Requiring employers to pay a minimum wage / livable wage sounds GREAT on paper, but has DEVASTATING effects on the economy. Just look at how the US has fared. Here’s what it has done to our economy….

1. HIGH UNEMPLOYMENT
Small and medium size businesses can’t afford to pay everyone the minimum wage, so they are forced to get rid of a bunch of their current employees in order to afford to pay a select few the new required “livable wage.” To make up for the missing workers, companies automate. This is why you see self-serve checkouts at grocery stores and ordering kiosks at McDonalds and other fast food restaurants that have been effected. Or they just get rid of the workers completely. We used to have movie theater ushers and gas station attendants that would fill our gas for us. Those jobs are now GONE due to the minimum wage mandates.

2. LOW SKILL EMPLOYEES MAKE LESS
Because there aren’t as many jobs to go around, and because of reduced work hours allocated (to keep wages down), low skilled employees don’t get the experience they used to be able to get to work their way up the income ladder and get stuck in a low paying job for far longer than before.

3. PRODUCTS AND SERVICES GO UP IN PRICE
To make up for the higher wage employers now need to pay employees, all of their products and services go up in price. Companies aren’t interested in making less money, so they just find other ways to make it back and raising their prices is the easiest way to do that.

4. SMALL AND MEDIUM SIZE BUSINESSES GO OUT OF BUSINESS
A mandatory livable wage also kills small and medium businesses that don’t have economy of scales and thus can’t compete with big box stores. Upjohn’s Hardware Store may only carry 350 items that it can raise the price on to make up for the new wage increase. That’s nothing compared to Home Depot that has 350,000 products it can spread that price increase out to. Furthermore, the big box stores often keep their prices as is for 6-12 months until all their smaller competitors are out of business, due to them having to raise all of their prices, and THEN after their smaller competitors are gone, they raise their prices to be able to afford to pay their remaining employees a livable wage. The result is that small and medium size businesses like Upjohn’s Hardware Store just can’t compete with the big box store and goes out of business 🙁

5. FEWER PEOPLE OPEN BUSINESSES
Because the minimum wage is so high, entrepreneurs do the math and realize that it’s just not worth the risk and choose not to open the business. A company that never exists, never employs anyone.

MY 2 CENTS
Don’t make economic decisions based on feelings and what sounds nice and good. The road to hell is paved with good intentions. Instead, look to the hard data and facts and use logic to make informed decisions…or else pay the economic price.

Here’s a good 5 minute video that sums it all up nicely:
https://www.youtube.com/watch?v=HwcHRyvrNCE

News Coverage

What’s behind the spate of recent Bay Area restaurant closures?

What’s behind the spate of recent Bay Area restaurant closures?

The Unintended Consequences of San Francisco’s Minimum-Wage Hike

The Unintended Consequences of San Francisco’s Minimum-Wage Hike

Hike in minimum wage prompts more closings of San Francisco restaurants
https://www.washingtonexaminer.com/hike-in-minimum-wage-prompts-more-closings-of-san-francisco-restaurants

​Feeling burned by a $15 minimum wage
https://www.cbsnews.com/news/feeling-burned-by-a-15-minimum-wage/

Seattle restaurants going dark as $15 an hour minimum wage goes into effect https://www.americanthinker.com/blog/2015/03/seattle_restaurants_going_dark_as_15_an_hour_minimum_wage_goes_into_effect.html

Closure of beloved East Bay restaurant Kincaid’s in Oakland takes customers by surprise
https://abc7news.com/food/closure-of-beloved-east-bay-restaurant-takes-customers-by-surprise/5583100/