One has to have a rudimentary understanding of business in order to understand the realities of a forced high minimum wage. Restaurants and manufacturing operations can’t do not operate in a distortion field where external realities do not matter.
In the case of the restaurant, what they are able to charge for their product is governed by myriad variables, some of which are: location, competitive landscape (how many, distance, kind, etc.), audience dynamics (breakfast and lunch crowd or spread across the day and evening), etc.
Competition drives both prices and margins down. Once an area has reached price stability, it is very hard to raise prices. So, you are selling a burger for $10 and, if you are lucky, you make $2 to $3 on it. Depending on the nature of the organization, delivering burgers might require 5 to 10 people.
Along come politicians pandering for votes and push for a 50% increase in minimum wage.
This increase causes a chain reaction through the entire wage structure. The guy making $10/hr now makes $15. Someone making $15 makes $20, and so on.
Most people don’t stop to do a bit of math and understand reality before accusing business people of being evil, greedy, or both.
What ends up happening is that the thin margins and realities of the market can’t support the delta in cost structure. The business either controls costs or shuts down.
How do you control costs?
Less people doing more or less people and automation. A few more options, but that’s the basic idea.
In other words, the politicians get the votes and continue on their sweet power ride. Those who voted for them lose their jobs. A bunch of the businesses who created jobs shutter. Fantastic deal, isn’t it?
I am in the process of setting-up a manufacturing operation to produce up to 100K of our products per month. We want to manufacture in the US. The ONLY WAY this is even remotely possible is through automation. We are explicitly designing both the product and the manufacturing process for as close as we can get to lights-out manufacturing. We cannot afford hordes of people at $15/hr. The only alternative is to go to China, Taiwan, Mexico or other shores. That’s the reality we have created for ourselves through what I can only describe as ignorant voting decisions that only benefit politicians.
Everything we use in manufacturing comes from China. We can either understand this reality and think of creative way not to lose even more job-generating industries or we can continue to be led by the nose by politicians with no skin in the game and one day wake up and think “What happened?” without realizing we did it to ourselves.