The desire for a higher wage is pretty self-explanatory. However, the impact of a minimum wage increase is more complicated and could have a catastrophic effect on millennials.
The question facing any employer is whether a prospective employee is worth the hire. Does the person in question possess the necessary skills and potential to contribute to the success of the business? Entry-level positions often represent the only employment opportunity for those with limited education — at least initially.
Given the choice between hiring an unskilled worker (or inexperienced worker) for $7.25 an hour versus a worker with more experience for the same rate, companies will always choose the more experienced worker, who will be more productive and provide more value to the business. By raising the minimum wage, the government makes it more difficult for less experienced, or unskilled workers to find work.
Take a moment to think about who might be the most unskilled or inexperienced worker. It’s those who have spent the least amount of time garnering skills and putting them into practice - it’s young people.
In January, 18 states raised their respective minimum wages. Washington was among the most generous, hiking their minimum wage by $1.53 (bringing it to $11 per hour). Higher labor costs render low-skilled workers unemployable as it removes their key competitive advantage — cost. Political “campaigns” to raise the minimum wage will not only leave a disproportionate amount of millennials unemployed, it will drive companies to invest in automation, and reduce the amount of low-skilled employment.
One chain axing jobs is Red Robin, which hopes to save about $8 million this year by eliminating busboys at each of its 570 restaurants, the company said Monday. Additionally, the chain already eliminated so-called expediters — who plate the food in the kitchen — which gave them a cost savings of nearly $10 million last year.
Popular fast food chain, Wendy’s, has also seen the impact of the wage hike phenomenon. Wendy’s Chief Operating Officer Bob Wright stated that the company experienced a 5 percent wage inflation and they expect wages to rise at least four percent in 2017. When addressing possible options to accommodate the rising costs of business and inflation, he presented the current solution at hand: eliminate 31 hours of labor each week. In other words, lower workers’ hours, eliminate jobs, and decrease take-home pay.
Here's the bigger picture: the more repetitive and script-driven your job is, the more it's threatened by the advancement of technology, due to the rising cost of human labor. This is not a sci-fi horror story about the rise of the machines; it’s real life. In order to supplement the hours lost, Wendy’s transitioned to self-serve kiosks, at approximately 16 percent of their locations.
In 2015, the percentage of hourly paid workers earning the prevailing minimum wage was 3.3 percent. While this may not seem like a lot, young people are disproportionately impacted. Around 68 percent of these workers are between ages 16 and 34, or millennials.
A minimum wage hike could also spell difficult times for millennials looking for work. A part-time job will be more difficult to obtain with higher wages. For a worker who has little to no experience yet, a company could take a risk on at $7.25 an hour, but won’t get a job at $9 an hour. The cost becomes too high for the risk.
With increasing minimum wages, millennials will ultimately be forced to compete with older members of the workforce during a time of deep economic uncertainty.
Sydney Jacobs (@the_poli_chick), a Las Vegas, Nevada native, currently resides in Washington D.C and works in Republican politics.