Not long ago, new kinds of jobs appeared: app-based gig work.
Gig work includes jobs such as dog walking on Rover, Taskrabbit work, DoorDash food delivery, and Uber and Lyft driving.
Lots of people like gig work. It’s flexible. You work when you want to work.
But “workers’ rights” activists and governing socialists don’t like that. Gig workers rarely join unions. They don’t get a minimum wage.
“Uber and Lyft exploit their workers,“ reads a headline at MS NOW. ”We can’t ignore it.”
Leftists said they had a solution. Seattle’s city council imposed a $26 delivery driver minimum wage.
What could go wrong?
Now Seattle residents complain about prices.
This is what happens when politicians dictate wages.
“Obviously, when you’re increasing cost to businesses, you’re going to increase costs to customers,” economics professor Judge Glock said.
“These are unimaginably complicated markets where the company’s main job is interfacing between restaurants and delivery workers and customers. Then you have an economically illiterate city council or mayor who thinks, basically by looking at an industry through reading the news, they can appropriately regulate the exact wage.”
Former Seattle City Council President Sara Nelson admitted that the politicians made a mistake: “We created a problem and it’s our responsibility to fix it.”
They repealed the harmful law?
No.
Nelson said they just needed to adjust their numbers: “If we had gotten the minimum pay standard right, we would not see the decline in the revenue.”
Such conceit! Somehow, the political class knows exactly what every worker should be paid.
Price controls never work.
Flexible pricing does.
Competition forces businesses to constantly adjust pay and prices to attract workers and customers.
When smug politicians think that they can set a price that’s “right,” “it’s just patently absurd,” Glock said.
“You’re not going to have any improved well-being for people, and you’re not going to have increased wages for those workers,” he said.
A similar minimum wage increase failed in New York City, after politicians guaranteed app-based drivers an hourly minimum of about $20.
“The decrease in tips and increased competition for jobs offset all of the gains from that imposed minimum wage,” Glock said. “It’s this continual Whac-a-Mole tendency. The market responds, [so politicians] pass a new regulation to try to prevent that response. They think the next regulation will somehow squelch the greed out of the system, but there’s simply no way to do that.”
Competition is the only good way to decide what people get paid.
“A lot of politicians believe there’s a free lunch or a fixed pot of money that they can give out to the neediest people,” Glock said. “The actual effect was not to improve the well-being of workers, but to increase costs for customers and sabotage one of the most successful businesses in the city.”
