Tags: Minimum | wage | costs | jobs

Employment Expert Saltsman: Lifting Minimum Wage Costs Jobs

Friday, 31 Jan 2014 11:28 AM

By Dan Weil

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Minimum wage increases drive away jobs by encouraging development of technology that can replace human service, says Michael Saltsman, research director of the Employment Policies Institute.

For example, at some restaurants you can now order food on a tablet-like device, eliminating the need for waiters, he writes in The Wall Street Journal.

"Technology has made these changes possible, but that's not what's driving their implementation," Saltsman says.

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"Steady federal and state increases to the minimum wage have forced employers in retail and service industries to rely on technology as the government makes entry-level labor more expensive."

Democrats are working to increase the federal minimum wage to $10.10 from $7.25. "Lawmakers should consider the technology trend a warning," Saltsman writes.

Studies show that when labor costs go up, companies must choose between raising prices or cutting costs if they want to hold on to their profit margins, he says. "And they've already been fighting rising costs," Saltsman says.

Minimum wages rose substantially in the last decade, and now Democrats seek more, he says. "It is not surprising that companies are urgently seeking labor savings that don't dramatically alter the customer's experience."

Paul Singer, CEO of hedge fund firm Elliott Management also opposes raising the minimum wage. "These policies would destroy jobs and cause companies and even entire industries to move elsewhere," he writes in a letter to investors obtained by CNBC.

"These movements are politically motivated–a way for politicians to fake compassion. If they gain traction, millions more people will make the transition from gainful employment to government dependency, as jobs get priced out of existence by the rise in employment costs."

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