BY NICK MEYERS
Citizens of San Francisco voted Nov. 4 to increase minimum wage to $15 per hour over a four-year timeline.Anyone with a rudimentary understanding of economics might call this a bad idea.
Supply and demand suggests that raising the price of employment will decrease the number of people employed.
Only large corporations could afford the wage hike. Small business would need to decrease employment — or go out of business — to manage costs.
However, evidence suggests this is not the case.
In the two areas of the country where minimum wage is highest for their categories, Washington state and the city of San Francisco, unemployment has decreased.
More importantly, the number of jobs increased.
In 2013, California experienced a 2.95 percent increase in employment. Washington saw a 2.10 percent increase.
There is one simple reason this happens: people who make minimum wage don’t save money, they spend it.
Those who make minimum wage are more likely to turn right around and spend that money where they work, especially when businesses offer incentives in the form of discounts.
Large corporations especially should increase the minimum wage of their employees. Some economists say that if Walmart or McDonald’s doubled the minimum wage of employees, prices would experience minimal increases.
Other economists say prices would not increase at all since they are set by the market, not by the cost of production.
Either way, those companies would still experience greater returns as their employees shop there.
There are other problems, however.
For starters, San Francisco has the third highest cost of living in the United States.
A $15 minimum wage roughly equates to $1,800 per month.
Median rent for a one-bedroom apartment in San Francisco is $2,800. That means you’d have to work a nearly 80-hour week on minimum wage just to live in the city.
Additionally, McDonald’s has found a way around the increase in minimum wage: by employing machines instead of people.
That may seem like a cheap tactic, but isn’t this the direction all labor is headed?
As technology advances, more and more jobs will be replaced by machines. We are already experiencing this trend.
The move by McDonald’s is a symptom of an even greater problem than increasing minimum wage: What will humans do when machines do all the work?
That is the question we should be trying to answer, not whether to increase minimum wage.
Meyers intends to study journalism in conjunction with economics to make the subject more accessible.