Let us thank the union- and taxpayer-backed Restaurant Opportunities Center, which this month has been launching protests around the nation to demand a minimum wage of $15 an hour for restaurant workers. They’ve presented us with a great opportunity to discuss the many reasons the minimum wage is not only bad economics but an affront to freedom.
First, some facts from the U.S. Bureau of Labor Statistics:
1. The national unemployment rate for persons 18 to 29 years old topped 16 percent in July, more than double the overall unemployment rate of 7.4 percent.
2. Among black youth ages 18 to 29, the unemployment rate was 20.9 percent, nearly three times higher than the overall rate.
And those figures don’t include persons who want jobs but are so frustrated they’ve given up looking.
Blame the minimum wage for much of this. Young and inexperienced workers typically are the least productive. If they are poorly educated — as many young urban minorities are — they are even less productive. So they typically receive the lowest pay. As they learn more, develop better work habits and become more skilled, they become more productive and earn pay raises or have the ability to switch to higher-paying jobs.
No employer could stay in business long with a staff whose productivity averages $5 an hour while they receive the federal minimum wage of $7.25 an hour or higher. More than doubling the minimum wage would throw even more young, inexperienced, and poorly educated persons out of work, because they’d be costing employers far more than they produce.
Imagine what would happen if the government set a minimum price on cars. No matter what car you wanted to buy, you’d have to pay at least $40,000. We’d soon see only higher-end cars sold and the disappearance of lower-end cars. No one would want to pay $40,000 for a $20,000 car. And we’d see fewer cars sold overall because fewer people would have the money to buy cars that start at $40,000.
With a minimum wage, employers try to hire only higher-end workers — those with experience, skills, and education — instead of those with little or no experience, low skills, and poor education.
Proponents say restaurants could raise prices to cover the doubling of the minimum wage, but fewer meals would be sold, and fewer jobs would be available, because people would be spending more per meal and therefore could afford fewer meals.