Mox’s Dick’s Drive-In Mocks offers a roadmap to minimum wage

Reprinted from RealClearMarkets

Up front, the minimum wage must be less than zero. Some say it should be zero, but as Oklahoma State professor Per Billund once pointed out to me, individuals should have the right to Pay someone to work with. think about it. If the only way to work for Jeff Bezos is to pay him, right?

Speaking of Bezos, or the city where Amazon is headquartered, one of the most popular fast food establishments is Dick’s Drive-In. It’s excellent.

It was noticeable on my last visit to have a sign in the window. It announced wages starting at $20 an hour, with an increase to $25 an hour once a worker is fully trained. Other benefits include $28,000 for education and/or child care. What do these numbers tell us? Many things really, but most notably in terms of minimum wages, the left and right tend to herd carelessly. Let’s defeat the left first.

They claim that companies are “exploiting,” and that they exercise “pricing power” that leads to insufficient wages. Dick’s visit blows up the idea. The clean hamburger stands are a marvel of operational genius, but they are in the end hamburger stand. However, in these positions, workers who work 40 hour weeks can earn over $50,000/year in addition to the benefits listed. Exploit? Let’s be serious.

From there, politicians on the left promise to enact even more generous “minimum wage” laws. $15 an hour is a figure that gets thrown around a lot in modern times, but as Dick reminds us, companies don’t legally require it. Eager to win the services of good and willing workers, the wages they will offer are beyond the promises of the politicians, who have nothing to offer but strength.

By pivoting to the right, members argue that imposing a minimum wage causes “poverty” by driving workers out of the market. Which likewise is not dangerous. As Dick’s Wages reminds us again, there are not enough workers available at $25 an hour in booming areas of America. So while imposing a minimum wage is an appalling take on this destructive mind, to pretend as members of the right do that what is foolish is causing poverty in the world’s most opportunity-filled country is a bit too much. Don’t worry, the argument is getting worse.

Every time a company automates and, in particular, automates a fast food restaurant, the right that has learned all the wrong lessons from the left about pimping begins to generate false tears about how wage floors can replace man with a machine. Which is garbage motivating, economically illiterate.

To find out why, ask yourself what companies and fast food restaurants would do if minimum wage were zero. Logic says they will do the same. Watch Dick’s Drive-In again. Rest assured, Dick still needs workers, which means compensation of $25 an hour will be the norm even without government involvement.

The catch is that the above would likely be true even if Dick’s could secure the services of workers for less than $25. why? The answer is that labor is cheap very expensive. Unbelievably. Low-paid workers often live off their paychecks, quit without care, and turnover is very expensive. Henry Ford taught us this truth more than 100 years ago. His workers never overpaid to buy Fords; Rather, they increased their wages until they stopped quitting.

Which brings us back to automation. As any sane being might infer, corporations of all classes would be automated today regardless of the illiterate wage tampering by politicians. They are simply because the more that work can be automated within a company, the better off it is. Bots don’t show up late, don’t need breaks, and don’t give up. Robots are very expensive now, but as with all things produced by the profit motive, what is useful starts out expensive only to get cheaper and cheaper.

Looking into the future, automation will become more and more the norm. And this will lead to the endless improvement of – you guessed it – workers. Anytime additional “hands” can be added to the workplace, human hands become exponentially more productive.

In short, the right to know better sets him back. Automation will not so much replace human workers as it will rapidly increase the value of those workers. Which also explains why a promising left cannot be considered superfluous either.

John Tamney

John Tamney

John Tamney, Research Fellow at AIER, Editor at RealClearMarkets.

His book on current ideological trends is: Both Are Wrong (AIER, 2019)

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