Raise minimum wage: Goodbye Micky D's, Hello Chipotle

[Covertibility]

Raising the minimum wage: Not a fast-food job killer

Increasing the minimum wage might not lead your local McDonald's to fire its cashiers. But it might mean that a 5 Guys will one day replace it.

That's the upshot of a new paper from the Federal Reserve Bank of Chicago that puts an intriguing twist on the age-old minimum wage debate. Most studies on the subject tend to focus on jobs (and, as regular readers of this site may know by now, those studies often come to wildly different conclusions). But this time around, researchers Daniel Aaronson, Eric French, and Isaac Sorkin also decided to look at what happened to the fast-food restaurants themselves in three states

 

[piezoe]

We have raised the minimum wage many times in the past. One only needs to look at what happened then to know what will happen now. We also have excellent data showing us what will happen if we don't raise it.

 

[nazzdack]

----local McDonald's....
----5 Guys will one day replace it.

Nothing would happen. Each serves horrible burgers.

 

[jsp326]

Very unbiased source there. As if the Fed would release anything suggesting that we should limit the size or scope of economic intervention. I'd trust the tobacco companies' scientists more.

 

[tradingjournals]

Higher minimum wage is another factor to increase the rent income of landlords, and help the price of their properties.

 

[clacy]

Raise minimum wage.... don't raise minimum wage. It really makes no difference. Those that are in minimum wage jobs are the most affected by the price inflation that will result. It's a net of zero, IMO.

It may push out some weak hands... aka crappy, low profit, fast food chains, in favor of some higher margin concepts like Chipotle, but that is meaningless to the nation as a whole.

 

[piezoe]

Raise minimum wage.... don't raise minimum wage. It really makes no difference. Those that are in minimum wage jobs are the most affected by the price inflation that will result. It's a net of zero, IMO.
...

This is common sense, and it seems self-evident. It's wrong however, because this simple, seemingly sound argument, fails to take into account how raising the minimum changes the distribution of money. This can have a very significant impact on the economy. Economic history does not support your common sense viewpoint.

_______________________
"Conventional wisdom is almost always wrong." -- Gore Vidal.

 

[tradingjournals]

Raise minimum wage.... don't raise minimum wage. It really makes no difference. Those that are in minimum wage jobs are the most affected by the price inflation that will result. It's a net of zero, IMO.

That is correct, but the issue is that they will distribute the money, which is why I thought in the previous post that it would lead to money going to landlords. I would not be surprised if a main motivation to raise minimum wage were help the real estate market, as landlords benefit from lower interest rates and the income of the population that must rent (ie the minimum wage earners).