'This Week': Seattle's New Minimum Wage Hike

ABC News' Neal Karlinsky takes a closer look at Seattle's new $15/hour minimum wage and Paul Gigot and Katrina vanden Heuvel discuss its impacts
6:41 | 06/08/14

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Transcript for 'This Week': Seattle's New Minimum Wage Hike
In "This week's" "Closer look," the city of Seattle raised the minimum wage to $15 an hour, far and away the highest in the country. Will that experiment inspire other cities or scare them away? ABC's Neal Karlinsky in Seattle. Reporter: Across the country, this spring has seen protests by fast-food workers demanding a raise. Fast-food workers and all workers deserve a living wage. Reporter: Democrats are listening, hoping it will be a winning issue for them in the midterm election. The minimum wage, even if it doesn't affect you or your family, it's an issue of basic fairness. Reporter: Seattle has done something that no other city has come close to, raising the minimum wage to more than double the federal rate, an unprecedented $15 an hour, the nation's highest hourly wage. If we want to regain our economic strengths the minimum wage is going to have to raise. Reporter: Newly elected Seattle mayor ed Murray says his city is setting an example others should follow. And he is not afraid of the criticism. I'm sure you read and heard some of these things. Seems ready to turn his city into a gigantic laboratory. One of the most ambitious labor experiments. I think we're acting as a laboratory of democracy. Because the federal government is not acting. The Seattle approach is the way out. You rebuild the middle class, you get back to a vibrant economy. Reporter: This restaurant owner says her cafe and others will almost certainly be forced to lay off workers and possibly close because $15 an hour will put her in the red. Some of us might lose our livelihood if we can't keep our businesses open, but who's really going to pay for it? The workers in the restaurant industry. Once we get to $15, the cafe is pretty difficult. Reporter: The new rate will be phased in over several years. The international franchise union isn't waiting and plans to sue to protect small businesses. But the mayor says, he isn't worried. I actually feel pretty excited about the work we did, the very difficult negotiations we had between business labor and nonprofits to reach a good balance. And I think it's a model for the nation to look at. Reporter: For "This week," Neal Karlinsky, ABC news, Seattle. And let's get more on this from Paul gigot and Katrina vanden heuvel. Paul, you heard the mayor, he said Seattle will be a model. Well, if it's a model, we'll find out if it works. When you raise the cost of labor, you outprice a lot of people out of the labor market. Particularly, the young, the least skilled. Those who want to get on, on that basic wrung on the ladder. And move up. Look, I worked for minimum wage. I worked for $2. I had jobs -- what did I learn -- I learned to show up on time. I learned certain skills. I learned that I didn't want to make the minimum wage for the rest of my life. I better get an education. Katrina, what about that argument, this will squeeze young people out of the job. Listen, this is smart economics. It's good politics and it's morally right. Only 1 out of 10 minimum wage workers, is a teenager or a young person, you know, who E the real job creators in this country? It's a strong middle class. They create jobs. You create growth. It's a winning issue. 76% of Americans support this. It's republicans and et cetera. Morally, what does it say about America? If you're an American and you work full time and you live in poverty, it's a broken economic system. Henry Ford had it right. A good capitalist. He put money in the pockets of his workers to buy cars. And he created a middle class. The CEO of McDonald's. They understand people have money in their pockets. They spend it. What they're going to do -- probably, McDonald's going to hire a lot of people, they're going to have kiosks. And automation. But a lot of people who employ the minimum wage workers are low-margin businesses, restaurants, cafes, retail, they are the ones who can't afford to pass the cost along. The biggest employer of low-wage workers, Walmart -- I mean, Walmart is being subsidized by taxpayers, because their workers can't afford food. We're getting socked as taxpayers on both ends. There are enlightened businesses, costco, stride rite. Trader Joe's. Big businesses with big profit margins. Walmart, they can afford it. They don't mind. They play politics. They'll go along with it. Then it's their competitors -- There are studies that have demolished the idea that increasing the minimum wage will cost low-wage workers jobs. That congressional budget office showed the benefits of raising the minimum wage outweighs the costs. You lift nearly a million out of poverty. 500,000 low-wage jobs will be lost if a minimum wage is increased. You have seen Mitt Romney, you have seen other top republicans coming out for minimum wage. It always polls well. I think people should get a raise. What they don't see are the jobs that are never created. That's harder to detect and it's harder to show up in polls. When that 500,000 figure came out from the cbo, they said, you know what, that's a very powerful argument. I don't think it's going to pass. You know what. Last word. It's about the values of this country. If we're a country that believes in a strong middle class and healthy families, we need rules of the road to do that and I think hiking the minimum wage, by the way, enormous productivity gains of the last four decades were factored in, the minimum wage today would be $22. We need to have a sense of fairness in this country. That also is good for business and the economy. We got to take a break. Thank you very much. We'll be right back with the powerhouse roundtable. The take on Bowe bergdahl and Hillary's launch.

This transcript has been automatically generated and may not be 100% accurate.

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