Big Hike in Minimum Wage Will Be Self-Defeating For Workers

December 6, 2013

Another fast-food walkout took place in 100 cities recently. The goal? To push for an increase in the minimum wage to $15 an hour. But the arguments made by advocates of a living wage are flawed on so many levels, and will end up hurting the people they purport to help, says Pamela Villarreal, a senior fellow with the National Center for Policy Analysis.

If higher wages are forced on the fast food industry, capital eventually will replace labor in that industry, as it has done in retail. Sadly, this is all under the guise of helping people, but the result will be that teenagers and low-skilled workers get the shaft.

The unemployment rate among teenagers is the highest of all age groups.

  • In some areas, such as Washington, D.C., it is above 50 percent. Teenagers there would be happy to work for $8.25 an hour.
  • Recently, Washington's council almost passed an ordinance that would require the area's newly established big-box retailers to pay a "living wage" of $12.50 an hour.
  • Given that 23,000 applications were submitted for the 600 jobs that were available when Wal-Mart opened its first stores in the D.C. area, it is evident that many job-seekers are willing to work for less than $15 an hour.

The fast food industry will also seek out those people.

Advocates argue that many fast food and retail workers support families and also depend on public assistance, which costs taxpayers.

  • A study from the University of California, Berkeley, found that 330,000 fast food workers are enrolled in Medicaid, the health care program for the poor, and 432,000 children of fast food workers are enrolled in CHIP, the Children's Health Insurance Program.
  • But as many states offer Medicaid benefits to households living well above the poverty level, it is disingenuous to connect Medicaid benefits directly to fast food workers.

Furthermore, if a minimum wage hike results in more low-wage workers becoming unemployed or unable to find a job in the first place, the cost of public assistance programs will likely increase.

The bottom line is that those who want to make $15 an hour flipping burgers should put their picket signs down and instead pursue education and skills that warrant higher pay.

Source: Pamela Villarreal, "Big Hike in Minimum Wage Will Be Self-Defeating For Workers," Investor's Business Daily, December 4, 2013.

 

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