Fast food workers have been staging strikes across the country for the last three years to demand a $15 minimum wage, among other things. Which begs the question: Would raising wages in the industry to that level force companies to lay off workers to reduce costs?
The answer in a new paper is a resounding no. Economists Robert Pollin and Jeannette Wicks-Lim of the University of Massachusetts-Amherst looked at a scenario in which the federal minimum wage gets increased to $10.50 in one year and to $15 three years after that, which in the end would mean a 107 percent increase over the current minimum wage of $7.25 an hour. They found that instead of having to cut jobs, fast food restaurants could cover the cost of the increase with savings from reducing turnover, higher prices, and greater economic growth.
I made it as far as that paragraph before my first out loud laugh.
As with most progressive think pieces, it is a veritable cornucopia of qualifying. There are enough assumptions and kinda/sorta/maybes to fill Michael Moore at lunchtime here.
The first assumption is that the jump to $10.50 an hour would be so life-changing that it would drastically reduce turnover. This key component also exposes the fact that progressives would prefer to trap people in low income jobs for as long as possible, if not forever. Rather than get someone on the path to being a fast food franchisee, the progs would rather they remain slightly more comfortable fry cooks.
The second assumption is that sales would only suffer a slight dip from the price increases that would have to be put in place, which is a rather bold hope when even McDonald’s is looking at dropping numbers.
So significantly higher wages and the resultant higher prices are going to eventually result in economic growth. Makes sense, no?