particular focus on what Bastiat would call the “unseen” effects. Job losses like those at the Ritzy are just the beginning. As we summarize:

Breaking out of poverty is difficult for many people, and the evidence is that a minimum wage adds to the difficulty. Workers are fired, hours are cut, jobs are not created, non-wage perks, including insurance, free parking, free meals, and vacation days evaporate, annual bonuses shrink, prices rise, (squeezing minimum wage earners themselves), big businesses gain an artificial competitive advantage over their smaller competitors, and crime rates rise. It is a bleak litany.

The minimum wage, and even more so a mandated “living wage,” hurts people they are supposed to help.

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