Wednesday, April 23, 2014

Another Object Lesson on How Jobs Will Be Lost If the Minimum Wage is Raised

You can't just raise wages by law. What happens is that the market will get distorted. Companies will resort much more to automation. I found the recent news from Brinker International instructive on this point.

Brinker is the operator of the Chili's Grill & Bar and Maggiano's Little Italy restaurant chains. There are about 1,550 Chili  restaurants world-wide. Would Brinker's just quietly accept a higher minimum wage? Indications are that they wouldn't. Indeed, even before there are any new minimum wage hikes, Brinker through automation is trying to reduce labor costs.

WSJ reports today on the Brinker earnings report:
The company has been trying to adjust its business over the past two years to cope with the changing consumer behavior and economic challenges. For instance, its kitchen overhaul, with new equipment and staffing changes, has reduced labor costs.
Does anyone seriously believe that Brinker wouldn't intensify such changes, including beyond the kitchen, if minimum wage laws increased the cost of employees?

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