All across the country today fast food workers are exercising an organized strike to protest "depressed wages" and the inequities of working under the current minimum wage. From the outside, it looks as if the workers have a good case as to why they need a hike in the minimum wage. The proponents of the wage hike argue that the middle class is eroding and that raising the wage would be a step forward to helping reconstruct the middle class. Admittedly, their case sounds very good in sound bites and prepared remarks. If we examine exactly what a $15 dollar minimum wage would mean for prices, employment and business owners, the conversation changes completely.
The biggest talking point that proponents of a minimum wage use is "middle class workers need higher wages because the cost of living continues to go up across the country." But the statistics show in study after study, that a minimum wage worker is more likely to be a suburban teenager than a single mother. Low entry jobs give students the extremely valuable chance to gain work experience and skills in the market. This creates further barriers to that would have serious negative repercussions.
Ironically, even economists agree that raising the minimum wage will cause an increase in unemployment. It is a law and rule of economics that if you raise the wage floor you will exclude more workers. It is basic supply and demand.
Even with all the economics and data we have available to us today, certain politicians demand a higher minimum wage. What they unfortunately don't forecast is how lifting the minimum wage would be disastrous for employers, prices, millennials and low skilled workers.
What would a minimum wage of $15 dollars mean the average price of a cheeseburger? According to Michael Saltsman, research director of Employment Policies institute, if the minimum wage was raised to $15 dollars an hour, the price of a hamburger would immediately surge. He cited a 2006 study that found that every time the minimum wage was increased 10%, fast food menu prices went up by about 1.6% and could reduce industry employment by as much as 2.5%.
If you take those figures from the study, a $15 minimum wage would cause a 17% surge in fast food prices and nearly a 27% slide in employment.