The Coming Minimum Wage Catastrophe
Unions get what they want even when it leads to layoffs.
The Left’s destructive push for a $15 an hour minimum wage threatens to make the American fast-food worker extinct while driving up the price of burgers and other dietary staples relied on by low-income consumers.
It’s actually a highly effective job-creation program – for those who manufacture robots and the touch-screen point-of-sale terminals that replace the comparatively expensive human help. White Castle, Carl’s Jr., Hardee’s, McDonald’s and plenty of other fast-food chains are already considering or making the move to get rid of their frontline employees.
The current feel-good push for a $15 an hour minimum wage has nothing to do with helping workers and everything to do with advancing the goals of the left wing, especially the labor movement. It’s a vote-buying scam that moves money around on an Alinskyite chess board. The minimum wage has become a “motherhood” issue for the Left in recent years. It gets fuzzy-thinking bleeding-heart voters to the polls the way that opposition to same-sex marriage used to get conservative voters to the polls.
The “Fight for $15” movement got a massive shot in the arm in the fall of 2013 when the voters of SeaTac, a small community outside of Seattle that is home to the Seattle-Tacoma International Airport, just barely approved the $15 an hour wage mandate in a referendum. “Yes” got 3,040 votes (50.64 percent); “No” got 2,963 (49.36 percent). This razor-thin victory gave leftist organizers across the country a huge morale boost and drove bands of economic illiterates to push even harder for their goal.
Hiking the mandatory hourly wage is about redistributing wealth to fat-cat labor unions and recruiting Democratic voters. It allows the gluttonous Left to gorge itself on other people’s money.
So as usual, the Left is responsible for causing untold misery. As _Discover the Networks_’ profile page, “Left’s War on Minorities War on Minorities, the Poor, & Working Americans,” states:
“Leftists view their own prescriptions for all manner of social ills—e.g., racism, sexism, homophobia, intolerance, greed, alienation—as solutions uniquely rooted in enlightenment and decency. … But the solutions they have advanced in the form of social and ideological crusades, often prosecuted with messianic zeal, have actually brought immense, needless suffering to the very same ‘victims’ in whose names they have acted.”
The plain fact is that left-wingers are waging war against fast-food purveyors in the pursuit of so-called social justice even though all serious economists agree that such artificial wage hikes lead to layoffs and higher prices for fast food items. When influential leaders in the restaurant industry are asked if the services of an order-taker or burger-flipper are really worth $15 an hour, the answer is typically a resounding no.
Advocates of a high minimum wage argue businesses simply pay the higher mandated wage out of profits, raising earnings for workers. Restaurants operate on thin margins, though, with average profits of 4 percent or less, and the business is highly competitive.
Leftist blowhards like New York Gov. Andrew Cuomo (D) and California Gov. Jerry Brown (D) don’t care whom they hurt. They’re committed to raising the minimum wage because their puppet-masters in the labor movement demand it.
“By moving to a $15 statewide minimum wage and enacting the strongest paid-family-leave policy in the nation, New York is showing the way forward on economic justice,” Cuomo said after signing the minimum-wage measure a fortnight ago.
“These policies will not only lift up the current generation of low-wage workers and their families, but ensure fairness for future generations and enable them to climb the ladder of opportunity.”
Cuomo seems convinced by his own blatherskite but Brown is more honest.
“Economically, minimum wages may not make sense,” Brown said earlier this month.
But despite this admission he then signed legislation forcing a 50 percent increase in California’s minimum wage from $10 an hour to $15 over six years.
This is really about helping Big Labor, explains former California State Assembly member Chuck DeVore, now with Texas Public Policy Foundation.
“Lost amid the rhetoric about $15 an hour being a boon for the working poor is this: The entire effort to raise the minimum wage is being pushed by organized labor, mostly government-employee unions. Virtually every vote in favor of $15 an hour in California was accompanied by copious campaign contributions from unions, totaling about $10 million. The Service Employees International Union (SEIU) even delivered large campaign contributions to five key Democrats (who may have been having second thoughts) on the day of the vote. The odd part is that very few of their members make minimum wage. In 2015, only 510 California state employees did, mostly interns, students, and part-time conservation-corps workers. So why were these unions so eager to press for a huge hike in the minimum wage?”
The unions like it when the minimum wage gets raised because that triggers automatic increases in their members’ collective bargaining agreements. The more, the merrier.
New York State’s recent decision to force the minimum hourly wage up to $15 threatens the very survival of popular restaurant chains like White Castle. The wage fiat has the potential to be almost infinitely more damaging to the fast food industry and its customers than former New York mayor Michael Bloomberg’s attacks on large soft drinks and dietary salt.
The fight for a $15 an hour minimum wage is “something that’s become a bumper sticker,” White Castle vice president Jamie Richardson told NRO. “But it hasn’t really been thought through. There is a better way to get people out of poverty than hiking the minimum wage.”
Many of the slider-serving chain’s outlets are in the New York City metropolitan area. The hourly minimum will climb from $9 to $15 by 2018 in New York City, and will be phased in more gradually in the rest of the Empire State.
“We’ve been in New York for a long time,” Richardson said. “Castle No. 2 over on Fordham Road opened in 1930.”
“We’re disappointed,” he continued.
“What this means for White Castle is we really have to evaluate how we manage our business,” Richardson said. “About 30 percent of every sales dollar covers the pay of our hourly workers, and that doesn’t include management.”
“It’s our biggest investment, our biggest cost. And it’s one that if we see increase dramatically through fiat, and we don’t do anything — it’s unsustainable,” Richardson says. “We are in uncharted waters.”
“Is there any room to raise prices to cover costs?” Richardson wondered aloud. “We think we’d need to increase menu prices by something like 50 percent. It’s not something we’ve done before. It’d be catastrophic.”
Andy Puzder, CEO of Carl’s Jr. and Hardee’s, told Business Insider last month he’s keen on opening employee-free restaurants.
“I want to try it,” Puzder said. “We could have a restaurant that’s focused on all-natural products and is much like an Eatsa, where you order on a kiosk, you pay with a credit or debit card, your order pops up, and you never see a person.”
Skyrocketing minimum wages across the country make automation necessary for the survival of the fast-food industry. “With government driving up the cost of labor, it’s driving down the number of jobs,” he said. “You’re going to see automation not just in airports and grocery stores, but in restaurants.”
A longtime critic of the minimum wage, Puzder slams left-wing politicians for their destructive policy proposals that hurt the very people the Left claims to champion. Raising the minimum wage kills jobs, he’s argued in the Wall Street Journal.
“This is the problem with Bernie Sanders, and Hillary Clinton, and progressives who push very hard to raise the minimum wage,” he explained. “Does it really help if Sally makes $3 more an hour if Suzie has no job?”
Richardson is frustrated.
“Candidly, this could create a whole generation of kids who won’t get their first job,” he shrugged. “We’re in tough neighborhoods — and White Castle hasn’t abandoned those neighborhoods. On the surface, higher pay seems noble, but it’s not — because it denies the reality of the free-enterprise framework that has allowed small businesses like ours to thrive.”
Boosting the minimum wage has real-world consequences.
Some of the newly unemployed people end up on welfare which helps to expand the size and scope of government. People who are dependent on the government tend to support Democrats.
Doubling the minimum wage is a big win-win for the Left no matter how you look at it.