MoneyWise Live


High Cost of Minimum Wage Hikes

July 16, 2018

You take your spouse out for a romantic dinner at that new place advertising fine dining but you discover that while the food is upscale, you have to stand in a cafeteria line to order and pay for it.  What happened to the wait staff? It’s a new trend in eating out.  Rob West has the backstory on what could be driving it.

The industry already has a name for it— “fine-casual” dining.  What is it exactly?  Fancy new “sit down” restaurants are opening up without waiters and waitresses.  You stand in line to order and pay the tab then you take a number back to your table.

This novel idea is coming out of California but you’ll start seeing this trend in other places like New York State and Seattle, Washington because all of those places have raised the minimum wage dramatically.

  • Points to consider:
    The restaurants say they’re catering to folks who want a fine dining experience at reasonable prices— and there’s no doubt some truth in that.
  • A $15 minimum wage makes it a lot more expensive for businesses to pay for labor.
  • Studies show that a higher minimum wage hurts people who need help the most - low income and entry level workers maybe seeking their first job to gain some experience. 
  • Making it more expensive to hire workers who may be able to contribute only marginal productivity to a business forces owners to hire fewer or reduce hours. It's essentially cutting off the bottom rung of the economic corporate ladder. 
  • There’s a movement behind these minimum wage hikes called “Fight for 15”... most of the money behind Fight for 15 has come from the Service Employees International Union.  Union wage contracts are often tied to the minimum wage and if the itgoes up— union wages go up correspondingly.
  • Some say it’s always better to let the free market determine the price of things and that includes labor. This doesn’t mean that we abolish the minimum wage altogether… we need an economy where people can rise from a starter job at $7 an hour to $15 and higher, not from government mandate, but from pro-growth policy, Christian work ethic, mentoring, investing in workers with training and education. 
  • Of course, business owners should always pay their workers a fair wage but once someone is in the employment of a Christian, the employer should meet their basic needs to the limit of our ability to do so.  “You shall not oppress a hired servant who is poor and needy, whether his is one of your countrymen or one of your aliens who is in your land in your towns.  (Duet 24:14)

Next, Rob and Steve tackle listener questions at 800-525-7000 and via email to Questions@MoneyWiseLive.org on a variety of topics:

  • If you've have an annuitized annuity since 2009 with a contract value of $230,000 and have lost $13,000 from market fluctuations and fees, can you do better if I you withdrawn it or continue on?   
  • If you currently have children ages 8, 10 & 12, should you consider selling a rental property to reduce your assets so college-grant application qualification would improve? 
  • If you and your significant other are now talking about money and marriage, what resources are available to help getting started?   
  • What is a decent number to shoot for for your mom who's 52 and only started saving about 15 years ago? 
  • If you're 71 with a fully paid mortgage, is there a compelling reason to take out a home equity loan to fund long term care and other living expenses?
  • If you've come into a sum of money and have several credit cards with balances, should you pay off just one card or distribute an even sum across all cards to maintain a credit score? 
  • If you've been retired for about 6 years and have a 457 State Retirement Plan that you plan on using at age 70, what are the reasons to consider moving that plan to another type of investment? 

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