BIRMINGHAM, Ala. — The Birmingham City Council on Tuesday passed an ordinance that will increase the city’s minimum wage to $8.50 by July 2016 and $10.10 by July 2017. Alabama does not have a statewide minimum wage so the federal $7.25 minimum wage currently applies.
The vote on the citywide minimum wage hike comes just days after the council voted 8-1 to increase its own salary from $15,000 per year to $50,000 per year in 2017. City councilmen serve in a part-time capacity.
The council claimed the minimum wage increase was necessary because of the rising cost of living in Birmingham, although The Magic City was ranked the most affordable city in the United States in a recent study by Forbes Magazine.
“The goal of it is to really try to bring in line the cost of living standards,” said City Council President Jonathan Austin, who sponsored the measure.
Free market economists have long criticized minimum wage hikes for chopping the bottom rung off of the economic ladder, warning such mandates only increase layoffs and cause prices to rise, effectively eliminating the supposed benefits of the forced wage increase.
Most recently, Seattle has become the poster city for a minimum wage hike gone wrong.
The city increased its minimum wage to $15 per hour last year and has experienced disastrous consequences.
In an effort to avoid layoffs as a result of the hike, some small businesses have reacted by tacking on to customer’s bills an additional 15 percent surcharge.
Additionally, some low-wage workers have asked their bosses to cut their hours after realizing the wage increase would push them past the threshold of receiving government assistance, such as food stamps and rent assistance. This has left employers scrambling to pay the increased wages while their employees’ production has plummeted.
“If they cut down their hours to stay on those subsidies because the $15 per hour minimum wage didn’t actually help get them out of poverty, all you’ve done is put a burden on the business and given false hope to a lot of people,” said a local radio host.
Seattle’s restaurant industry has been the hardest hit.
Many restaurants now peg labor costs approaching 50 percent of total operating costs, making it nearly impossible to survive. As a result, restaurant closings in Seattle are far outpacing the national average. Perhaps even more alarming for Seattle is that data from the Bureau of Labor Statistics shows a slowing of growth in restaurant jobs, meaning future jobs that would have been created will never even have a chance to exist.
This is particularly concerning for Birmingham’s flourishing culinary scene.
Earlier this year Birmingham was hailed by Zagat as “America’s Next Hot Food City.”
“This Southern contender took the top spot due to a delicious combo of fine dining, barbecue and a fresh batch of more casual restaurants,” explained Zagat. “The food culture – and the city itself – have changed dramatically in recent years.”
But while the city may have changed, its government clearly has not.
Birmingham suburbs are undoubtedly licking their chops as restaurants and other small businesses that once would have located in The Magic City may now look for more economical alternatives.
