One dollar bills have been dropped into a tip jar at a car wash in Brooklyn, N.Y., Oct. 24, 2016. (AP Photo/Mark Lennihan)

Minimum Wage Hikes are Killing the Poor

There’s really no way around it, raising the minimum wage is about the worst thing imaginable the government can do for poor people. It’s fairly simple to understand, but since it’s a counterintuitive concept and most Americans think on a superficial level about economics, politicians can easily exploit the issue to win votes. And they do.

Take the wealthy liberal city of San Francisco as a prime example of this anti-poor policy and its imminent repercussions. In a year and a couple months, the Golden Gate city will become the first in the state to raise its minimum wage to $15 an hour. The entire state is set to follow suit by 2022, unless of course the coming disaster in San Francisco will make lawmakers reconsider.

And what’s coming? This:

According to a study published last week by the Harvard Business School, “Survival of the Fittest: The Impact of the Minimum Wage on Firm Exit,” “a $1 increase in the minimum wage [in the San Francisco Bay Area] leads to an approximate 14 percent increase in the likelihood of exit [from the industry] for the median 3.5-star restaurant.”

The study also found that the lower scale restaurants saw a marked increase in the likelihood of collapse. That makes sense, obviously. Bob’s Burgers may not be able to absorb the cost associated with paying $15 an hour for their entry level employees without coming to economic ruin. But swanky, upscale Eagle’s Nest Steakhouse, on the other hand, can simply jack up the cost of their filet by a few bucks and be okay.

In other words, the liberal minimum wage policy lets the rich get richer and the poor lose their job when the business they work for goes under.

The foolishness of minimum wage increases has always been easy to depict by asking a simple question: “Why just $15 an hour?” If $15 is better than $10 an hour, doesn’t it stand to reason that $20 or $30 an hour is better than $15? Even if the person advocating the increase goes for that, just keep increasing the amount until eventually they will admit, “Well you can’t do that because the business wouldn’t survive.” All that is left is for you to point out what they just acknowledged and admitted.

It’s why at some point maybe common sense conservative lawmakers are going to have to call the bluff of their liberal counterparts. When leftists begin campaigning on an increase in the minimum wage, conservatives need to up the ante by offering to increase the Democrat rate by 10.

It might put an end to the nonsense by forcing the left to be grown up and talk seriously about the economic consequences of these policies. Of course, that all depends on the Democrats being responsible and moral enough to quit the dollars-for-votes exploitation of the poor to do so.

So obviously San Francisco is out.

About the author

Peter Heck

View all posts