On April 10, 2019, Amelia Lucas writes on CNBC:
- A survey from Harri found that restaurant operators respond to minimum wage hikes by cutting hours and raising prices.
- Fast-food workers across the country have been driving the fight for a higher minimum wage.
- Six states, including Illinois and Maryland, have approved laws phasing in a $15 minimum wage.
For restaurants, minimum wage hikes usually mean higher menu prices and fewer employee hours, according to a survey released Wednesday.
Harri, a workplace management software company that works with restaurants, surveyed 173 restaurants between Feb. 28 and March 15 about the impact of raising the minimum wage. The respondents represent more than 4,000 restaurant locations ranging from fine dining to fast food.
Fast-food workers across the country have been driving the fight for a higher minimum wage to keep up with the cost of living. States across the U.S. have been raising their minimum wages. Six states, including Illinois and Maryland, have approved laws phasing in a $15 minimum wage. Washington, D.C., currently has the highest minimum — $13.25 — and that is set to rise to $14 an hour on July 1 and to $15 on July 1, 2020.
However, the federal minimum wage has remained stagnant since 2009. House Democrats have been pushing a bill to raise the federal minimum wage to $15 per hour from $7.25, but it is unlikely to pass.
Proponents of increasing the minimum wage argue that it can stimulate the economy, reduce income inequality and decrease taxpayer spending on government assistance programs. Opponents like the National Restaurant Association say that it eliminates jobs and hurts small businesses. But not all restaurants oppose these efforts. Notably, McDonald’s told the NRA last month that it would no longer join in its lobbying efforts against minimum wage hikes.
The restaurant industry employs a large portion of minimum wage workers. It’s no surprise that 83% of survey respondents affected by minimum wage hikes reported that their labor costs rose at least 3%.
Twenty-three percent responded to minimum wage hikes by not making any changes to their business.
But the majority did. The most popular response — from 71% of operators — was to raise menu prices. Nearly half reworked their food and beverage options to reduce costs.
Some operators responded to the minimum wage increases by cutting costs, with 64% saying they reduced employee hours, and 43 percent saying they eliminated jobs.
Outside the restaurant industry, companies like Bank of Americaand Target have been hiking internal minimum wages to attract and retain employees in a tight labor market. Similarly, 87% of survey respondents affected by minimum wage hikes said that they increased wages for workers who made more than the minimum wage.
Gary Reber Comments:
Unfortunately the effects of minimum wage hikes are not short term. They are an endless cycle. The call is to raise the minimum wage to increase purchasing power. Corporations and business do not pay expenses, they merely roll them into their prices to cover them. Once that has been done, increased prices consume the increased minimum wage and consumers that were impacted are right back in the same economic position.
There are ONLY five ways to deal with forcing a 2X minimum wage increase: 1) raises prices on the products and services offered by the employer/OWNER(s) of the business impacted, which are passed onto the business’ customers, 2) further reduce non-human marginal costs of producing such as the cost of materials, etc. 3) save labor by reducing the number of people employed or employ part time labor to avoid paying benefit costs, 4) replace human workers with non-human workers such as machines, robotics, computerization, etc. and 5) reduce profitability of the business
Paying people less than the market wage rate is unjust. That’s obvious. It’s practically the definition of injustice, to pay people less than the market rate, or to withhold pay. Stop and think about it. An employer is buying someone’s labor. If labor is worth X per day at the market rate, but an employer is forced to pay 2X per day, isn’t the employer being cheated? People tend to want to do things in the most efficient way possible, and get as much as possible for the least amount of effort or cost.
Doing more with less comes naturally if you work for yourself, or you own whatever is doing the work, e.g., capital. You want as much as you can get for as little cost or effort as possible. No one is harmed, because you bear the cost, whether high or low. You benefit, because you pay.
The wage system distorts this natural tendency, a virtue, into something vicious, that is, a vice. A worker who has only his or her labor to sell is going to want as much as he or she possibly can get for it. Naturally, he or she are also going to want to give as little as he or she can get away with.
If he or she was the only one involved, there would be no problem. Unfortunately, there is the person who is buying the labor, and the people who are buying the good or service that the labor, in part, is being used to produce. If the worker has power, the employer pays more. If the worker does not have power, the employer will pay less. Wages will be just only in the rare instance in which the propertied employer and propertyless worker have equal power.
The only way out is to give workers a stake in keeping costs low so that the natural tendency to do more with less works in favor of everybody, not against them. An aggressive program of expanded capital ownership, such as proposed in the Capital Homestead Act, is therefore not only consistent with nature, it is in everybody’s best interest, morally and economically.
Support the enactment of the proposed Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment Act) athttp://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/…/capital-homestead-act-a-plan-for-get…/, http://www.cesj.org/…/capita…/capital-homestead-act-summary/ andhttp://www.cesj.org/learn/capital-homesteading/ch-vehicles/. And The Capital Homestead Act brochure, pdf print version athttp://www.cesj.org/…/uploads/2014/11/C-CHAflyer_1018101.pdf and Capital Homestead Accounts (CHAs) at http://www.cesj.org/…/ch-v…/capital-homestead-accounts-chas/
