Minimum Wage Advocates Get Blunt Lesson in Economics 101
Minimum wage advocates are receiving a blunt lesson in Economics 101 this week courtesy of the free market.
Efforts to mandate a $15.00 minimum wage in cities like Seattle and Los Angeles—which is supposed to lift workers out of poverty and off public assistance—seems to have hit a snag. In a filing published Monday, Whole Foods Market, Inc. (NASDAQ:WFM) announced it would cut 1,500 jobs as the company strives to slash costs and reign in labor expenses. (Source: Whole Foods Market Statement Regarding Reduction in Positions, SEC, September 28, 2015.)
Whole Foods, which dominates the natural and organic grocery category, faces increasing skyrocketing costs both from minimum wage increases and complying with new Obamacare regulations. The cuts will be mainly low-skill, in-store positions, the company told Reuters in an e-mail. Whole Foods’ stock price rose $0.01 to $31.07 per share on Monday, up 0.03% from its previous close. (Source: Whole Foods Market to cut about 1,500 jobs, Reuters, September 28, 2015.)
And Whole Foods isn’t the only employer cutting staff in response to higher labor costs, either. Maybe you’ve seen the iPads that take your order at Chili’s or machines that dispense drinks at your favorite drink at Wendy’s. At McDonald’s Corporation (NYSE:MCD), they’ve combined a computerized kiosk with a brand new menu, and it appears to be a big hit around the country:
— Simone Previti (@rekotc) May 25, 2015
And in Orlando…
— John Weeden (@JohnWeeden) April 24, 2015
These tweets and press releases are further proof that a minimum wage—like free college and socialized medicine—is a concept that sounds good in theory, but fails miserably in the real world. By raising wage rates, the public can see minimum-wage earners making more money. What they don’t see is the number of jobs destroyed or the citizens who would have been able to obtain jobs if the minimum wage were never raised in the first place.