I recently had a layover at the Minneapolis-Saint Paul airport on my way to visit my parents in Oregon, so I stopped at McDonald’s for a quick bite. Rather than being greeted by a human cashier, I was met with a hall of self-serve kiosks, where I placed my order and paid for it.
Expect to see a lot more machines and far fewer human workers in states and cities that are artificially driving up the cost of employees through higher minimum wages.
“The government seems stuck on this way of fixing something that doesn’t need to be fixed,” Brian Wesbury, chief economist at First Trust Advisors, told me. “It messes up the marketplace, and businesses attempt to find a way around it because these are not market-based wages – and today with robotics and computers they can. So it ends up hurting people.”
While efficient, automation like those ordering screens at the Minneapolis airport is emblematic of what happens when the government distorts the marketplace with a heavy-handed regulatory approach.
Minneapolis has mandated a $15.57 hourly minimum wage – more than twice the federal minimum wage of $7.25 – for large employers, but that wage will apply to all businesses starting this summer. While the airport isn’t technically part of any city, its employers are no doubt forced to offer comparable wages to attract workers.
High wages are having other effects, too. Minneapolis residents will soon be out of luck if they want to call an Uber or a Lyft. Both companies are leaving town in May after the ultra-liberal city council (several of the 13 are declared socialists) applied the minimum wage to drivers, overriding the mayor’s veto. The companies said the mandate makes operations in the city unsustainable.
So in the effort to increase pay for drivers, the city council effectively will strip thousands of jobs and leave many people without transportation.
As Democratic Mayor Jacob Frey said in an interview, “Getting a raise doesn’t do a whole lot of good if you lose your job.”
Nice work, Minneapolis.
California hikes minimum wage, employers lay people off
Then there’s California. In what should have been an April Fools’ joke, a law requiring fast-food workers at large chains to earn $20 a hour took effect April 1.
Gov. Gavin Newsom, a Democrat, signed the law last year. Obviously, businesses aren’t happy because it’s bad for their bottom lines.
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Newsom admitted as much when he tried to give his buddy Greg Flynn, who runs Panera Bread franchises in California, a loophole from the law. Flynn is a big Newsom donor, and Newsom had demanded a curious exemption to the law for restaurants “making in-house bread.”
After the justified uproar that Flynn was getting special favors, he has said he’ll abide by the higher wage.
It’s no surprise that even before the new minimum wage became reality, restaurants started planning layoffs. For instance, Pizza Hut has said it will cut more than 1,000 delivery jobs. Many more are following suit.
As any economist could have predicted, these businesses are having to downsize their workforce, reduce hours and raise prices. That’s what happens when the government meddles in the private market.
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It’s hard to see how this benefits anyone in the long run. Minimum wage jobs have traditionally existed to give people an entry point into the work world, but government-driven inflated wages will take those opportunities away from inexperienced workers.
And this government intervention ignores that workers have more choices than ever.
“It’s such a competitive marketplace and unemployment is so low that if you’re disappointed in the job in either the culture or the wage or the working conditions, you can move,” Wesbury said.
Less work for same pay? Welcome to Bernie’s world.
You can always count on Congress’ resident socialist, Vermont Sen. Bernie Sanders, to come up with truly wild (and costly) ideas. He’s a constant pusher of “free” college, student debt forgiveness and high minimum wages.
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Sanders also says Americans deserve a 32-hour work week. Employers would be forced to continue paying workers the same pay and benefits as they get for working 40 hours. And he’s not just thinking about it – he’s introduced a bill.
Sounds pretty darn good, I have to say.
Unfortunately, in the real world, companies would have to make adjustments to afford this cushy new employee benefit. Employers would either have to hire more workers or lose out on productivity, and consumers would face higher prices as a result. Other unintended consequences would surely follow.
Bottom line: The private sector works best when the government gets out of the way. It’s a lesson liberals never seem to learn.
Ingrid Jacques is a columnist at USA TODAY. Contact her at [email protected] or on X, formerly Twitter: @Ingrid_Jacques
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This article originally appeared on USA TODAY: California minimum wage increase hurts workers it claims to help
