A news service for the people of Michigan from the Mackinac Center for Public Policy

Politicians call for a higher minimum wage

About 80 fast food workers picketed restaurant chains earlier this month saying they wanted to double their pay going from minimum wage $7.40 an hour to $15 an hour. 

But business and economic experts say some of those workers would be out of a job if their demands were ever met.

"If forced by government to increase wages to $15 per hour across the board, affected restaurants would almost certainly have to lay off employees and reduce overall hours to compensate for increased overhead," said Justin Winslow, vice president of government affairs for the Michigan Restaurant Association.

Antony Davies, associate professor of economics at Duquesne University, said stockholders would get less return on their investments, consumers would pay more for fast food and the workers who could least afford to lose their jobs would likely be laid off.

Fast food companies would respond by cutting back on services, Davies said. Fast food restaurants already have cut costs and increased efficiency by eliminating some jobs workers used to perform. For example, at McDonald's customers fill their beverages, not the employees.

"Now here's where the very sad part comes," Davies said. "If you're a manager with six employees and you need to let two of them go in order to afford to pay the higher wage to the remaining four, who are you going to let go? Well, the remaining four will need to do the work that used to be done by six, so you're going to need to keep the most capable, responsible, and intelligent workers. Conclusion: The wage hike will end up simply taking money out of the pockets of the least advantaged workers and putting it in the pockets of the most advantaged workers."

Charles Owens, state director of the National Federation of Independent Business, said fast food jobs were never meant to support families.

"These are not career positions," he said. "They were never meant to be career positions. There is a segment of the population that wants to make a career out of those positions. Those positions don't support that kind of labor costs."

According to the National Restaurant Association 2013 survey, the average household income of restaurant workers who earn the federal minimum wage was $62,507. That meant in most cases, the fast food employees were not the head of the household.

"It is also important to understand that a majority of minimum wage workers are just beginning their professional lives, given that 46 percent are teenagers and 70 percent are under age 25," Winslow, of the Michigan Restaurant Association, said.

Don Byrne, an economics professor at the University of Detroit Mercy, said it all boils down to simple supply and demand. Byrne said that the number of employees will decrease if the cost of labor increases.

"The rationality of a demand is not correlated to the decibel level generated by the shouts of demonstrators," Byrne said.

Jenice Robinson and Renee Asher, national spokeswomen for the Service Employees International Union, which organized the protest, didn't respond to requests for comment.

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See also:

Minimum Wage, Maximum Harm

Big Business Supports Minimum Wage Hikes

Minimum Wage For TheeBut Not For Me? - Members of Congress vote for higher minimum wage while offering unpaid internships

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