Chapter 1: The Rise of the "Fight for $15"

In 2012, the "Fight for $15" initiative emerged with the aim of increasing the minimum wage to $15 per hour for unskilled laborers. Proponents argued that this change was essential for workers to meet the basic necessities of life. While the movement succeeded in raising wages across numerous states, the real question remains: Did it genuinely benefit unskilled workers?

For those fortunate enough to retain their jobs, the wage hike provided significant relief, making essential goods more affordable. However, for many who lost their positions, this increase became a significant setback.

For businesses, particularly in the fast-food and hospitality sectors, the wage boost proved detrimental. Rising costs of food and supplies, combined with increased labor expenses, forced these establishments to raise prices. Unfortunately, consumer purchasing power limits how much more they can spend.

Since the onset of this movement in 2014, prices at popular fast-food chains have surged dramatically. For instance, McDonald's average prices have doubled, with a staggering 100% increase noted. Much of this inflation has taken place over the last three years.

In Michigan, the cost of medium French Fries has jumped from $1.79 to $4.69, while the Big Mac meal has risen from $5.99 to $12.69. Even the well-known Subway footlong has seen its price rise from $5.50 to $8.49.

Today, many fast-food outlets and affordable restaurants have raised their prices to levels that many consumers can no longer afford, leading to widespread closures. Red Lobster, once celebrated for its "all-you-can-eat" offerings, has shuttered numerous locations and ultimately filed for bankruptcy protection, citing a staggering 30% decline in business.

Several other budget-friendly restaurants have also announced the closure of certain branches, including Applebee's, TGIF Fridays, Denny's, Boston Market, Outback Steakhouse, and Hardee's.

Part of this downturn can be attributed to soaring food prices stemming from unprecedented inflation in the U.S. economy over the past three years. These establishments typically employ a significant number of minimum-wage workers, and the wage hikes have ripple effects throughout the labor market.

If the minimum wage were set at $10 per hour, individuals with a few years of experience—who would no longer be considered unskilled—might demand wages 50% higher at $15. Following the wage increase to $15, these experienced workers might seek $22.50, resulting in substantial labor cost increases across the board.

The outcome of raising the minimum wage to $15 has been a marked decrease in job availability. Nearly all teenagers aged 16 to 19 are employed in minimum-wage roles, and while the national unemployment rate sits at 3.8%, that figure jumps to 11.7% for this age group.

Some contend that no one can sustain themselves on less than $15 per hour, which is a valid point. However, minimum-wage positions are intended for unskilled workers. The primary goal is to gain employment, develop skills, and ultimately pursue higher-paying jobs.

The long-term ramifications of inflated wages for unskilled positions may lead to many of these jobs disappearing altogether as businesses strive to manage costs by substituting labor with automation. Innovations such as robots and artificial intelligence threaten to reduce the availability of jobs for unskilled workers further.

Already, many restaurants have implemented touchscreen kiosks to replace human order-takers, and robots are emerging that can serve food without human intervention. Soon, even tasks like flipping burgers might be automated. The higher the minimum wage climbs, the faster this transition to automation is likely to occur.

Ultimately, it is more beneficial to allow the market to dictate wage levels. This approach keeps labor costs manageable for businesses and food prices reasonable for consumers. It also helps workers understand their economic value. If they find that their worth is perceived as low, the solution lies in acquiring additional skills.

In our economic framework, a worker's compensation correlates directly with their output value. Skilled workers command higher wages than their unskilled counterparts due to their increased worth.

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Chapter 2: The Consequences of Minimum Wage Increases

Michael Reich discusses how California's increased minimum wage impacts fast food workers and the broader economy, shedding light on the challenges faced by the industry.

This video explores the adverse effects of the $15 minimum wage, arguing how it can lead to job losses and higher prices, impacting both workers and consumers.