Fairfax County Virginia has a 2016 ballot initiative to raise a prepared meals tax of 4%, used to fund public schools (70%) and County services, capital improvements and property tax relief (30%). Let’s hope it works better than the minimum wages initiatives on the ballots in several states.
Minimum wages sound great … if you don’t think about it too hard. But raising the minimum wage has to be paid for by somebody and it is usually the same group of people that the minimum wage is allegedly trying to benefit.
A simple example might help. You have a fast food restaurant with 3 workers. With a higher minimum wage, you are likely to see 2 happier workers (unless they have to work longer hours) and 1 worker that loses their job. Alternatively, the fast food restaurant could raise prices and try to pass the minimum wage increase on to consumers (passing the “tax” onto consumers). Of course, the minimum wage cheerleaders usually hope the the owner of the fast food restaurant will take a decrease in profits to fund the higher minimum wages.
But what often happens is what I laid out in my example: layoffs and longer hours for the existing employees.
Take a recent study by the American Action Forum. This study finds that four states (Arizona, Colorado, Maine and Washington) have state minimum wage proposals on their ballots.
But the economic result of enacting these minimum wages proposals is devastating. They estimate that 289,782 jobs will be lost.
And lest we forget the dystopia that was warned by novelist Kurt Vonnegut is “Player Piano,” restaurant owners are increasingly turning towards automatic to control costs (and reduce waitstaff, cooks and food prep staff). McDonalds, Olive Garden and Applebee’s are among a number of chain trying out a way to reduce the number of employees.
So while minimum wages sound groovy, someone pays for it. And it is usually the lower income households, the very ones insisting on the minimum wage.
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