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The issue with a large increase in minimum wage isn’t that consumers may have to pay a little more for a burger. It’s that small business owners, with razor th

The issue with a large increase in minimum wage isn’t that consumers may have to pay a little more for a burger. It’s that small business owners, with razor thin margins to begin with, can’t afford to pay their existing staff the new, higher wages. Therefore, they cut staff, increase automation, etc. so now you have 1 person who makes $15 per hour and 1 person who makes $0 per hour. Can you truly say this is better than 2 people each making $7.50 an hour?

jimmaswell 7y ago
In practice it's phased in gradually, and that problem doesn't happen much. Here's one look at real data. "[I]n a new research paper by Doruk Cengiz, Arindrajit Dube, Attila Lindner and Ben Zipperer that looks at data during the period from 1979 to 2016 in 138 U.S. states and regions where minimum pay was increased[, t]he conclusion is that low-wage workers had a pay gain of 7 percent after a minimum-wage law was enacted, but there was little or no change in employment." https://www.bloomberg.com/opinion/articles/2019-01-24/u-s-economy-higher-minimum-wages-haven-t-increased-unemployment https://www.bloomberg.com/opinion/articles/2019-01-24/u-s-ec... Businesses can adapt, like they do when unions negotiate better pay.
- joejerryronnie 7y ago
  Yes, if the increase is phased in over a few years you’re right, business will adjust. But many places have implemented a large increase in one shot and it’s had a really negative impact on small businesses
core-questions 7y ago
I'm aware the burger is a facile example for it. It's supposed to make people realize that these razor thin margins exist everywhere, and will all be disrupted.
perl4ever 7y ago
I don't think you're completely wrong, although you may be exaggerating the magnitude of the effect. But this is actually a reason to support a higher minimum wage. If you make vastly more than minimum and are a consumer of fast food, then don't you think that you will get better service from the one person making $15/hr? Plus, they're less likely to spit on the burger. The thing about the minimum wage is that there is a market determined wage for a minimally effective employee, but if the official minimum is lower, and it generally is these days, business owners and managers will keep trying to hire at the legal minimum instead. You'd think the invisible hand, etc. but it doesn't work that way. The rule is "the law says X, so we do Y, the minimum required".

jimmaswell 7y ago

In practice it's phased in gradually, and that problem doesn't happen much. Here's one look at real data. "[I]n a new research paper by Doruk Cengiz, Arindrajit Dube, Attila Lindner and Ben Zipperer that looks at data during the period from 1979 to 2016 in 138 U.S. states and regions where minimum pay was increased[, t]he conclusion is that low-wage workers had a pay gain of 7 percent after a minimum-wage law was enacted, but there was little or no change in employment." https://www.bloomberg.com/opinion/articles/2019-01-24/u-s-economy-higher-minimum-wages-haven-t-increased-unemployment https://www.bloomberg.com/opinion/articles/2019-01-24/u-s-ec... Businesses can adapt, like they do when unions negotiate better pay.

joejerryronnie 7y ago
Yes, if the increase is phased in over a few years you’re right, business will adjust. But many places have implemented a large increase in one shot and it’s had a really negative impact on small businesses

core-questions 7y ago

I'm aware the burger is a facile example for it. It's supposed to make people realize that these razor thin margins exist everywhere, and will all be disrupted.

perl4ever 7y ago

I don't think you're completely wrong, although you may be exaggerating the magnitude of the effect. But this is actually a reason to support a higher minimum wage. If you make vastly more than minimum and are a consumer of fast food, then don't you think that you will get better service from the one person making $15/hr? Plus, they're less likely to spit on the burger. The thing about the minimum wage is that there is a market determined wage for a minimally effective employee, but if the official minimum is lower, and it generally is these days, business owners and managers will keep trying to hire at the legal minimum instead. You'd think the invisible hand, etc. but it doesn't work that way. The rule is "the law says X, so we do Y, the minimum required".