Nah, forcing a 50% hike in minimum wage will only have one effect. And anyone who has operated a non-trivial business for a while knows what that will be. What was Ross Perot's famous line about a huge sucking sound?
Do you non-business folks want me to spell it out? Well, I don't have the time to describe all that will happen. I'll just pick one consequence. This one highhlights the economic tsunami this will be:
You only need one, or a handful, of people at minimum wage to destroy jobs and even the very viability of a business.
So, you have 50 people earning $15 to $20 per hour today. Maybe you have another ten earning $25 to $50. And you have, say, five, earning minimum wage.
In five years your minimum wage folks go to $15 per hour. An incredible 50% raise.
The folks making $15 to $20 know this. They don't want to be at minimum wage or thereabouts. Their wages are likely to have to go up. What do we do? One group just got a 50% raise. Do we give everyone a 50% raise? No, let's try $5 per hour.
We now go from $15 and $20 to $20 to $25. In other words, 25% to %33% hike in wages for mid-range employees.
Of course, those making $25 to $50 now want their cut. Let's give them $5. So, $30 and $55 it becomes.
On the aggregate, mid-range employees probably represent the bulk of your labor expenses. Your real costs just went up somewhere around 33%.
Can we raise our prices? Probably not.
What we now have is a hit in profitability AND a cashflow squeeze. And we know we can't survive them.
Well, fuck it! Let's fire the minimum wage earners and problem solved. We only have five of them and they triggered this mess.
Will that solve the problem? No. Your employees know about this new scale out there. They don't think it is fair that they earn anywhere close to what a 14 year old kid can get at Del Taco.
Well, shit! We didn't solve the problem.
Oh, wait a minute. A Chinese competitor who understands the math just lowered their prices by 10%, forcing us to follow suit and causing a further squeeze to our finances.
We need to take drastic measures.
We need to lay-off enough people to remain viable. We migt even have to shift some of the remaining people to part-time work.
The trouble is that we were straining to keep up as it was. We really can't produce enough goods with 25% less man-power.
Only one choice remains. We contract to have our goods and services made and performed in China and India. We shrink dow to a management and marketing team in the US, get out of the lease for our 50,000 square foor facilty and move into a 1,500 square foot office space.
And there you go: The huge sucking sound you'll hear is that of millions of jobs leaving the US.
Thanks everyone! Good job! We are really good at destroying ourselves from the inside. They are laughing their asses off in China right now.