Blogs » A Constitutionalist & Believer in Natural Law » Minimum Wage Increase Cost Jobs?


As many individuals that have read my blogs know I love financial and cost analysis. I love to find the hidden factors not considered and bias in many so-called independent studies related to cost.

The recent increase in the minimum wage by about 11% is a good example. Through various media outlets we have heard that the increase will cost jobs. And we are given the “fact” that at least 300,000 teenagers and young adults will lose their jobs. These media outlets talk about various studies, but I cannot find a single published study posted on line or in any published research media. When I cannot find a published detailed study, I tend to regard the statements as bogus figures, made up to impress.

We hear how restaurants and other business are relucant to raise prices because of the economy so they just hire less people or lay off people. I just can not buy this logic. If I get poor service, the place is dirty, or the product is of lower quality—they lose my business.

I have repeatly seen the salaries of managers in major chains increase at rates that 2-5 new minimum wage workers could be easily be hired. Yes, I am aware that a minimum wage increase also increases the salaries of other workers. I am also aware the wage increase causes employers additional cost in workman’s comp, Texas Workforce Insurance, and Social Secuirty/Medicare withholding.

I wish I could say that the increased cost of providing a service or product due to the minimum wage increase should not increase the customers cost by more than 2%; but I can not. Idle time, periods of non-sales, and sales volume are critical factor in the analysis. However, if we are talking about labor to mow a yard, the passed along increased cost of labor should not cause a loss in business.

I also do not see the increase as being economically neutral. True most products and services will increase in price, but they will not increase by about 11 % because of the minimum wage increase. Therefore, the new purchasing power and standard of living of the minimum wage worker will increase at rate of the difference. Though rather minor in the grand scheme of things, it will stimulate additiona purchases.

It will be interesting to see if 300,000 teenagers and young adults lose their jobs this month.