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Forced Hike In Minimum Wage = $10,000 to $12,000 Tab For Restaurant Customers

As of today, Missouri businesses must increase the minimum wage from $7.85 to $8.60 per hour. The Associated Press reports this will be the first of multiple wage hikes that will culminate in a minimum wage of $12 per hour. The hike was approved by voters. The results are entirely predictable. Yes, some employees will certainly benefit from seeing more money in their paycheck. But there is no free lunch with mandated wage hikes, as the Associated Press reports (emphasis is mine).

At Granny Shaffer’s restaurant in Joplin, Missouri, owner Mike Wiggins is reprinting the menus to reflect the 5, 10 or 20 cents added to each item.

A two-egg breakfast will cost an extra dime, at $7.39. The price of a three-piece fried chicken dinner will go up 20 cents, to $8.78. The reason: Missouri’s minimum wage is rising.

Wiggins said the price hikes are necessary to help offset an estimated $10,000 to $12,000 in additional annual pay to his staff as a result of a new minimum wage law taking effect Tuesday.

“For us it’s very simple. There’s no big pot of money out there to get the money out of” for the required pay raises, Wiggins said.

What’s more, this isn’t the way to help folks who are working at entry-level wages. Our Jon Sanders explains in Policy Solutions the short-term thinking behind forcing a hike in the minimum wage.

Compassionate or not, raising the minimum wage hurts the very people it’s supposed to help: the poorest, the least skilled, and the disadvantaged. All a higher minimum wage can do is make it more expensive to employ low-level workers. It can’t increase the skill level of any worker. It can’t expand payrolls. It can’t keep the work hours offered by employers the same as before. It certainly can’t make automation less price-competitive (not with human labor suddenly becoming much more expensive). Finally, it can’tmake employers stay in business despite sharply rising labor prices.

Most minimum-wage workers are new to the workforce, often unproven, and often not educated beyond high school. They are getting startup wages because they are startup workers. It’s a very small subset of workers, mostly young, and most working part-time.

 

Donna Martinez / VP of Marketing and Communications

Donna came to the John Locke Foundation in January 2003 after freelance writing for Carolina Journal and contributing to projects for the North Carolina Education Alliance. He...

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