As we have said many times before, the temptation to raise the minimum wage is understandable. Who wouldn’t want people who struggle economically to struggle a little less? But the people who advocate for increasing the minimum wage can’t have thought the issue through very far.
First, if one was to mandate that all $7.25/hour jobs are now $15.00/hour jobs, many employers will just automate the formerly $7.25/hour jobs and those jobs, as little as they paid will be gone forever.
Second, many jobs will shift overseas. In the case of fast food restaurants this isn’t possible and as a result restaurants will be forced to raise their prices, customers will leave, and again the low paying jobs will disappear.
The counter argument to the second objection is that higher wages will be extracted from the fat cats in management.
On some marginal level (if that) that might happen at a place like McDonalds. (I wouldn’t count on it.) But most of the jobs which are affected by an increased minimum wage mandate are not in companies rolling in cash. Many, if not most companies employing minimum wage workers are just getting by in this economy. Raise the price of employees and many of those companies will simply close their doors. Those jobs will again be gone forever. Not to mention the loss of tax revenue generated by the company and the employees. The burden is then also increased for taxpayers that much more as new formerly employed people hit the social safety net.
Third, and my wife and I were talking about this the other night – putting everything above aside – if flipping burgers becomes a $15/hour job many college graduates are going to move right into those positions. There are plenty of college grads out there making less than $15 an hour right now who would love to work at Dairy Queen for more pay.
The people doing the protesting right now in front of Wendy’s? Guess what? They will be long gone because Brad has to find a way to pay his student loan back. Again, as far as the working class is concerned, those jobs have vanished.
The people calling for a higher minimum wage can’t have thought things through. It is pretty easy to see that a rise in the wage means job losses for many people who are now just barely making it. Raising the minimum wage will further exacerbate societal inequality not reduce it.
But yet, this seems impossible for some to understand.
Bill Gates however understands.