New York Gov. Andrew Cuomo (D) has recently called for an increase in the minimum wage in New York specifically for fast food employees from $8.75 to $15 per hour, the equivalent of a 70 percent raise, stating in a recent rally that “you cannot live and support a family on $18,000 a year in the state of New York — period.”  If passed, New York would become the first state to single out one specific industry for a targeted raise in the minimum wage.  This joins the chorus of cries for increasing the minimum wage around the country and even in DC.

Unfortunately, New York’s governor and other government officials have all fallen victim to the popular myth that increasing the minimum wage helps minimum wage workers by pumping more money into the economy.  No theory could be further from the truth.


First, let’s think critically about the precedent that this would set.  Cuomo wants to help the underpaid fast food workers in his state by increasing the minimum wage specifically for workers in that industry.  But if government can pick winners and losers on an industry-by-industry basis, why bother stopping at the fast-food industry?  We could also pick school teachers, nurse practitioners, police officers, and all other underpaid workers as winners too with but a stroke of his pen. 

In fact, if governors really believe that raising wages through legislation would be helpful, we should propose a law that says, “Every worker, regardless of income, is hereby granted a 70 percent raise on their 2015 earnings.”  After all, if it’s easier to live with more money than less and if government can decree that workers receive a raise, then we should share this economic brilliance with everyone instead of the 2 percent of the population currently making minimum wage.  Just think of the immense economic prosperity the state would experience if Cuomo and his cohorts are correct!

It’s fairly easy to see the folly of this plan.

Raising wages by legislative decree does not help workers; it hurts them.  When something, anything, becomes more expensive, less of it will be purchased.  We readily understand this in the context of goods and services (if one grocery store raised prices by 70 percent, would you keep shopping there?) but in the context of labor, people become skeptical despite the fact that the evidence is overwhelmingly clear. 

What’s worse is that the decreased job growth is concentrated on the very people who are supposed to be the beneficiaries as employers find new ways to get the job done.  Automated soda fountains and fry-hoppers have reduced the amount of labor necessary for fast food restaurants to operate by automating small parts of their operation.  While these innovations may seem trivial, they act to reduce the amount of labor that fast food restaurants use.  Going further, McDonald’s began experimenting with using touchscreen computers to handle taking orders in Europe as early as 2011.  More recently, companies have begun work on machines that will actually prepare the food.  Making it more expensive to hire workers will only accelerate this process of automation, thereby harming these workers, not helping them.  Rather than making workers more expensive, officials around the country should instead focus on finding ways to make workers more productive. 

Ask yourself, which is more likely to be employed: a more expensive worker or a more productive worker?

Hebert holds a Ph.D. in Economics from George Mason University and is currently an assistant professor of Economics at Ferris State University. His expertise is in taxation, regulation, and public policy.