Wednesday, June 22, 2016

Retail Food Stocks Getting Killed

The push to boost mandated wage rates, ignoring the free market for political considerations, is costing jobs and crushing employers.  In the past, retail food operations, like McDonalds, have provided the first leg up for minorities and low income employees.  That leg has now been chopped off.

Retail food stocks -- think Wendys, McDonalds, Five Guys -- are getting crushed by the stock market, which represents a growing recognition that big government is changing the business model.  Just as the left destroyed hundreds of thousands of jobs in the energy sector, they are now destroying hundreds of thousands of jobs in the retail food sector.  The business model in this sector will be changed to eliminate human employment.

Less than a decade ago, the minimum wage was $ 5 per hour.  Now, in many communities, the mandated minimum is $ 15.  That is a triple.  If your employer was required by law to pay you three times as much as he paid you less than a decade ago, what do you think your chances of holding on to your job would be?  That's right.  Zero.

The argument is that you can't live on less than $ 15.  The remedy -- live on nothing.  But, then, of course, the welfare system kicks in.  So, the left is moving folks from the job market to the welfare system.  More than 100 million Americans of working age, no longer look for work.  That leaves a huge burden for the remaining Americans to carry.

Meanwhile, the stock market is recognizing the coming re-tooling of retail fast food.  Employees will be replaced by automation.  In five years, when you enter a fast food establishment, there will be likely no humans to interact with.  Those folks will now simply be added to the welfare rolls.

This is the ultimate liberal dream.  Either shift everyone to government work or put them on welfare rolls.  One way or another, eliminate the private sector.  The left is well on their way to accomplishing this goal.  Increasing the minimum wage is one of the most effective ways to destroy opportunities for the less-advantaged members of our society.  Meanwhile, fast food prices are on the way up for the average American.

This is a lose-lose proposition.  There are no long-run winners in the higher minimum wage environment.

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