I am writing in response to Gerry’s Dec 4 editorial about minimum wage. The point Gerry made sounds great if you don’t take the economic factors into account. The first and most basic rule of economics is the law of supply and demand. If the price of an item goes up, then the demand for the item goes down. The vast majority of economists are against increases in the minimum wage for this reason. This is why minimum wages laws hurt the people they are supposedly intended to help. The workers with the least ability, ie; young, unskilled, minority, undependable, slightly handicapped quickly find that there are less people willing to hire them when the minimum wage increases. Having been in the restaurant business most of my life I can tell you what our response was to each minimum wage increase; 1) cut work hours. Of course we cut the least productive first. This is also why we see businesses cut levels of service(self serve gas, self checkout) 2) Raise prices, this hurts everyone including the minimum wage workers who are also consumers. 3) Invest in more labor saving equipment.
Yes Forbes may have found a McDonald’s worker supporting 4 children with a minimum wage job but that is not common. The vast majority of minimum wage workers are 1) young-High school and college age people working first jobs, 2) people who need the schedule flexibility of these type of jobs, wife needs evening work when husband can be with kids, and 3) people working a second or third job at a time when it doesn’t conflict with their regular job. These people also find less opportunities with minimum wage increases. When we operated our restaurants about 90% of our management had started as minimum wage employees, but their skills and abilities allowed them to move up so they didn’t stay there long.
Most people understand at some level that increases in the minimum wage hurt lower income people. Otherwise why don’t we raise the minimum wage to $25 per hour. Then everyone(who kept their job) would make at least $52,000 per year($25*40 hours*52 weeks) and would be easily able to support a family. That is not proposed because we know that it would destroy the market for low skilled workers. There would simply be no jobs available for them. The same effects are there at $10, just on a smaller scale.
Yes there are benefits to an increase in the minimum wage, but they need to be compared to the costs of that policy. When you look at both sides you can see that it has a much great negative affect than it does positive.