The Impact of Minimum Wage Increases

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

The debate over the minimum wage did not end when the state followed the lead of a number of local governments in agreeing to boost the minimum wage to $15 an hour. Now we are watching the impact of the increase. Even before workers achieve the $15, there are signs that the increase in minimum wage is hurting many it was intended to help.

A report in the San Diego Union Tribune reveals an economic study showing an increase of just $1.50 to$11.50 likely cost 4,000 food service jobs.

While it may be early to judge the true impact of the $15 minimum wage boost, anecdotal evidence continues to come in. This on top of reports out of Seattle that the $15 minimum wage mark is sending jobs out of the city and into the suburbs.

Many in the business community warned that raises in the minimum wage could hurt hiring of entry level jobs and put pressure on small business owners to reduce work time or cut jobs all together.

One San Diego restaurant owner quoted in the Union Tribune article said he has already cut his staff from 71 employees to 65 and intends to cut seven more employees as the minimum wage continues to rise.

Despite these stories, labor advocates say that concerns about the minimum wage increase is no more than crying wolf and past minimum wage increases did not bring devastation to the work force prior to the wage increases.

However, the dramatic increase in technology could change the equation.

Former CEO of CKE Restaurants Andy Puzder wrote in the Wall Street Journal, “Government policies are destroying entry-level jobs by giving businesses an incentive to automate at an accelerated pace. In a survey released last month, the publication Nation’s Restaurant News asked 319 restaurant operators to name their biggest challenge for 2017. Nearly a quarter of them, 24%, said rising minimum wages.”

Puzder noted that a company that is using an automat-style self-serve ordering process is setting up shop in cities that have agreed to raise the minimum wage to $15. Puzder’s article headlines the minimum wage increase as the Robot Employment Act.

That may be taking things too far, but it’s not out of the question. Already, Bill Gates and some San Francisco politicians are talking taxing robots because they are replacing workers.

Meanwhile, others have written that technology advances could actually create jobs of a different kind.

Impact of the dramatic minimum wage increases will be measured over time, but so far it appears those who raised red flags about the increases hurting entry level positions may be validated.

 

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