Minimum Wage – Doing what it does best, destroying jobs…

The Government's own CBO states the obvious.

The Government’s own CBO states the obvious.

Hot Air is reporting on the latest devastation from minimum wage increases in Seattle. The proletariat yawned. I’ve had the minimum wage argument with many people and the argument goes something like this… Me: “Minimum wage, everywhere it has occurred, always has, and always will have, the following unintended consequences:

  1. Employees are fired to free up labor budget for the remaining more expensive employees. Fired employees earn the minimum wage of exactly $0/Hr
  2. The owner of the business will lower the quality of the ingredients to save money, consumers suffer
  3. The owner of the business will lower the portion sizes to save money, consumers suffer
  4. The owner of the business will raise prices to compensate for the higher labor costs, consumers suffer
  5. The employee now making $15 an hour lives in a place with higher prices, smaller portions and worse ingredients when they themselves are the consumers, chewing into their new extra pay
  6. The owner will end any employee benefits he can such as free lunches at work, medical benefits, flexible schedules, tuition reimbursements, anything he can take away legally that will save money
  7. Chain locations that were only slightly profitable, or unprofitable, will immediately be closed, all employees terminated
  8. If a small business, just one or two locations, many owners will be forced to close or move out of the area
    1. Closing is the only option when talking about Federal minimum wages – no place to move to and escape it
  9. The owner of the business, if sufficiently capitalized, will invest in tech to replace employee (kiosks, etc…)
  10. A hiring freeze will happen at many locations as they squeeze more efficiency from the remaining employees
    1. Drop in customer service, bad for the consumer, more pressure on employees
    2. Jobs are destroyed before they were even created, what is $15 an hour times zero?
  11. Promotions stop to compensate for the legislated wage increase
  12. People who worked several years building experience to achieve $15/Hr become disenfranchised as they work next to a day-old “new hire” with no experience who is “earning” the same $15/Hr
  13. Employees making $15/Hr find it impossible to duplicate that salary anywhere else (since they lack skills to “earn” $15 an hour anywhere else doing anything else) – trapping themselves in the job
  14. The media (and politicians) will never discuss the thousands of jobs lost, benefits cut, declines in product quality, increased prices, locations closed or human labor replaced by kiosks and computers.”
  15. Additional minimum wage increase legislation for the future will immediately be drafted to the thunderous applause of an incredibly ignorant society on economics, politics and history. It will get 223,876 ‘Likes.’

Them: “Whatev. It’s the right thing to do.”

The truth is, every time minimum wages go up, the free market responds with a vast array of solutions. Some will keep their jobs, and make more money. This is true. This is what makes it on TV and is trotted out before the voters as why we need to keep raising the minimum wage. But in order for those people to get that extra money, the quality of food will decline in many, but not all, locations. In other locations, the portion sizes will decrease. In still others, prices will go up, but in some, portion sizes will go down while prices go up simultaneously. In other locations, benefits will be cut for some employees while other employees are let go. Elsewhere, plans for a new store will be scrapped – so those employees will never even know they never got hired. In other words, the cost of raising some people’s income is spread out like peanut butter and absorbed by society at large in a multitude of ways which is why it is so easy for politicians to trick the public to accept it.

The spread is thin, and so almost unnoticeable. A smaller burger patty here, a little kiosk there, a lower quality bun there, cheaper coffee here, less customer service there, but we pay. We do pay for it, and these millions of little changes is how we pay. The pain from those costs are not only socialized across everyone, but deferred over time in most cases. This is also why they never do a bulk increase in minimum wages, but an annual uptick so that the damage is gradual and stretched out over the longest period possible, spread as thin as possible, to make the destruction less obvious, but still gain all the immediate political rewards of passing the policy in the first place.

That is why a proponent of the minimum wage can never answer the simple question, “Well if $15 an hour is so good, why not go to $30 an hour?” They can never, never, never answer this question, and why? Because they have ZERO understanding of economics. They can’t say that $30 an hour is any better or worse than $15 an hour because they don’t even know if $15 is a good or bad thing to do. They just want it. They want it now. It makes them feel snuggly about themselves to want it. It’s popular on Facebook. That is all they know.

Idiocracy. You’re standing in it.



Categories: Government Failures

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