×

Just who is subsidizing who?

Tips for takeout?
Klaus Vedfelt | Digital Vision | Getty Images
Tips for takeout?

Once again, our CNBC.com readers have responded with a number of strong comments on one of my columns.

Tuesdays' editorial on why the minimum wage hikes in some cities like Seattle are already not working focused on how the first real victims of the hikes aren't even the small business owners who have often been labeled as the losers in this process. I made the case that it's tipped employees, mostly waiters and waitresses, who are getting hurt by this because a significant portion of their tip income is being counted against that supposedly higher new wage.

Now Los Angeles is considering allowing tip income to count against whatever the new higher minimum wage the city council agrees to in the coming year or so. Currently, California state law protects tipped employees from that but a Democrat in the state legislature is gaining support for changing that law and L.A. Mayor Eric Garcetti is one of those supporters.

Read MorePutin's arms deals: It ain't about the money

The first really impassioned comment on all of this came from Jason F. who said:

"This is a sad and pathetic article attacking the poor."

Well, Jason's point is often heard whenever a conservative criticizes anti-poverty measures that simply don't work. Frankly, it's a baseless accusation that only serves to turn a possibly constructive debate into a shouting match. We can disagree about what is the best way to boost people out of poverty, but when you claim that the other guy simply "hates" the poor, it's just a ploy to avoid the real questions. Millions of Americans who oppose these minimum wage hikes desperately want to help the poor, we just think that new regulations that will actually reduce their wages or get many of them laid off isn't the right way to go.

Read MoreFight the government! But not with your kids

A reader using the name "Trox" voiced a point that dozens of other readers made about how business owners are going to respond to a higher minimum wage:

"Moore's Law says that computing power doubles every 18 months. Humans are expensive and will progressively be replaced by machines. It is the future."

The fact that many restaurant chains are already introducing more automated kiosks and tablets to take customer orders is not lost on those of us who are paying close attention. Replacing human workers with computers or robots is becoming easier and more cost-effective every day. Only politicians who care more about headlines and ignore realities like this can ignore the trend.

A reader by the handle of "Theses" made a point about how tipping is done in foreign countries:

"Americans are a joke when it comes to tipping. In Europe it is rude to tip because they actually pay people enough to live."

Well, I know for a fact that this isn't true in all European countries. But even if it were, I don't like the idea of abdicating my power as a customer to reward or punish my server based on his or her performance. I think we've all dealt with far too many businesses or employees who have very little incentive to serve customers better or faster. And it's no surprise when they indeed provide bad service. I can think of only a few times in my life when I've really been served badly by a wait staff at a restaurant and I think the fact that they rely on tips for the bulk of their income is the reason why.

Read MoreTurn Tax Day into the "Day of Yes"

Finally, a lot of commenters echoed the sentiment expressed by Jeff:

"If an employer doesn't pay enough to keep workers off of the benefit trail then we as taxpayers are effectively subsidizing that business."

Jeff's point is made not only in this minimum wage/tipping debate but it's also heard quite often from critics of big chains like Wal-Mart. However, I think this argument has it exactly backwards. Wal-Mart, McDonald's and all the other major minimum wage employers aren't hiring workers that other people want to hire and then paying them less. That wouldn't make economic sense. What they're doing is hiring unskilled labor who can't get work elsewhere and paying them a wage that significantly reduces their need for even more government benefits. Instead of forcing them to pay more, the government might want to send those employers a "thank you" note for helping to reduce the overall cost of welfare rolls and also helping to absorb the disastrous effects of the failed government-run public school system that pumps out more and more unskilled workers year after year. In essence, Wal-Mart is subsidizing the government. And Wal-Mart's recent decision to raise minimum wages at its stores all on its own was caused by an overall improving economy that increased demand for all levels of labor.

It's free market results like that wage increase that are much more positive and long-lasting than a government imposed wage hike. Let's make that happen a lot more.

Commentary by Jake Novak, supervising producer of "Power Lunch." Follow him on Twitter @jakejakeny.