Last week Seattle City Councilmember Mike O’Brien admitted the goal of the city’s proposed “sweetened beverage tax” (dubbed the soda tax, even though it encompasses much more than just soda) is to curb the demand for such drinks.

Responding to business owners worried the tax will increase costs and result in fewer customers, Councilmember O’Brien had this to say: “…the point of the [soda] tax is I do want people to consume less sugar." (Never mind the proposed tax includes sugar-free drinks, but that’s a story for another blog).

The bad news is Councilmember O’Brien thinks people who drink a Diet Coke in Seattle should be penalized with higher taxes.

The good news is O'Brien's statement is an admission from someone who supports a $15 minimum wage law that he understands one of the basic laws of economics—increasing the price of something will naturally decrease the demand.  

Throughout the minimum wage debate, supporters of a higher minimum wage paradoxically insist that increasing the cost of labor will not reduce the demand for that labor.  In other words, forcing employers to pay an artificially high minimum wage will have no negative impact on the employment prospects for low-skilled workers in minimum wage jobs.  In fact, bending all of the fundamental laws of economics, they argue it will somehow increase the demand for labor. 

The theory is that by giving workers a higher wage, they will have more money to spend, which will increase business for employers and therefore spur those employers to hire more workers.  It’s rainbows and unicorns, a win-win-win for workers, employers and the economy.

That may be the case in Bizarro World, but Earth's basic economics dictate the exact opposite.  According to the laws of demand, when the price of labor rises, the quantity demanded will fall.  Employers will figure out ways to economize on the high-priced labor.  Some employers will embrace automation, some will favor skilled workers over less skilled applicants, while others may simply make do with a smaller work-force.

Either labor-saving tactic means fewer work hours available for the least-skilled over the long run.  That is why the vast majority of studies conclude, “the most prominent employment effect of minimum wage laws is a decline in the hiring of new employees.”

Clearly Councilmember O’Brien understands the principle behind the law of demand.  The selective application of this economic truism reveals the real agenda behind the $15 minimum wage movement, and it has nothing to do with helping low wage workers. As Governor Jerry Brown summed up, "Economically, minimum wages may not make sense. But...politically they make every sense..."  Indeed they do.