I remember a while back having a conversation with a Christian philosopher who assured me that raising the minimum wage would be a great policy, and put more money in the hands of the “working poor”. But when you study economics, one of the views that has the highest level of acceptance is that raising the minimum wage harms the poorest people, and especially young minorities.
Let’s take a look at what happened in one state that raised the minimum wage a lot.
This is from September 2023, from the far-left UK Guardian. You cannot go any farther left than the UK Guardian.
Excerpt:
In the face of recent intense pressures on fast-food workers, employees in the sector in California are about to get a boost with the creation of a body that will set wages and other standards for the industry.
The move is a hard-fought win for the labor movement in the state…
[…]Fast-food workers in California have held over 450 strikes since 2020, according to the labor group Fight for $15.
[…]The bill creating the body will also raise the minimum wage for fast-food workers in California to $20 an hour on 1 April 2024, with the council able to set annual wage increases beginning in 2025.
It’s a “win”! The fast-food workers are going to get a “boost”! Their wages are going to go up to $20 an hour! That’s what the secular left thinks will happen. And how could it NOT happen? After all, it makes the secular left feel so good. They feel so generous, handing out money that isn’t theirs. How could it not work, when it shows everyone how morally superior the secular leftists are? It HAS to work. It feels good, so it MUST produce good results.
So what happened next? The first thing that happened is that fast-food restaurants raised prices for consumers, because they had to pay for the generosity of the secular leftists or go out of business.
New York Post reports:
Menu prices at fast food chains across California have increased, as a new law went into effect requiring them to pay a $20-an-hour minimum wage to workers from Monday.
[…]The biggest leap was at a Burger King, where a Texas Double Whopper meal cost $15.09 on March 29 but surged to $16.89 on April 1, a whopping increase of $1.80 (nearly 12%) for the same meal.
The Big Fish meal also jumped from $7.49 on the menu before April 1 to $11.49 after — an increase of $4 (53%).
Most other items increased anywhere from 25 cents to a dollar.
Who buys fast food? Fast food is cheap food. The people who are hit with these higher prices are precisely the poor people that the secular left promised to “boost” with a big “win”.
What next? Well, these business owners are closing their restaurants because they cannot afford to pay their employees – even with higher prices. Why not? Because when you raise the prices of items without increasing the value, people find alternatives that are cheaper and better. And when sales go down, businesses close.
Here’s another article from New York Post:
Subway shrunk its sandwich chain in the US by 443 stores last year, a surprise downsizing that experts said could continue as the chain’s California shops face an increased minimum wage.
[…]The threat of further closures hangs over 2024, according to John Gordon, a restaurant analyst at Pacific Management Consultant Group — and a major reason is the increased labor costs in California, he said.
There were 2,719 Subways in California at the beginning of 2017. That number had plunged to 1,934 as of Dec. 31 — although Subway still operates the most locations in the state behind Starbucks. On April 1, the state’s minimum wage rose to $20 an hour from $16 an hour.
California has the highest unemployment rate in the continental United States. The minimum wage advocates don’t understand that mandating a $20 minimum wage doesn’t mean that workers will collect that wage. When they’re fired or laid off, they collect the REAL minimum wage – which is ZERO. The businesses just close, or they stay open and replace low-wage workers with machines.
The problem with California is that almost no one there understands basic economics. Nobody is reading economists like Thomas Sowell in California. Not the leaders of the state. Not the people who vote for those leaders.
Be careful what state you live in.
(Image credit: The Fraser Institute)
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Author: Wintery Knight
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