Imagine paying $6.54 for a gallon of gasoline. Or $16 per pound for New York Strip Steaks--on sale. Or 8.9% for a thirty-year fixed-rate home mortgage?
That is what many fast food workers desire their employers to do. A few days ago, leftist groups staged a "strike" against fast food establishments, calling for doubling the federal minimum wage to $15 an hour. The same workers who will say that they cannot afford to buy various and sundry goods, such as Christmas gifts, for their families because their prices are too high given their income are lobbying the government to raise the prices their employers will legally have to pay for their services. They, of all people, should know that such a request is economically equivalent to asking their firm to reduce its purchases of their labor. They are, essentially, asking to be laid off. Businesses that pay their workers more than they economically contribute to revenue will eventually go bankrupt, which is no plan for prosperity.
Economists have known for a very, very long time that if the state mandates a price above the market price, a surplus results. I devote an entire section of a chapter in my book Foundations of Economics to this very problem. A surplus in the labor market is unemployment. That is precisely what a $15 an hour minimum wage will produce. Unemployment--not prosperity. That is why historically, the minimum wage has not been an effective means to reduce poverty. It has been an effective means of keeping the least productive, and therefore, most poor, workers out of the job market.
Meanwhile, Don Boudreaux raises some provocative questions regarding the ethics of the minimum wage.