I'm not sure why liberals think that increasing the cost of labor will not reduce the demand for labor, but, apparently, they don't. Instead, they keep pushing for increases in the federally mandated minimum wage. Naturally, since liberals tend to view things through the urban prism they live in, they fail to consider that maybe, just maybe, the minimum wage mandated for New York City should not be the same as the minimum wage in Wheeling, West Virginia. After all, the true minimum wage is zero. When it is no longer worth a business owner's while to hire an employee at the mandated rate, that would-be employee will not be hired:
As the labor union-backed Fight for $15 begins yet another nationwide strike on November 29, I have a simple message for the protest organizers and the reporters covering them: I told you so.The article in Forbes quoted above is an op-ed by a former president CEO of McDonald's, a guy intimately familiar with the economics of the minimum wage. He isn't predicting the future, either. The things he talks about are already happening:
It brings me no joy to write these words. The push for a $15 starter wage has negatively impacted the career prospects of employees who were just getting started in the workforce while extinguishing the businesses that employed them. I wish it were not so. But it’s important to document these consequences, lest policymakers elsewhere decide that the $15 movement is worth embracing.
Let’s start with automation. In 2013, when the Fight for $15 was still in its growth stage, I and others warned that union demands for a much higher minimum wage would force businesses with small profit margins to replace full-service employees with costly investments in self-service alternatives. At the time, labor groups accused business owners of crying wolf. It turns out the wolf was real.Jobs at the entry level will go away, replaced by automation, robots and anything else that costs less over the long term than unskilled labor.
Earlier this month, McDonald’s announced the nationwide roll-out of touchscreen self-service kiosks. In a video the company released to showcase the new customer experience, it’s striking to see employees who once would have managed a cash register now reduced to monitoring a customer’s choices at an iPad-style kiosk.
But wait! you cry. Many small businesses cannot afford to automate and so will still hire unskilled labor at the minimum wage, you might say. Um, maybe not:
Of course, not all businesses have the capital necessary to shift from full-service to self-service. And that brings me to my next correct prediction—that a $15 minimum wage would force many small businesses to lay off staff, seek less-costly locations, or close altogether.The author goes on to cite a few examples, noting that as such wage policies go nationwide, the examples will proliferate. Read the whole thing.