To Strike or Not to Strike? That is the Question

Posted: Dec 05, 2013 12:01 AM
To Strike or Not to Strike? That is the Question

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.

Imagine 27% of fast food workers losing their job overnight because of an increase in the minimum wage. What is even more startling when we examine the minimum wage argument is when the wage is raised, it targets less experienced and younger worker almost exclusively. If the wage is indeed raised, then employers will immediately fire the least productive and least experiences workers on their staff. Those people are usually younger workers and part time workers trying to make additional income for their family. According to the bureau of labor and statistics, in 2011 over half of the people making the federal minimum wage are people under the age of 25.

A potential hike in the minimum wage would also destroy the traditional "mom and pop" restaurants, cafes and eateries that are barely able to make ends meet. The bigger corporations such as Starbucks, Subway and Burger King can most likely take the blow if such a wage hike was enacted. Restaurants that are barely sliding by in the current climate would either have to drastically raise their prices, or forever close their doors.

And perhaps the greatest irony of all is if the workers did in fact get what they wanted, and a $15 dollar minimum wage was enacted overnight, many of them would then lose their jobs. They are essentially protesting for their own demise.

If you were to walk into a fast food restaurant and talk to the owner, chances are he or she started flipping burgers and cleaning booths. Without access to work and experience, the workers of today would have no chance to be the owners of tomorrow.

As the workers picket and yell all throughout today for higher wages and benefits, remember one thing: "The best social program is a job!" When people are working and gaining experience they are more likely to climb out of their current socio-economic bracket and rise to higher income and social standing.

Is poverty a problem and is the middle class hurting? Absolutely it is. The antidote to the disease of poverty and the road to restore the middle class lies in increasing access to work, so they can gain experience and become the entrepreneurs and business owners of tomorrow.

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