Investor’s Business Daily posted an article today about the impact of raising the minimum wage. Traditionally the minimum wage job has been a place for those young people who are just entering the workforce to learn the basic principles of holding a job–showing up on time, being there when you are supposed to, treating people with respect, integrity, etc. Most of these concepts should have been covered during the school years, but many of them are not. The entry-level job was the last place a potential employee would be able to learn them. An entry-level job was supposed to encourage the employee to work hard in order to get a better paying job and advance his/her career. Well, I guess that concept has gone out the window.
Investor’s Business Daily reports:
Twenty-one states and Washington, D.C., will raise their minimum wage this year, under the misbegotten notion that it will help the poor, in particular struggling minority youth. It won’t.
As a new study from the American Action Forum shows, not only will most workers not be better off, they will take a huge hit.
Why? Common sense tells you that when you raise the cost of something, anything, less of it will be used or consumed. It’s a fundamental precept of economics. And labor is no different.
Coercive minimum-wage hikes this year, the AAF estimates, will kill 261,000 jobs held mostly by poor, undertrained, undereducated, young suburban millennials and minority teens.
But it’s even worse than that: Once the minimum-wage increases are fully phased in, some 1.7 million jobs will be lost. As the Daily Caller helpfully notes, the U.S. Bureau of Labor Statistics estimated last year that the U.S. economy will add 11.5 million jobs over the next 10 years. So that’s roughly 15% of a decade’s worth of jobs destroyed.
The complaint has been that you can’t support yourself on the current minimum wage. You’re not supposed to—you are supposed to use the opportunity of a minimum-wage job to become a better worker and be promoted or educate yourself and move on to a better job.
The article concludes:
Yes, some people will do better because of the “Fight for $15,” the organizing shibboleth used by activists who want a national minimum wage. But many small businesses struggle to stay open. Labor is their No. 1 cost, taking up more than two-thirds of total costs. If you raise the minimum wage sharply, they have to lay off people or raise prices to stay in business. And some won’t make it.
The job losses are already happening. Just last month, the food chain Red Robin announced it would eliminate busboys at 570 restaurants to “address the labor increases we’ve seen.” For “labor increases,” read “minimum wage hikes.”
Other restaurant chains take a slightly different approach, automating to offset rising labor costs. Neighborhood mainstays Chili’s and Applebee’s, for instance, are replacing front-end wait staff with computer tablets for placing orders. Since a tablet entails a one-time expense of roughly $200, the investment pays for itself in a little over 13 hours at minimum wage.
It’s sad that just as the tax-cut boom gets going, one big group is going to be cut out of the action entirely. Whenever government sets the price of anything, distortions occur. In this case, the “distortion” is millions of lost jobs. It’s cruel, racist and devastating to lower-income people who depend on entry-level jobs to make ends meet.