What do you think of this argument against raising the minimum wage?

[Small Business Owner of Any Repute]

The argument goes like this:

A business employs some people at $10 an hour (which is the minimum wage in this scenario) and other workers at $12 an hour. These are the two lowest pay levels at said business.

Now, the minimum wage gets raised from $10/hour to $12/hour; what happens to the employees who were paid $12/hour before the minimum wage is increased? Their wages won't be increased (or so the argument goes) any time soon, and wage increases for them will actually be delayed, yet they have seniority and experience over the minimum wage employees.

Is this a valid argument?

No, it's not.

That person receiving $12/hour will, when the minimum wage gets boosted, immediately become underpaid. This means the employer will face increased pressured to maintain the company's labor structure. The employer can continue to pay the minimum, but as the market adjusts, the employee will be sorely tempted to leave their current job in favor of one that, once again, pays higher than the minimum.

http://money.cnn.com/2014/01/14/smallbusiness/minimum-wage-hike/

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Approximately 2 million Americans saw their wages increase as a direct result of minimum wage increases in 2014. Another 2.6 million saw their wages increase indirectly, because their wages were close to the minimum and now need to be increased to maintain a wage structure.

[Small Business Owner of Any Repute]

The argument goes like this:

A business employs some people at $10 an hour (which is the minimum wage in this scenario) and other workers at $12 an hour. These are the two lowest pay levels at said business.

Now, the minimum wage gets raised from $10/hour to $12/hour; what happens to the employees who were paid $12/hour before the minimum wage is increased? Their wages won't be increased (or so the argument goes) any time soon, and wage increases for them will actually be delayed, yet they have seniority and experience over the minimum wage employees.

Is this a valid argument?

No, it's not.

That person receiving $12/hour will, when the minimum wage gets boosted, immediately become underpaid. This means the employer will face increased pressured to maintain the company's labor structure. The employer can continue to pay the minimum, but as the market adjusts, the employee will be sorely tempted to leave their current job in favor of one that, once again, pays higher than the minimum.

Or, in a more likely scenario, they will be laid off and their position, in the long run, will be phased out by a cost saving measure.

People will be phased out by cost-saving measures regardless of what happens with the minimum wage. For the most part, though, minimum wage workers are service employees who can't be outsourced or replaced by machines. No one wants to order from McDonaldsbot 3000, and you can't outsource the Burger King drive through to India.

If your local Walmart thinks it can get by with only 50 employees, then it's only going to hire 50 employees. Cost seems to have no bearing, so long as the cost is "as low as possible."

[Small Business Owner of Any Repute]

McDonalds made that move in Europe, a very different place with very different customs and very different ways of doing things. It's notable that McDonalds has not made the switch in the U.S. aside from limited tests, and based on my knowledge of its order-by-iPad experiment, it's far from a QSR slam dunk.

Touchscreen ordering is not quicker than ordering in person, and it's not necessarily that more accurate — most fast food mistakes seem to happen in the kitchen, not at the kiosk. Most of the things can't take cash, only credit. Americans also like, I think, the feeling of superiority they feel when dealing someone in a customer service station. When else are we "always right?"

In any case, no one ever seems to be using them at the fast food establishments I've seen them at. Unless the line is 15 deep at the regular registers, there's no perceived benefit to most consumers.

[Small Business Owner of Any Repute]

It's a slow process, but pricing labor out of the market will quickly accelerate it and add the additional functions needed to make it viable as a main order taking option.

Again, touchscreen ordering's lack of adoption is not a function of its price. It is really inexpensive today for a QSR to set up a remote ordering station option (especially if its just a $500 iPad).

Kiosk-based ordering is, by its nature, a supplement to human cashiers. It's not a replacement.

[Small Business Owner of Any Repute]

Can someone give me a valid argument on why minimum wage should be justified? I'll completely disregard the fact that it's unconstitutional.

I don't agree with President Obama on everything, and in general, I think he's been very unhelpful when it comes to the problem of income inequality. One thing I do agree with him on is this: Anyone who is willing to work a 40 hour day in the United States should not live in poverty.

Increasing the minimum wage increases the incentive to work. It makes welfare and public housing less attractive. It reduces the public need for food stamps. It increases government revenues in terms of income taxes and sales tax (via increased lower class spending), cutting the deficit. People would be more interested in climbing the ladder if the ladder didn't look like complete and total $h1t.

Historically, when businesses do not have regulations as to how they can treat their employees, they treat them very badly. Look at the abuses in the coal mining industry, such as company stores, that were tantamount to slave labor. I'd prefer it not be legal for McDonalds to pay an employee $2 per hour in the form of McD gift cards to literally live in the janitor's closet.

If you let businesses pay people less than the minimum wage, some will. And that means lower average wages for Americans. Why the would anything that promotes lower wages for workers be good for the health of the country, especially those stuck in jobs that pay close to the minimum?