Don Boudreaux at Café Hayek points out that minimum wage regulation has long term pernicious effects because businesses anticipate that government will constantly raise the wage floor above the market price. This means that the impact of the Seattle minimum wage is not only the difference between $15 and the current market wage, but also the anticipation that an anti-business city council will continue to raise that number in the future. In response to this, employers will today try to adjust their business models -- mainly though automation -- to accommodate not only today's wage, but the $20 or $30 that will surely come in a few years.
The Anticipation Effect extends well beyond wage floors. Just a couple of weeks ago Amazon made the decision to expand its headquarters outside the city of Seattle. They did this not only because of the anti-business actions the current city council has taken, but because it had become quite clear that they could expect a tsunami of onerous regulation in the future.
Businesses are forward thinking even if government is not.
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