Government-mandated minimum wages cost jobs

January 19, 2019

If only someone had warned us:

NYC restaurants cutting staff hours as minimum wage hits $15

The legal minimum wage for New York City employers with 11 or more workers rose more than 15 percent on Dec. 31, 2018, to $15 per hour from $13, giving fast-food, retail and other employees a bump in pay. But some New York City restaurant owners say the latest minimum wage hike is forcing them to cut workers’ hours just to stay afloat.

The article then makes an odd claim:

It’s not just a New York phenomenon, however: Minimum wages rose in 20 states with the new year, forcing businesses across the country to grapple with higher payrolls — and compete for workers with giants like Amazon that are already offering $15 an hour.

So, the need to “compete” for workers required the state to artificially raise wages beyond what many businesses can afford? This is helping how? 

The article then talks to someone “helped” by this new law:

“We lost control of our largest controllable expense,” he told CBS MoneyWatch. “So in order to live with that and stay in business, we’re cutting hours.”

Bloostein said he has scaled back on employee hours and no longer uses hosts and hostesses during lunch on light traffic days. Customers instead are greeted with a sign that reads, “Kindly select a table.” He also staggers employees’ start times. “These fewer hours add up to a lot of money in restaurants,” he said.

But the victims aren’t just the employees:

Bloostein said he has increased menu prices, too. “So as a result [of the minimum wage hike], it will cost more to dine out,” he said.

Meaning people on a budget will likely dine out less often. Great work!

As I’ve argued many times before, labor is a cost of doing business that businesses have to account for. When costs go up, these firms have only a few choices:

  1. They can pass on the cost to the consumer, risking the loss of customers’ business.
  2. They can cut labor costs by reducing hiring, cutting back hours, laying off employees, and automating.
  3. They can decide the reduced profit isn’t worth it and close shop, costing all employees their jobs.
  4. They can move out of the jurisdiction, probably costing local employees their jobs.

We’ve seen examples of this happening time and again in recent years, and the people who get hurt are the very ones these “enlightened” policies are supposed to help. Does a minimum wage of $15 per hour help when the jobs have been filled by order-taking kiosks and tablets?

Wages should only be determined by economic logic: what the business can afford to pay vs. the worker’s desired wage (and other benefits, such as learned skills, &c). If the business doesn’t pay enough for the work required, then they won’t find good employees: the business will suffer and they will be forced to raise wages to compete, if they want to stay in business.

Anything else is an attempt to impose utopia by people who don’t understand the way the world works, or by politicians looking for donations from unions.

h/t Mike LaChance at Legal Insurrection

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