Who will a minimum wage increase benefit? Who will it hurt?


Barack Obama is proposing to increase the minimum wage to $9 an hour. Isn’t that great? What could go wrong? After all, our hardest workers deserve a break, don’t they? Maybe that’s why our state legislature is trying to do him one better (38 cents better to be precise).

You know where I am going with this.

First of all, our hardest workers don’t make $7.50 an hour. The folks you see on the roadways pounding at concrete and such make well in excess of that. Not that they don’t stand to benefit. Union wages are tethered to the minimum wage.

But let’s not pretend there is a wide swath of experienced workers slaving away for decades at the minimum wage. For the most part, this law will impact three groups of employees: union workers, high school kids and wait staff.

As everyone who reads this blog assuredly knows, waiters and waitresses in Minnesota make minimum wage. Politicians who propose a tip credit, which would allow restaurants to count tips against wage requirements, have pennies hurled at them. Extremists, they.

Simply put, a minimum wage hike hurts restaurants, especially locally owned and operated restaurants that operate on a profit margin of approximately 0% (for the sake of discussion, let’s just talk about the successful ones). The Chipotles of the world will probably benefit from the decrease in competition.

Waiters and waitresses do not rely on the minimum wage. The good ones make at least $20 an hour, which is wholly deserved. A nominal bump in pay isn’t going to make or break them. It can certainly make or break restaurants. If a restaurant employs an average of five wait staff for 80 hours of operation per week, a $1.88 minimum wage hike will cost that restaurant $752 per week.

Make no mistake; this will force restaurants to make a hard choice. They will either fire employees or close up shop. Same rule applies to the high school kids, by the way.

Every governmental regulation has unintended consequences. It’s a fact of life. But the service industry, and restaurants in particular, are especially vulnerable to those consequences. From patio bans to stadium taxes, it seems our political leaders assume restaurants are made of money.

They aren’t, and just because an idea is popular, or scratches the back of a powerful constituency, that doesn’t make it right. Our leaders owe it to us to legislate sensibly, and regulate commerce in a way that permits, um, commerce.

This isn’t that.

Kevin Sawyer is a contributing writer to Shefzilla.com.  His views represent his own, and not necessarily that of Shefzilla.