Minimum wage

There have been a lot of stories in the news about people wanting to raise the federal minimum wage to $15 per hour.  There have even been protests in my home town in support of this.  Trump's nominee for Labor secretary,Andrew Puzder, has been a critic of this idea.  Mr. Puzder is an executive in the fast food industry. 

Many Democrats have criticized Puzder's nomination.  They feel he will harm low paid workers by not supporting the minimum raise increase.  I do not believe this is necessarily the case.  I'm certainly no economic expert but as an accountant for a fast food franchise early in my career, I know that the margins in this industry are very low.  These employers would have to pass along these additional costs to their customers.  It seems to me that people on the low end of the income spectrum are also fairly big consumers of low cost restaurant food.  Isn't this just a vicious circle?

The following quote is from the article "Labor Department Pick is Critic of $15 Minimum wage" from the Washington Post on December 9, 2016 by Jonnelle Marte:

"Puzder has said that government policies that increase labor costs, such as significantly raising the minimum wage, hurt small businesses and "encourage automation." In March, he told Business Insider that he and other fast-food companies are investing in automation and considering machines that could tackle simple tasks such as taking customers' orders. "If you're making labor more expensive and automation less expensive - this is not rocket science," he said at the time, though he later added that he would never remove all front-line employees."  This doesn't sound like unreasonable logic to me.  Those who want this raise are not thinking about the long term effect of this.  

Below is a link to an article on the PBS Newshour site.  The article by Diana Furchgott-Roth outlines studies that confirm that an increase in the minimum wage will result in less jobs for lower skilled workers since employers will want more skills in return for having to pay higher wages.  Therefore the increase in the minimum wage ends up hurting those it's supposed to help.

I'm not saying that the minimum wage should never be raised.  However, a drastic increase from $7.25 to $15 certainly seems to put excessive cost burdens on businesses.  It subsequently may hurt low income employees by encouraging businesses to hire more skilled workers or resort to automation. The article below states that less than 2% of the workforce are paid minimum wage or less.  So it would seem to me that supply and demand for labor is doing a pretty good job of setting wage rates. 

http://www.pbs.org/newshour/making-sense/column-minimum-wage-lowers-employment-teens-low-skill-workers/?utm_source=facebook&utm_medium=pbsofficial&utm_campaign=newshour