Last week, fast-food workers staged a one-day strike in 60 U.S. cities to demand a minimum wage of $15 an hour, more than double the current federal minimum of $7.25. The nationwide effort, “Fight for 15,” was organized by the Service Employees International Union.
I feel bad for those who are relegated to a minimum-wage job. I feel worse for those who want a minimum-wage job as a steppingstone to something better and would be denied that opportunity by the imposition of a higher wage floor. A higher wage is great for the workers who keep their jobs; it isn’t so great for those who wouldn’t get hired because McDonald’s Corp. (MCD) starts asking its existing workforce to do a bit more. With a higher minimum wage, the cost of automating certain tasks suddenly becomes more affordable.
About Caroline Baum»
Caroline Baum, a columnist for Bloomberg News since 1998, is the author of "Just What I Said: Bloomberg Economics ... MOREFOLLOW ON TWITTER
Let’s start with the basics. As with any good or service, there is a supply of, and demand for, labor. Supply and demand meet at what’s known as the equilibrium price. The unintended consequences of setting a cap or a floor on prices have been well documented. Many economics textbooks use New York City’s rent-control laws to demonstrate the effect of price caps: a supply shortage as landlords keep apartments off the market rather than lease them at a below-market rate. The lack of supply also gives them the power to charge above-market rates on apartments that aren’t subject to rent control.
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