Tags: Minimum Wage | Money | fast | food | restaurants

Make No Mistake, Minimum Wage Impoverishes All

Image: Make No Mistake, Minimum Wage Impoverishes All

A security guard waving off leaflets as activists shouted slogans about the minimum wage during a protest at a McDonald's inside the Smithsonian's National Air and Space Museum in Washington, D.C., on  Dec. 5, 2013. Fast food workers and labor organizers marched across the country pushing for wage increases. (Charles Dharapak/AP)

By
Tuesday, 25 Apr 2017 09:51 AM Current | Bio | Archive

Since much of the U.S. now endures rule by Harvard it’s understandable that the results of a new study conducted at the same school might offer relief for California businesses. My advice is don’t get your hopes up.

Harvard was originally a Christian college but now it worships at the altar of cultural Marxism, and Marx is a jealous god that punishes in the here and now.

The Washington Examiner reported on a study by Harvard’s Dara Lee and Michael Luca entitled, "Survival of the Fittest: The Impact of the Minimum Wage on Firm Exit." The study found the fad that currently sweeping the leftist side of the nation — the $15 per hour "living" minimum wage — is a double whammy for restaurants.

First it causes an increased number of restaurants on the lower end of the rating scale to go out of business, eliminating existing jobs. A higher minimum wage also causes fewer restaurants to open  — reducing the creation of new jobs.

San Francisco was the test case for the study. The Washington Examiner writes the city "has an estimated 6,000 restaurants in the Bay Area and [restaurants] are one of the largest employers of minimum wage workers."

To assign quality rankings the study relied on Yelp ratings. Not surprisingly the authors found the five-star restaurants — havens of expense account denizens and our betters who make the rules we live under — were almost immune to the baleful effects of the politician’s wage fantasy. Once again politicians using our money and rich people using their own money are able to insulate themselves from the bad effects of their own ideas.

While restaurants with 3.5 stars and lower — where many of the rest of us eat — were 14 percent more prone to fail when the city’s minimum wage increased 10 percent above the state’s minimum. As the gap between the state’s minimum (currently $10.50 per hour) grew, so did the rate of restaurant failure.

So even a $13 per hour minimum wage  — lower than the $15 per hour Nirvana promised by activists — has a negative effect on job retention and creation. And as the wage is increased the effect will magnify.

There is also a 4 to 6 percent deterrent effect on new restaurants for each $1 increase in the minimum. For San Francisco the increased minimum wage means between 10 and 14 percent fewer restaurants will be opening in the future.

Unfortunately ideologues are immune to the settled science of economics. They will continue to feel good about themselves by eliminating the first rung on the ladder of success.

Michael Reagan, the eldest son of President Reagan, is a Newsmax TV analyst. A syndicated columnist and author, he chairs The Reagan Legacy Foundation. Michael is an in-demand speaker with Premiere speaker’s bureau. Read more reports from Michael Reagan — Go Here Now.

© Mike Reagan

   
1Like our page
2Share
Reagan
Unfortunately ideologues are immune to the settled science of economics. They will continue to feel good about themselves by eliminating the first rung on the ladder of success.
fast, food, restaurants
470
2017-51-25
Tuesday, 25 Apr 2017 09:51 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved