Strikes in the U.S. Demanding 100% Raise

From USA Today : "Workers at McDonald's, Burger King and Wendy's restaurants across New York walked out Monday in a one-day strike to demand better pay and the right to unionize, calling for minimum wage to more than double from $7.25 to $15 an hour and the end to what activists called "abusive labor practices.""

Calling for minimum wage increases seems like a great idea, who wouldn't want to give higher wages to workers? We would all be happy people and everyone can have a great life and buy everything they need!  Unfortunately, that is now how the real world works. 

In a free market society, employers and employees come to an agreement at a set price for their labor. If the employee does not like the wage, they do not have to accept the job and they can go find another job that they feel that their labor is worth or they can become entrepreneurs and start their own business. Nobody is forcing them to accept the job at an undesired wage for their labor. 

Lets say there was no minimum wage and a gas station owner was only willing to pay an employee 5 dollars to pump gas and wipe windows for 5 dollars an hour. Typically, these jobs will go to teenagers. Now five dollars is not a whole lot of money but the teenager is getting the experience of working and being a productive member in society. On his downtime, the teenager may head over to the car mechanic working at the time and learn a few things about being an auto mechanic and how to fix cars and maybe eventually save up enough to start his/her shop. Now lets say we pass a law and the minimum wage is now 15 dollars an hour, by setting a minimum wage, the employer will no longer hire the teenager and will change the gas station from full serve to self serve which we typically have more of now. The teenager will no longer be able to get the job and more importantly, learn on the job. Instead, because the teen is has no experience and is unskilled, he/she may never get the skills to advance and move up.  

Today we encourage everyone to go to college and we PAY for the internships to learn on the job and we come out with $25,000 of debt. However, this is another story. 

Going back to McDonalds and other fast food businesses, these are generally entry level jobs, they are low skilled labor jobs that are not meant for raising families. The free market will adjust to the new minimum wage (if it were to happen) by becoming more efficient. Typically if the minimum wage is high enough, what we will see is more investment by the employer to automate. Eventually we may only have one or two people working at the McDonalds only to make sure that the machines are functional while at the same time, more teens unemployed, staying at home and being unproductive.