For the 10 years or so that I lived in the Washington, D.C. area, I would fly back home to the Midwest every Thanksgiving and Christmas. It was a fresh hell every time. Wonderful as it was to see family and friends, getting to them was brutal. Between security lines, crowds, and flights full of surly, harried passengers, the holidays have a way of making the miracle of human flight actually unpleasant. Labor unions see this as an opportunity to campaign for a minimum wage increase.
About 500 workers at Chicago’s O’Hare Airport, along with a local branch of the Service Employees International Union, have been pressing for a $15 minimum wage, and threatening to go on strike to press the point. They originally planned to do it during the Thanksgiving travel rush, one of the busiest travel periods of the year. But realizing that such timing might not exactly be good public relations, they have apparently decided to wait until after the holiday.
If they want to make workers better off, they might consider a different policy goal. Employers facing payroll increases of the magnitude advocated by the Fight for 15 campaign will have to make all kinds of cuts elsewhere to make up the difference.
Minimum wage hikes are not free money for workers; they have tradeoffs. For one, that likely means fewer workers in the first place. And the ones who remain will have to work that much harder to make up for their former colleagues’ absence—and since they might have fewer hours in which to do it, they might not even get anymore take-home pay.
That free parking spot and free lunch? Gone. Fewer breaks, less generous vacation and leave policies, smaller or no annual bonuses, and more are other possible tradeoffs. So are higher consumer prices, which also eat away at paychecks.
Every employer will find a different mix of tradeoffs. But those tradeoffs will always be there. One understands why O’Hare employees want a raise; everyone wants a raise. But a higher minimum wage, despite its directness and simplicity, is unlikely to have its intended effect.
Another, underappreciated tradeoff is that minimum wage increases also mean tax increases for many poor workers. Many on-the-job perks such as the ones listed above are untaxed, because they aren’t wages. When those get converted to wages, all of a sudden they are taxed. This is another tradeoff that minimum wage activists should consider.
What would be better for workers than a minimum wage hike? The answer is multi-faceted. The general idea is to make it easier for people to start businesses and create jobs. Occupational licensing, extensive permit requirements, and other stifling regulations make it hard for people to make themselves—and others—better off. Better to campaign to remove those shackles than strike for a feel-good policy that doesn’t do good on net.