Americans like the idea of hiking the minimum wage — until they understand the devastating consequences that come with it, Forbes.com contributor Jeffrey Dorfman says.
"Politicians like it because it doesn't cost them any money and its popular with the public so it'll get votes,'' Dorfman told Dennis Knealy, guest host of "The Steve Malzberg Show'' on Newsmax TV.
"But the public supports it because nobody tells them that people are going to lose jobs and that prices are going to go up in a lot of places they like to buy things.
"People think it’s going to come from the rich corporations or some big CEO, but the reality is that's not how it's going to work.''
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Hundreds of thousands of people will lose their jobs, he explained, as companies cut payrolls and raise prices to compensate.
"Places like McDonalds and Wendy's are going to raise their prices and once you ask people, would you still support the minimum wage after you tell them those things will happen, they don't support it nearly so much,'' he said.
Hiking the minimum wage could also prompt companies to use more automation.
"In the European countries with high minimum wages, we see McDonald's has often replaced the order taker people at the counter with a kiosk,'' Dorfman said.
"Like a little iPad touchscreen and you order your burgers and your fries and your drink [and] swipe your card on a machine.
"The only person involved is going to hand you the food because they can't afford to pay somebody minimum wages there to take your order."
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