Minimum Wage Increase Has Maximum Effect

Sanford Thier excoriates the owner of Chanteclaire restaurant for planning to lay off five workers due to the minimum wage increase [“Don’t Link Layoffs, Minimum Wage Increase,” Letters, Jan. 6]v. The man has been in business for 42 years, I think he knows how to run a restaurant better than Thier.

The socialists masquerading as Democrats have not repealed the law of supply and demand, as Thier seems to believe. Couple declining revenues with higher labor costs and something has to give, and it in this case it is five.

Thier makes a bold leap of faith confusing cause with effect. He concludes: “The point is that all this nonsense about minimum wage increases causing job losses is economic nonsense. If that were true, how do you explain what happened after the last minimum wage increase? At that time, unemployment fell to its lowest levels in years.”

Here is the explanation: At the time of the last minimum wage increase, the economy was approaching full employment. There were regions of the country where the prevailing wage for fast-food workers was $2 above the minimum wage. During an expansionary cycle, increasing revenue can exceed increasing labor costs, which will go up, in any case, regardless of the minimum wage, as employers bid up wages. During an economic contraction with decreasing revenues, increasing labor costs through a minimum wage increase could be the difference between profit and loss. You don’t need a Nobel prize in economics to figure this out.

Andrius V. Varnas

Redondo Beach