Beware boomerang of excessive hike in minimum wage
It is likely that soon, thousands of fast-food restaurant workers in New York will have a personal understanding of the warning, “Be careful what you wish for. You may get it.”
State officials have bowed to pressure and agreed that New York’s $8.75 an hour minimum wage is not enough for about 200,000 employees of fast-food restaurant changes.
So for them – and them alone – the rate will go up to $15.
Objective, non-political economists know what will happen: Some of those 200,000 people will lose their jobs.
Machines to perform their tasks, not a good deal for restaurants paying humans $8.75 an hour, will become the better bet.
Efficiency initiatives will result in even more job cuts.
Employees kept on the payroll will receive fewer fringe benefits as restaurants struggle to hold down expenses.
Some others who have full-time jobs now will go to part time – with no benefits – for the same reason.
Some restaurant locations, unable because of the $15 minimum wage to compete against smaller operations not covered by the law, will close. Their workers will get pink slips, not fatter paychecks.
And politicians who claim the issue was basic fairness will come under even more pressure from other minimum wage earners will who remain at $8.75.
They will wonder how the singling out of one group of people for help has anything to do with fairness.
So the politically motivated social engineering will have consequences for New York officials.
If history is any guide, they will react with even more of the same – along with more victims.
This issue is not a matter up for debate. It’s simple, free market economics.
Nearly doubling the minimum wage rate has to result in fewer jobs, higher prices and other consequences.
It’s as simple as adding up the operations numbers.