$15 minimum wage would harm Chicago workers

This week, fast-food workers, retail employees and others have been protesting at McDonald’s restaurants and other fast-food restaurants and chain stores in Chicago and cities across the country. The protesters, who are being egged on and funded by the Service Employees International Union, or SEIU, and other union-affiliated groups, are demanding a $15-an-hour wage; a huge...

This week, fast-food workers, retail employees and others have been protesting at McDonald’s restaurants and other fast-food restaurants and chain stores in Chicago and cities across the country. The protesters, who are being egged on and funded by the Service Employees International Union, or SEIU, and other union-affiliated groups, are demanding a $15-an-hour wage; a huge increase from Illinois’ $8.25 minimum wage and more than double the $7.25 federal minimum wage.

We’re all sympathetic to people who are struggling in Illinois’ current economy; we all want to see incomes go up and unemployment go down. But a $15-an-hour wage is not the answer. In fact, if these workers get what they’re asking for through unionization or a minimum-wage hike, they may find themselves with no jobs at all.

Economics 101 tells us that when the minimum wage goes up, so does the unemployment rate, other things being equal. Raise the cost of something – including unskilled labor – and people will buy less of it. So if the government forces employers to pay a wage that’s higher than a worker’s output is worth, the employers just won’t hire that worker.

Even the fast-food business can’t escape this economic law. I saw this firsthand in a recent visit to Seattle, where the state minimum wage is $9.19; the country’s highest. At a Jack in the Box restaurant, there was no cashier to take my order; instead, I ordered from a touch-screen kiosk, which presumably costs less than $9.19 an hour to do the same job. Likewise, in some European countries, where high minimum wages and other restrictions on economic freedom discourage hiring, McDonald’s has replaced cashiers with kiosks, too. As technology advances, workers who assemble the food may alsobe replaceable if minimum-wage laws price them out of the market.

The current minimum wage has already devastated employment among Illinois teens, especially black teenagers in Chicago. Meanwhile, more than a million Illinoisans are unemployed or underemployed, with 430,000 people unemployed in Chicago alone. To boost employment among young people and others who need to get their feet on the first rung of the economic ladder, the solution is to eliminate the minimum wage, not to raise it.

But that’s not the entire solution, of course. To create more jobs – and better-paying jobs – in Chicago and Illinois, the city and state will have to start eliminating the many other barriers they have placed in entrepreneurs’ way, which have helped make Chicago tied for the third-worst entrepreneurship rate of America’s 15 largest metropolitan areas.

So if those protestors are serious about increasing economic opportunity for the disadvantaged, they should be protesting the Statehouse and City Hall, not the businesses that are providing jobs despite everything government puts in their way.