It was announced earlier this afternoon that Donald Trump has picked Andrew Puzder to be his Secretary of Labor. Puzder is the CEO of Hardee’s and Carl’s Jr, two vastly successful fast-food chains.
Puzder is also a staunch opponent of the minimum wage and penned a scathing critique of its economic implications in 2014. Managing two major fast-food chains has helped him witness the dangerous consequences of raising the minimum wage. Puzder writes:
“Will a 40% minimum-wage increase improve this picture? No. Let’s examine how it would affect a restaurant franchisee, a typical small business owner attempting to run a profitable enterprise. My company, CKE Restaurants, has more than 200 franchisees running about 2,000 restaurants nationwide.
Our typical franchised restaurant employs 25 people and earns about $100,000 a year in pretax profit—about 8% of the restaurant’s $1.2 million annual sales. Our general managers, often also the store owners, are responsible for the success or failure of the business. They manage the employees and are in charge of a million-dollar facility. General managers are responsible for at least 25% of store profits. The other 24 employees are responsible for the remaining 75%, which comes to about $3,125 an employee. That is a generous estimate, as entry-level employees likely contribute less than their more experienced colleagues.
If minimum-wage crew members working 25 hours a week received a 40% raise, they would earn an additional $3,705 a year. That is $580 more than what the employee contributes to the restaurant’s profits.
The point is simple: The feds can mandate a higher wage, but some jobs don’t produce enough economic value to bear the increase. If government could transform unskilled entry-level positions into middle-income jobs, the Soviet Union would be today’s dominant world economy. Spain and Greece would be thriving.”
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