IBD:
Carl’s Jr. and Hardee’s CEO Andy Puzder has people all in a huff over his idea to automate restaurants. But why be upset with Puzder? This is an inevitable consequence of massive minimum wage hikes by the government.
“I want to try it,” CEO Puzder told Business Insider. He’s looking at something “where you order on a kiosk, you pay with a credit or debit card, your order pops up, and you never see a person.”
Is he being heartless? No. Just responding to the government’s foolish plans to jack up the minimum wage and put restaurants, hotels, bars and other service industries out of business. “With government driving up the cost of labor, it’s driving down the number of jobs,” said Puzder. “You’re going to see automation not just in airports and grocery stores, but in restaurants.”
He’s right. That’s why whenever the minimum wage rises above the market-set prevailing wage, jobs are destroyed. Who would pay someone $15 an hour to do a job that’s worth less than that? No one.
This isn’t rocket science or even advanced economics. It’s plain common sense — something that populist demagogues on the left seem to be missing entirely.
The proof for this proposition is overwhelming. Consider:
- IBD’s Jed Graham surveyed six big U.S. cities that hiked the minimum wage in 2015 and found they took a serious jobs hit. “Wherever cities implemented big minimum-wage hikes to $10 an hour or more last year, the latest data through December show that job creation downshifted to the slowest pace in at least five years,” Graham wrote.
- During the 1970s, Congress forced Puerto Rico to adopt the U.S. federal minimum wage. The result, according to a 1992 study by economists Alida Castillo-Freeman and Richard Freeman: “Imposing the U.S.-level minimum reduced total island employment by 8%-10%.” So Puerto Rico lost 1 out of every 11 jobs to the minimum wage.
- A study by the American Enterprise Institute looked at Seattle’s recent minimum wage hike. After it began phasing in a series of hikes in 2014, Seattle lost 10,000 jobs between just September and November, and its unemployment rate jumped a full percentage point. As AEI economist Mark Perry notes, Seattle’s minimum wage hike from $9.32 an hour to $15 an hour amounts to a $11,360 tax on every minimum wage job.
