Those who oppose minimum-wage laws are accused of being thoughtless and even cruel, as though opposition to government-mandated minimum wages implies a desire that everyone work for a pittance. Not true.
The point is that when the government mandates a minimum wage, it does not mean low-wage earners will get a raise. Instead, many will lose their jobs. Or to put it another way, anyone whose work in a particular job is not worth the minimum wage will not find employment in that job.
He or she will either have to find the sort of work for which his or her services are at least worth the minimum wage, or gain skills to increase the value of any work performed. The alternative is to join the ranks of the unemployed as many tragically do.
Here’s what happens when the government decides what the value of someone’s services are.
We study the impact of the minimum wage on firm exit in the restaurant industry, exploiting recent changes in the minimum wage at the city level. The evidence suggests that higher minimum wages increase overall exit rates for restaurants.
No surprise there. If the business cannot make a profit because of the wages it is required to pay its employees at the prices it can charge, it will close up or move elsewhere.
Here’s a key point that is often missed:
However, lower quality restaurants, which are already closer to the margin of exit, are disproportionately impacted by increases to the minimum wage. Our point estimates suggest that a one dollar increase in the minimum wage leads to a 14 percent increase in the likelihood of exit for a 3.5-star restaurant (which is the median rating), but has no discernible impact for a 5-star restaurant (on a 1 to 5 star scale).
In other words, it’s the restaurants that are already staffed by employees who work at or near the minimum wage where jobs will be lost when that minimum is raised. In other words, the hardship falls more severely on those who can ill afford the loss of wages.
To take matters to the next level, an out of control government would then enact additional regulations to supposedly fix the problems that were caused by the minimum wage hike. These will create more distortions generating the proverbial vicious cycle until either freedom is restored to the job market or the system collapses.
Unless businesses can find a way of reducing costs such as replacing workers with robotics or other automated systems, or of raising prices without hurting sales, they will close. In any event, it is the marginal worker who winds up getting hurt.
Image: Fibonacci Blue
No one has job since nobody pays and companies shut down…people go hungry
15? I want at least 25? Wait make that 50 , then I can work 4hrs a day.
A lot of this losers are not worth $2 an hour.
Harvard study support what free market economists have been saying! These were meant to be part time roles and first jobs for young people or people in transition! Increasing wages by government action is not the answer! Those misguided socialists who push this agenda are hurting our young peoples opportunity for first jobs and unskilled labor! More experienced restaurant servers earn tips that far exceed the minimum wage!
Maybe people should eat at home . Better for thier health and pocketbook. Dont need a restaurant on every street corner. Especially mickey d’s
Looks like they all are immigrants! Or illegals!
When will these idiots get it when u raise the minimum wage the companies will raise their prices they are not going to lose money wake up morons
Harvard Study: Each $1 Minimum Wage Hike Causes 14% Increase in Mid-level Restaurant Failures.
CONGRATULATIONS, YOU’VE MANAGED TO PRICE YOURSELVES OUT OF ALL JOBS YOU ARE QUALIFIED FOR!!!!