Dear Jamie,
While I appreciate your concern for workers, raising the minimum wage might feel good but actually HURTS the very people you're trying to help. Let me explain the economic reality that politicians don't want you to understand.
Here's a revolutionary concept: wages are set through voluntary agreement between employer and employee. A person agrees to accept certain wages the business is willing to pay. If no one accepts those wages, the business will fail, so the business raises wages to attract more or better employees. It's called market dynamics, not exploitation.
But here's where your economic wisdom gets really interesting: that "rich CEO" you mentioned? They're taking their money to build the company, buy equipment, advertise, and pay workers. The CEO is shouldering all the risk while providing all the jobs. When a business fails, employees simply find new jobs, but the CEO loses all their invested money. Those really wealthy people often have multiple business failures precisely because higher risk leads to higher reward - they're willing to lose everything to create something valuable.
Raising minimum wage to seventeen dollars per hour means employers pay approximately forty-two thousand dollars annually when including wages, benefits, and taxes for a full-time worker. Since many young and less educated workers simply aren't capable of producing that much value right out of the gate, they get priced out of the job market entirely. The Congressional Budget Office estimated that a seventeen-dollar minimum wage would cause three hundred fifty thousand disproportionately younger and less educated individuals to drop out of the labor force entirely.¹
McDonald's advertising campaign boasts that one in eight Americans has worked at the fast-food chain, and these jobs serve as important stepping stones into the workforce. Fewer than one out of every one thousand workers earns the minimum wage, and sixty percent of those who do are under age twenty-five. These aren't career destinations - they're entry points that teach work skills, punctuality, customer service, and responsibility.²
When California imposed a twenty-dollar minimum wage for fast-food workers, scores of businesses shut down before the law even took effect. The Wall Street Journal reported that establishments began laying off staff and scaling back hours preemptively. In South Carolina, researchers found that recent minimum wage hikes reduced employment by eight point nine percent for teens and fifteen point five percent for workers without high school diplomas.³
Consider McDonald's, which pays well over minimum wage and recognizes that crew positions are stepping stones while management jobs could be career paths. Their comprehensive benefits package includes major medical insurance, prescription drug coverage, dental and vision insurance, life insurance, disability coverage, generous holiday and PTO plans, and flexible spending accounts for managers. Similarly, Walmart, which also pays above minimum wage, offers clear advancement opportunities where employees can work their way up to store manager positions earning six figures without paying for college - more than some people with Master's degrees make.
The unintended consequences of artificial wage floors include reduced employment opportunities for less-skilled workers, accelerated automation adoption (hello, self-service kiosks), reduced hours for existing workers, elimination of employee benefits, and higher prices for consumers. Since lower-income families spend a higher percentage of their income at grocery stores and fast-food restaurants with thin profit margins, they're disproportionately hurt by minimum-wage-induced price increases.
Want to help workers achieve real income gains? Expand apprenticeship programs, reduce regulatory burdens that subtract from workers' wages, and eliminate unnecessary occupational licensing standards that create barriers to employment. Create more opportunities, not fewer.
The real tragedy is that high minimum wage laws cut off the bottom rung of the career ladder, effectively pricing the least-advantaged workers out of employment entirely. Instead of helping people climb the economic ladder, you're removing the first step.
But you mentioned foreign spending, and you're absolutely right that we spend too much overseas while ignoring American workers. However, the solution isn't artificial wage mandates that eliminate jobs - it's policies that create more opportunities for Americans to build valuable skills and advance their careers naturally.
Every McDonald's manager started somewhere. Every successful entrepreneur began with basic work experience. When you eliminate entry-level jobs through wage mandates, you're not helping workers - you're denying them the chance to start their journey toward prosperity.
#MinimumWageReality #EconomicLadder #JobOpportunities #MarketWages #CareerProgression #UnintendedConsequences #WorkforceEntry #SkillBuilding #EconomicMobility #AmericanDream
References:
Congressional Budget Office analysis of the Raise the Wage Act of 2023
Bureau of Labor Statistics data on minimum wage worker demographics
South Carolina employment impact study on minimum wage increases