A lot has been written about the impact of increasing the minimum wage on rising prices, with some apocalyptic predictions.
I'm not that concerned about rising prices with a $15 minimum wage. Or even a $20 or $30 minimum wage. We have a unique and seemingly miraculous economic system in this country called “capitalism”. We know it is the greatest system ever invented, because it has resulted in the most prosperous and powerful nation in human history. It is a system the Left so desperately wants to kill.
In any economy, problems arise. Labor issues, cost of goods issues, availability issues, transportation issues, and technology issues all work against the system. In a centrally-planned economy such as socialism, a government run by bureaucrats will “force” a solution to these problems based on the surface symptoms. This usually results in unintended consequences that exacerbate the problems. For instance, the government artificially raises wages, which result in out of control prices. The government then institutes price controls, which result in the populace waiting in six hour lines for a roll of toilet paper.
Under capitalism, self-motivated problem solvers emerge, known as “entrepreneurs”. When entrepreneurs succeed, they are richly rewarded. If they fail, they get hurt personally. They bear all of the responsibility and risks on themselves, as opposed to the unaccountability of government bureaucrats. Thus, true solutions to problems are realized.
Rising prices due to artificially raised minimum wages is just another problem to be solved by entrepreneurs. However, that does not mean there will be no consequences for this government-sponsored action.
When the minimum wage is raised, chains that employ most of the minimum wage workers will find much heavier competition with "mom & pop" shops, where the owners perform most of the labor. For instance, I can now get a mediocre $5 quarter pounder from McDonald's, or I can go to my local independent burger joint where the owners do the cooking and serving and get a wonderful 1/3 pound Angus beef burger with bacon, jalapenos, onion straws and great fries or cole slaw for $5. If the minimum wage is raised, more of these types of shops will emerge, and McD's will become a dinosaur. That is, unless McDonald’s can employ enough automation into their process to keep them competitive.
Either way, the people who will suffer are the young, unskilled workers. Ironically, these are the people the Dems claim to be most concerned about and use as a justification for meddling with the economy.
Another consequence is that the young and unskilled will now compete for jobs with more mature, highly skilled and educated workers. Once I retire permanently (and if no better options become available), I might want to supplement my income by working at an entry-level job if the price is right. With my customer service background and strong work ethic, I should easily run circles around any Millennial with no work experience and take one of those jobs away from him or her. I will also bet that there are hundreds of thousands of older folks like myself who can do the same thing, and will do it if they are paid $15/hr.
If the Dems are successful, they may actually provide a way for retirees with insufficient savings to have a comfortable retirement. However, they will also increase the misery, unemployment, and income gap of the underclass. But they have always been experts in that endeavor.
As published in American Thinker