August 12, 2015

Surprise, Surprise! There’s Been Another Minimum Wage Backfire

President Obama has frequently demanded an increase in the federal minimum wage from $7.25 to $10.10 . Meanwhile, dozens of states have set minimum wages above the federal level, and some — with the help of activists — have taken it as far as $15 an hour.
What they will soon see is that it’s not working out quite the way they hoped it would.
Wendy’s explains what mandated wage hikes do to jobs at burger joints, and yet again, the minimum wage hike proves its unfeasibility in reality.

From WSJ:
Last week the Wendy’s Company did a public service on its second-quarter earnings call by explaining how mandated wage hikes will lead to fewer jobs for the low-skill workers that progressives claim to be helping.
First, CFO Todd Penegor talked about the pressure to pay higher wages and said that “we continue to look at initiatives and how we work to offset any impacts of future wage inflation through technology initiatives, whether that’s customer self-order kiosks, whether that’s automating more in the back of the house in the restaurant. And you’ll see a lot more coming on that front later this year from us.”
So the company will now use machines to do jobs that used to be done by people who have become too expensive to employ. We keep hearing that these minimum-wage laws benefit restaurant workers. But since many will no longer be working in restaurants at all, the reasonable conclusion is that the activist campaigns to raise the minimum wage are mainly intended to benefit the unions that back them.
On last week’s call with securities analysts, Wendy’s CEO Emil Brolick was asked how the franchisees who own and operate Wendy’s locations could raise prices to offset the higher wage costs in places like New York. He replied that “our franchisees will likely look at the opportunity to reduce overall staff, look at the opportunity to certainly reduce hours and any other cost reduction opportunities, not just price. You know there are some people out there who naively say that these wages can simply be passed along in terms of price increases. I don’t think that the average franchisee believes that.”
Mr. Brolick elaborated that “we believe that some of these increases will clearly end up hurting the people that they are intended to help. And we continue to believe that one of the great opportunities you have in a business like ours is that an entry-level person, in a very short period of time, can rise to become a manager in a restaurant, and have an income above the median household income in the United States of America.”
The problem with progressivism is that it’s not realistic. All of the ideas sound pretty on paper, but in the real world, they don’t work.

The reality is that robots are the future because they are cheaper than the complainers who aren’t satisfied with being paid what their employers are offering to pay them. The push for a $15 minimum wage fast forwards the inevitable because robots costs much less than humans cost to employ.
Businesses want to supply as many jobs as possible to people who are just starting out, but this minimum wage hike push is surely not making them feel any more generous.
Besides, the end goal is to make enough of a profit to justify keeping their business open, and they can’t do that if they aren’t allowed to choose how much they can afford to pay their employees.
These “raise the minimum wage” activists are only digging themselves their own grave.

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