The New York Times Wakes Up – Sort Of

Published July 31, 2015

Even a blind pig roots up a truffle every now and again. 

Still, it was with some shock and amusement that I read in The New York Times a story by Josh Barro entitled “Fast-Food Minimum Wage Has Unintended Effects.” 

Gee, do ya think?

The proposed wage New York State wage increase, limited to fast food restaurants with thirty or more locations, “doesn’t do much to raise incomes for workers who don’t work at fast-food chains,” the Times helpfully points out, “[a]nd it imposes higher costs on some businesses than others; in this case, much higher, because fast-food chains will be required to pay about $6 an hour more than their nonchain competitors.”  Good points, both.

Not only that, The Times continues, “[t]he rule could cause owners to change their business models to avoid the higher wage.”  Some fast-food operators might instead choose to open non-fast food restaurants, not to expand if they are just below the minimum threshold of 30 locations that trigger the required raise, or even to install iPads (unpaid product placement announcement alert!) for taking orders instead of hiring real live cashiers. 

Others still might decide to purchase and serve food prepared by outside vendors, to hire fewer workers, or to relocate to adjacent jurisdictions.  Imagine that!

All of these alternatives are, The Times points out, what economists call “distortions,” and all of them have negative effects:  fewer workers than intended will receive the new minimum wage, and businesses will wind up doing things that customers may not prefer. 

Exactly right. 

That’s why markets determine wages and prices better than bureaucrats, no matter how smart and well-educated they may be.  The market, is after all, simply the aggregate of millions of individuals expressing their individual preferences and making their individual needs known when allowed freely to exchange their labor, wages, and services, for the goods and services they prefer.

When people don’t want Big Mac® burgers and fries they don’t go to a McDonald’s restaurant, and when they prefer some brie and pinot grigio they will go to a wine bar instead.  If they don’t care about brand names or high-priced service they’ll go shopping at street fairs or at Wal-Mart, and if they’re really brand-conscious they’ll buy their handbags at Gucci and Louie Vuitton instead.  And, most likely, if they have to spend $15.00 to buy a Big Mac® hamburger and fries they’ll choose the wine bar instead.

The minimum wage – if there is to be one – should be a starter wage, not something on which a breadwinner can expect to support a family of four.  And anyone who wishes to earn more than the minimum wage should work his or her way up inside an organization into a managerial position, become an entrepreneur, or obtain the training and education necessary to start in a career filed likely to pay more than a starter job at a fast-food chain is worth.

MacDonald’s, Jack-in-the-Box, White Castle, Chik-Fil-A, and a host of other fast-food restaurants I don’t have the time or space to name all serve fine food at a good price in ways that look and taste the same the world around.  But not every job they can offer is worth $15.00 per hour if they are to compete fairly in the marketplace for consumer’s fast-food dollars.  Competition among them will determine what those jobs are worth – nor more, no less – and well-meaning fools in the New York State Legislature (or elsewhere) cannot and will not change that by fiat no matter how hard they try.

It’s been said that progressives think the only reason that socialism never works is because the wrong people are in charge.  The truth is, no matter who’s in charge, you can’t repeal the basic laws of supply and demand.  Anyone who tries to do so is foreordained to fail.