I think it's fair to point out the downward pressure on wages caused by the welfare state. People on assistance only need to make up the difference. And they can use their ability to work for less to compete more effectively in the job market. It's a real problem. The people it really screws are the low-skilled workers who aren't on the dole.
So, to remedy the damage the welfare state does to the job market, we try to force employers to pay what they would have had to pay if not for the welfare. But that approach is fundamentally flawed because the law doesn't actually force them to pay their employees more. They can always opt to not pay them anything - lay them off.
It's not hard to understand how this works. If a business allocates $60/hr for its total labor costs, and currently employs six people at $10/hr, what will happen if a minimum wage law "forces" the business to pay employees $15/hr? Their total labor costs have jumped 50%. The business plan will have to change. They'll need to raise prices, reduce profits, or lay off the lowest performing employees. It would likely be a mix of the three. So in that scenario, it's likely one employee would be let go, and the others expected to work a bit harder for their 'raise'.
Well my first hand experience was....
As I have said dozens of times, I worked at a McDonald's when a minimum wage hike hit.
The first thing they did, was lay off 3 part time people. No one was hired in their place. Instead we simply had to do their duties along with our original position.
We had for example, and old retired guy. He came in 4 hours a day. So he would come in, empty all the trash cans around the store, including the ones outside, and then he would clean those plastic trays, and oven trays.
So with him gone, we emptied the trash ourselves (when we could between customers), and often that meant the trash cans outside were not emptied. And we would have to 'run' from the drive through window cashier position, to the back and clean trays, between customers.
You can tell if the store you are at, does not have part time people to do this, if the drive through window is empty when you pull up, and then you see a guy walk over with wet hands. He was likely cleaning trays between customers, because they no longer have someone to do that specific task anymore.
Then after that, the second thing they did was reduce portion sizes. So the size of the drinks, and the size of the fries, will get smaller.
This happened over a period of months. But the way I found out about it, was that the drink and fry cups, physically didn't fit the dispensers anymore. They were too small, and fell through the dispenser.
And then last, is they start slowly raising prices.
The idea that they are going to simply earn less profit, is just not all that likely.
The cost to open a McDonald's is around $2.2 Million dollars. The owner of that store, himself, has put in upwards of a Million dollars.
People that think that an owner or a investor in a McDonald's, is just going to "make do" with a sub-six-figure income... they are crazy.
If I put $1,000,000 into the stock market, I can make $80,000 a year just from the dividends. And that is with low risk, basic investing. I can easily make $100,000 a year, with aggressive investing in the stock market.
Why would I risk investing $1 Million dollars in a store, and risk losing that money if the store fails, in order to make only $100,000 a year or less? That would be stupid of me.
If you think anyone is going to invest $2 Million dollars to open a store, and not make a big freaking income from it... you are nutz.
Better to close the store, lay everyone off, sell all the equipment, and the property, get as much money back as you can, and invest in the stock market.
This idea the left-wing puts out in simple minded fools mouths, that owners and CEO will be willing to be happy with $100,000 a year, so their employees who risk nothing, can make $50,000 a year flipping burgers.... is just insane. Total stupidity. And if you simply put yourself in the owners shoes, no one would ever accept "you will just make do with less profits" crap. None of these people supporting this idea, would run a store on those terms.
