Fast food strike = economic ignorance

MoneypileSometimes I just have to marvel at the total lack of common sense and disregard for basic economic principles often shown by people in the grievance industry when they throw their little hissy fits. The latest example was the union-organized nationwide strike at fast food restaurants around the country.

It’s basic economics, and also just common sense, that if you increase the price of something people will buy less of it. That applies to labor as much as it does to, oh, I don’t know, let’s say oranges. Except that since most oranges are interchangeable, the decreased sales that inevitably follow a price increase applies to all of them equally. Not so with the minimum wage. People at the lower end of the wage scale are predominantly young, less educated, unskilled, and minority. If you arbitrarily raise the cost of hiring them, it’s just simple logic that fewer will be hired, since not all of them can add as much value to a product or service as the minimum wage that’s set. Or, someone or something else can be substituted for their labor at a lower cost than the minimum wage.

Low-skill jobs are especially susceptible to being replaced by technology or outsourcing. If a fast food restaurant can take orders at a rate of pennies per order from a self-serve touch screen versus dollars per order from a young and/or low-skilled employee, which option is better for the restaurant and for the consumers who ultimately pay the bill? The question answers itself.

So how does that translate into real people with real challenges?

During the great recession we saw national teen unemployment rise to about 27 percent overall and to almost 50 percent among blacks. Utah’s youth unemployment rate has been much better at around 12 percent, compared with an overall state unemployment rate in the mid-4-percent range, but that’s still unacceptably high, and much higher than it has to be.

We’re basically telling our young and the less educated that their labor is worth nothing if it’s not worth some government-mandated cost of hiring them. That’s a tragic waste and lost opportunity. And it’s flat immoral to tell someone they have zero value to society if they can’t contribute at some arbitrarily set level. In fact, we’d rather pay them not to work than have them do something productive at entry-level wages. How does that make either them or the rest of us any better off?

Forcibly unemployed working-age teens also suffer more than just the lack of a paycheck. Teens acquire skills in early employment that make them more marketable to future employers. It only makes sense that young people who work part-time or entry-level jobs earn more later in life than their counterparts who did not learn the importance of showing up on time, being productive, and getting along with their co-workers.

Again, labor is like any other good in that if you raise its price people will buy less of it. This commonsense fact has been proven time and time again. We should have a debate over whether we would rather force people, especially the young and poorly educated, onto the public dole or allow them the dignity of earning a living through the increased job opportunities that would be available at true market wages.

They say the road to hell is paved with good intentions. I have no doubt that most minimum-wage proponents are motivated by a desire to put more money into needy hands. But what they’re in effect doing is denying those needy hands the opportunity for earned success and the personal fulfillment that comes with it. And that’s just wrong.

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