Finance

Minimum Wage Increase Fails to Benefit Workers… And No One is Surprised

minimum wage increaseProponents of raising the minimum wage typically argue that the increase is a practical way to improve living standards for the working poor and reduce financial inequality. However, for many restaurant chains, the minimum wage hike signals a sharp increase in job cuts, resulting in the opposite effect its supporters tout.

In an interview with Fox Business, Zane Tankel, the CEO of Apple-Metro Inc., which operates 40 Applebee’s restaurants in the New York metropolitan area, revealed that he has been forced to cut at least 1,000 servers from the chain in the past year due to New York City’s minimum wage increase.

“I’ve always said increasing minimum wage is technology’s best friend”, Tankel said, explaining how Applebee’s restaurants now run on a “concierge” model, the employees mainly greeting guests and  assisting them with the tablets found at each table.  Other fast food and casual dining chains have followed suit and are using technology to cut down on labor as well, using tablets for placing orders and payment. By increasing automation, restaurants try to offset the costs of the higher minimum. Tankel noted that although minimum wage proponents tend to ignorantly assume that simply raising menu prices can fix the problem, this approach is not a realistic option nor a viable solution to the larger issue at hand.

“[…] it’s because of Cuomo, DeBlasio, the liberal agenda”, Tankel stated later in the interview, discussing how New York’s impractical liberal policies are largely to blame for the job cuts.

With Applebee’s currently facing a two-thirds reduction of their total workforce, evidence of job losses and layoffs among other chains continue to pile up as well. This raises questions about the effectiveness of the minimum wage in helping workers—evidence indicates that increasing the minimum wage disproportionately harms the people it is supposed to help, ultimately reducing employment among less-educated and low-skilled workers. Furthermore, chain owners like Tankel have observed that even with a higher wage, the difference in productivity of low-level workers is not large. “It’s just a lot more money for the exact same job description”, Tankel says.

Economists believe that New York City’s overall drop in restaurant growth could be attributed to the state’s minimum wage hike, its harmful effects becoming glaringly apparent as time goes on. It has been shown that an increased federal minimum wage does more harm than good for employees, as it reduces the likelihood of upward mobility by cutting off the first “rung” of the employment ladder where workers typically gain the skills and experience needed to move up the economic food chain. It also puts low-skilled workers at a disadvantage and inhibits the creation of new jobs, disrupting the balance of the free market. With overwhelming evidence indicating wage increases are not only ineffective, but completely counterintuitive, liberal policymakers continue to ignore reality and support what is essentially economic suicide.

Tankel remarked that the minimum wage increases in New York are “all really good if you have a job”. But the wage hike certainly hasn’t done much good for the 1,000 employees Tankel was forced to cut this past year.  He added, “If you don’t have a job, $100 an hour doesn’t help you out a whole lot, does it?”

Those who advocate for higher minimum wages and “Fight for $15” may want to reconsider their principles, as their efforts are clearly not in the best interest of those they claim to be “helping”.


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SARGE
5 years ago

Again, I have to say, I’m really tired of hearing about communism. Is this the 50s and 60s again. Come on, if you lived in those yrs ( I did) , there was constant fear mongering about communism. Constant. Bomb shelters were built, as kids we use to play war in them as they were being built. I think its really sad how you all are getting sucked up into believing this communism bs. Think about it, just how many communist countries exist in the world?? Im thinking…. China? they pratice capitalism, they love their kfcs and mcdonalds, oh ya Cuba, like who cares about cuba? Ok theres got to be a whole lot more….man I’m thinkin’ oh ya, Hungrey! and East Germany and Poland and Viet Nam. Oh wait, that was 30 – 40 YRS AGO. Come on people, quit your communism, fear mongering ways, you all sound like a bunch of hillibillys. Come on Jethro, get granny and elly may and go commie huntin’ Jusy listen to yourselves.
Its like the democrats are getting just what they want. I have to say, you all are playing right into their hands.

