Unions’ self interest – not higher pay – guide minimum-wage protests

September 5, 2014

by Nick Novak

Originally published by The Washington Times.

It was no surprise to me that protesters were at the Taco Bell in my hometown of Madison, Wisconsin, on Thursday calling for a higher minimum wage – $15 an hour – and the right to form a union. These so-called “strikes” have become the norm across the country over the last couple years, but many people still fail to understand what would happen if the minimum wage were increased and what is driving these protests.

Simple economics shows that raising the cost of something causes less of it to be purchased. It is the same with the cost of labor. If an arbitrary wage increase requires businesses to pay workers more, multiple things could happen.

First, prices would likely go up. The easiest way to combat higher costs of production is to charge customers more. Business owners will quickly run into a problem, however. When prices go up, people buy less, and suddenly fewer workers are needed to meet the demand of a product.

Another thing that could happen is automation. We see this everywhere thanks to technological innovations. Don’t have time to go to the bank, just stop by an ATM. Don’t have time to call in the order for pizza on Friday night, just order online. The same would be true in the fast food industry. Instead of telling a worker what I want to order, I could just as easily type it in on a computer at the counter. This would also lead to fewer needed workers.

Continue reading at WashingtonTimes.com.