Minimum Wage Increase Fails to Benefit Workers… And No One is Surprised

minimum wage increaseProponents of raising the minimum wage typically argue that the increase is a practical way to improve living standards for the working poor and reduce financial inequality. However, for many restaurant chains, the minimum wage hike signals a sharp increase in job cuts, resulting in the opposite effect its supporters tout.

In an interview with Fox Business, Zane Tankel, the CEO of Apple-Metro Inc., which operates 40 Applebee’s restaurants in the New York metropolitan area, revealed that he has been forced to cut at least 1,000 servers from the chain in the past year due to New York City’s minimum wage increase.

“I’ve always said increasing minimum wage is technology’s best friend”, Tankel said, explaining how Applebee’s restaurants now run on a “concierge” model, the employees mainly greeting guests and  assisting them with the tablets found at each table.  Other fast food and casual dining chains have followed suit and are using technology to cut down on labor as well, using tablets for placing orders and payment. By increasing automation, restaurants try to offset the costs of the higher minimum. Tankel noted that although minimum wage proponents tend to ignorantly assume that simply raising menu prices can fix the problem, this approach is not a realistic option nor a viable solution to the larger issue at hand.

“[…] it’s because of Cuomo, DeBlasio, the liberal agenda”, Tankel stated later in the interview, discussing how New York’s impractical liberal policies are largely to blame for the job cuts.

With Applebee’s currently facing a two-thirds reduction of their total workforce, evidence of job losses and layoffs among other chains continue to pile up as well. This raises questions about the effectiveness of the minimum wage in helping workers—evidence indicates that increasing the minimum wage disproportionately harms the people it is supposed to help, ultimately reducing employment among less-educated and low-skilled workers. Furthermore, chain owners like Tankel have observed that even with a higher wage, the difference in productivity of low-level workers is not large. “It’s just a lot more money for the exact same job description”, Tankel says.

Economists believe that New York City’s overall drop in restaurant growth could be attributed to the state’s minimum wage hike, its harmful effects becoming glaringly apparent as time goes on. It has been shown that an increased federal minimum wage does more harm than good for employees, as it reduces the likelihood of upward mobility by cutting off the first “rung” of the employment ladder where workers typically gain the skills and experience needed to move up the economic food chain. It also puts low-skilled workers at a disadvantage and inhibits the creation of new jobs, disrupting the balance of the free market. With overwhelming evidence indicating wage increases are not only ineffective, but completely counterintuitive, liberal policymakers continue to ignore reality and support what is essentially economic suicide.

Tankel remarked that the minimum wage increases in New York are “all really good if you have a job”. But the wage hike certainly hasn’t done much good for the 1,000 employees Tankel was forced to cut this past year.  He added, “If you don’t have a job, $100 an hour doesn’t help you out a whole lot, does it?”

Those who advocate for higher minimum wages and “Fight for $15” may want to reconsider their principles, as their efforts are clearly not in the best interest of those they claim to be “helping”.

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