Over at Cafe Hayek and Carpe Diem, Don Boudreaux and Mark Perry have been discussing a recent interview of Sally Smith, the CEO of Buffalo Wild Wings. The relevant aspect of the interview is this quote:
WSJ: How are minimum-wage increases affecting the way you make business decisions?
MS. SMITH: You look at where you can afford to open restaurants. We have one restaurant in Seattle, and we probably won’t be expanding there. That’s true of San Francisco and Los Angeles, too. One of the unintended consequences of rising minimum wages is youth unemployment. Almost 40% of our team members are under age 21. When you start paying $15 an hour, are you going to take a chance on a 17-year-old who’s never had a job before when you can find someone with more experience?
I’m not going to rehash their arguments. I recommend you check it out for yourself. Rather, I want to discuss something that empirical discussions need to be aware of.
Notice how M. Smith says she isn’t closing down her store, but rather not expanding operations. From a purely empirical viewpoint, this might look like there is no negative effects on employment. The same number of workers are still there.
But what is unseen is the jobs that were going to be there, but are not now. Say BWW would have opened another store with 20 MW workers. Now, with the new hike, those 20 potential jobs are gone. Even if the empirical work shows there were no job losses, the economic cost of the hike is still 20 jobs! These costs are unseen, but very real.