SARGE
5 years ago

Don’t you all see how this works out for the American worker. Im not talking about the people making 15 an hour. Theyve fought long and hard for this pittance of a wage, and when this battle is over, they’ll need to start over again. And that will take a whole new generation. Im talking about why would you set yourself up for a non-skilled, low paying job in the first place. True, someone has to take your order, but it doesnt have to be you. Learn a trade, the hell with school, actually learn how to do something. Learn how to actually do something. You can take that ability with you, anywhere! Minimum wage shouldnt even enter your mind.

SARGE
5 years ago

See, minimum wage = $600 a wk which = 2400 a mn = 28800 a yr?? Geez, I had to do that like 3 times. So why do we care. If we can get half the population to live in pretty close to poverty, thats good, we’ve accomplished our goal of a welfare state, these folks will think they really got over on employers, but in reality, they just set their ceiling. It’ll take 20 yrs or even more for them to ask for more. It’ll make more opportunities for the middle class. I know this is a mean way of looking at things, but so what.

BruceM
5 years ago

Why not just cut to he chase and raise the minimum wage to $50/hr. Using my Democrat friend’s logic, this will raise fast food workers, hotel maids, car washers and baby sitters up solidly into the middle class, erase student debt and obliterate poverty forever!!

Don’t laugh….there are elected persons and CNN commentators who would jump on this if they thought they could sell it.

Barry
5 years ago

All good points in the comments but one is missed. Wal-Mart going to a $15 an hour wage is cutting hours for employees and installing self check-outs at their stores. Fast foods as Wendy’s, MacDonalds, etc are installing self ordering and payment stations. Automation is putting many of the minimum wage workers out of the job market.

Bill O’Reilly who never admits he is wrong stated that the minimum wage workers could not be replaced. Boy was he wrong about that one (and many more).

Ellen
5 years ago

Only education and opportunity will benefit workers. Propping up the uneducated and ignorant with a “living wage” subsidized by others will ultimately result in collapse of the system.

Jim
5 years ago

You just can’t fix stupid.

Dandy
5 years ago

Bring on the robots! God bless automation, and to Hell with Progressive,Socialist, Communist Marxist Liberals…..Under schooled, and easily fooled.That’s how they get their voters. Under schooled, and easily fooled…..

Aardvark
5 years ago

If the answer to poverty is so simple, as liberals would have you believe, then why don’t they push for $50 per hour minimum? Then everyone could enjoy higher middle income status (Sean Hannity suggestion). What the liberal elites know very well, is that it would just increase the layoffs and inflation at an accelerated rate.

Mike
5 years ago

If you can’t afford to pay a living wage, you can’t afford to be in business. Asking people to work for poverty wages is the height of entitlement. You are using others to subsidize your dream of having a business. Yes, you are the one taking the risk but when your business thrives, thanks to help from your employees, you’ll be comfortably off and they may still be working for you. And no…you didn’t do it on your own.

Rik
5 years ago
Reply to  Mike

Mike, I guess you’ve done well these past 8 years under Obama’s destruction of our economy. In fact, I don’t know where I’ve heard this statement but by 2020, predictions are that 50% of the population will be home-based businesses. Hope you don’t end up having to work for yourself!

Robert L WILSON
5 years ago

I worked my way through by working in a gas station. Every car, I put the gas in, washed all the windows and checked.the air in all the tires. Now, in most cases you do it yourself. Great result from higher minimum wage, fewer jobs and no service.

Gary Zeiher
5 years ago

Tom Wilde

I took your suggestion and just finished reading the 45 Communist Goals and it was a definite eye opener. I didn’t even know about these. I’m glad you mentioned this because it was enlightning to say the least.

Don
5 years ago

These people are Communists. They do not understand economics. Business must make a profit or why be in business? People are not required to spend their money with you. So raise prices all you want- but it’s not going to happen! Competition in a free enterprise system determines cost and quality. liberals think just because you raise prices people are required to pay it. Numb skulls! All communists countries fail unless they do business with free counties. China is a good example.

Scottar
5 years ago
Reply to  Don

And they have been stealing Western technology, they are not that innovative.

