24 October 2004 - Las Vegas Review-Journal
Katharyn Lyell asked
how a minimum wage increase would cause unemployment, and thereís
really a very simple answer. Forcing businesses to spend more on
each employee would only mean that they can afford fewer employees
in total. The same calculation takes place in a purchaserís head
every time he encounters a price increase - he can use his $50 to
buy 10 widgets at $5 apiece, but he can only buy 7 when the price
goes up to $7.
a local mom & pop pizza place has a relatively steady expense/sales
breakdown that allows them to keep three full-time employees, who
have voluntarily agreed to do certain work for a certain wage (which
to an employer is just another expense, like raw pizza dough). If
the owners are forced to start paying each employee more, the only
way to keep all three employees and not go out of business is to
raise prices to offset their increased expenses - which could very
well turn business away and result in lower total revenue.
rates follow the supply-demand curve just like any other product
- when the price goes up, a buyer will naturally buy less of it.