Second Order Effects
The side effect of policy
In the previous article about a $15 per hour minimum wage the author predicted that automation would be used to reduce labor hours. Well, look at this McDonald’s and what do you see, terminals for the customers to fill out their orders instead of minimum wage workers. This Seattle McDonald’s has automated to eventually reduce it’s labor costs. This is just the start, the faster that wages go up, the faster things will be automated.
There have been many calls recently, mostly by labor unions, to set the Federal Minimum Wage at $15 an hour. This is double the current Federal Minimum Wage of $7.25. The principal augment is that you can’t support a family on the current Federal Minimum Wage and therefore can’t get off public assistance. This article discusses the potential ramifications of doubling the minimum wage and the impact. We discuss what would be reasonable, given the amount of time that has passed since the last raise. Also, ways that one could get employers to increase wages without a change in the minimum wage.
Premise of Article: The City Counsel of Philadelphia just doesn’t seem understand second order effects or think that people are smart enough to do math. This article is designed to show that economic and tax policy second order effects are easy to predict and avoid if one simply applies basic economic principles. Facts: On January …