The (other) Don
5 years ago

It kills me that they even have the nerve to call this a “living wage”. Think about it….$15/hr at 40 hours is $600. Where in NY, or mostly anywhere, are you going to get a rental making $2400 a month. I just looked it up and according to https://www.apartmentlist.com/rentonomics/national-rent-data/ the median price for a 2 bedroom house in NY is $2408.
So if they want to call it a “living wage” they should demand something like $30/hr. That doesn’t sell.

Tom Wilde
5 years ago

Why does anybody at all still think that the Democrat Party is on the side of the so-called “Little Guy”? Sure, at one time long ago they were. Now they represent the interests of the Globalist/Communists and are working to utterly subvert the Constitution and this nation as a whole.

They KNOW their economic policies are destructive that’s why they push them. Their objective is the elimination of Free Enterprise and replacing it with government control of everything – COMMUNISM. Trashing the economy is one method of achieving that end.

One only needs to read history, study a bit of economics, learn a little about sociology and take a crash course in political science to understand what it is that the “Democrat” Party is all about in today’s world.

Therein lies the rub. They don’t teach those things in our schools to any useful extent any more. Jimmy Carter’s Communist Core Department of Indoctrination saw to that.

If you haven’t already done so, look up the “45 Goals of Communism in America” on the internet. What you will see is the Democrat Party national platform described to a “tee”.

Bernie Sanders? Hillary? Waters? Pelosi? Schumer? “Democrats”? LOLOL. Not by a long shot. There’s nothing democratic about their agenda! The “45 Goals” proves that!

Maria Rose
5 years ago

Living wage or minimum wage call it what you will, but I saw what would happen (decreases in available jobs) based on what happened over my years of work and how pay increases effected number of employees scheduled. Any employer who runs a successful business controls costs and one of the highest costs has become labor, plus nowadays most businesses need to achieve profit to keep succeeding. Raises in labor cost effect all costs to companies. But staffing needs should be a stable number based on efficient productive workers. You achieve this with effective training and follow up on performance. Raises should only be expected if companies achieve a reasonable profit level without drastic changes to overall costs. Which means cost is predictable and should not effect labor staffing, but ever raise in the last few decades has decreased staffing ( employees) needed for jobs based on efficiency models set by those who don’t look at current employees abilities ( comes down to, do job ).
Okay employers do have a right to insist on a certain level of performance for a job, but as mentioned in article, certain jobs have low performers which can be better served by automation e.g. Cashier or stock work.
But we also need new jobs created for low skilled employees,too.

Greg Whalin
5 years ago

The leftist socialist politicians in this country know exactly what they are doing. They know that a so called Living Wage will be most harmful to the least among us, but in order for them to hold on to their power it is necessary to maintain a permanent underclass. Mandating employers to pay artificially higher wages, which forces them to fire lowskilled Americans or to hire illegal aliens to do the work achieves their goal. As a conservative and someone who truly cares about my fellow man, I demand that all our leaders work to insure a Living IQ so those at the lower end of the economic spectrum can lift themselves up and provide a more abundant lifestyle for their self and their family.

Gary
5 years ago

As the old saying goes: Be careful what you ask for. You may just get it. Seems like this holds true right about now. Funny thing though, many of those pushing so hard for an increase in the minimum wage don’t now and never did have to work for minimum wage.

El gringo viejo
5 years ago

Lots of folks find out that after the law is passed their new minimum wage becomes $0.00.

This law is also called ‘the permanent youth unemployment act’

Additional evidence of progressive ‘negative help’

Ivan Berry
5 years ago

Good shot, old man. Love your handle.

DrZ
5 years ago

Wages of any amount are justified when the employee gives the employer a return on his investment. Would you make an investment that returned $0 or worse a negative amount? It sounds nice that an activist group and politicians imposed artificial wage increases, but did they analyze the return implications for the employer? Somehow I doubt it.

With higher wages comes additional expenses such as increased FICA, worker’s comp, etc. did the employee receiving the artificial mandated increase increase his productivity to make up for the increased “investment” forced on the employer? Obviously not and that is why employees are being laid off or having their hours reduced.

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