In 2013, the average Pizza Hut restaurant had revenue of $861,000. I just went to a Pizza Hut restaurant in New York State a few weeks ago, and my bill was about $24, tip not included. So if that restaurant served 100 people like me a day, it would add up to about $861,000 for the year. It all sounds reasonable.
A Pizza Hut restaurant is not much different from a McDonalds, or a Subway, or any other fast food restaurant. If they do more than a million dollars a year, it’s phenomenal. Most are struggling along. Many barely make it.
Having government raise the minimum wage from say $8 to $15, almost doubling the payroll, will surely put many restaurants out of business. Many are starting to add kiosks now so customers can order on a screen, without a human assisting. I have seen kiosks on tables at Olive Garden, I have ordered at a kiosk at Panera, and I recently saw that McDonalds is adding kiosks for customers.
Raising the minimum wage on restaurants for low-skilled or unskilled laborers is not solving the problem. We like to talk about everyone “deserving a living wage.” Those rich employers just have to make it work. Tell that to the owner of the Pizza Hut, who barely makes ends meet, and sometimes has loss years because he can’t get enough customers every day (remember, he needs a 100 every day of the year).
There are people with college degrees working as paramedics, firemen, teachers and yes, soldiers, who start out making $16 an hour. That’s what these jobs pay at the entry level. Compare that to the skill you need to flip a burger – something you can learn in a few days, and tell me again that everyone “deserves” $15 an hour.
It just does not work that way.
Forcing employers to pay higher wages to low-skilled employees inflates their costs and ends up with one of two results:
- They go out of business since they can’t make ends meet.
- They lay off staff or shorten their hours and bring in kiosks or other automation.
Both result in job loss. Fewer service jobs. More unemployment for low-skilled workers. More dependency on government handouts. Fewer jobs in the country. Higher prices for basic goods and services.
Raising the minimum wage for low-skilled workers sounds like a noble thing. After all, everyone “deserves a living wage.”
Those that obtain an education and plan a career where workers are needed and therefore the pay is high will get that higher pay.
We have a terrible shortage of doctors, nurses, engineers, computer programmers, and many other professional careers that pay six figures each. Nobody deserves a living wage. The economy, the collective “all of us” are willing to pay doctors, nurses, engineers and computer programmers a lot of money because those jobs are hard, they are stressful, they have long hours, and they require many years of education.
The solution to our economic problems are not government subsidies, or regulatory interference. That never works. The solution to our problems is education.
But education is hard work.