The Fast Food and the Furious

[XLFD]

Recently, a bunch of fast-food workers and their sympathizers among the advocates for raising minimum wages dramatically for them went on some widely-publicized demonstrations in several cities across America.  They decided against petitioning for incremental raises and went for broke going from $7.40 to $15.00 per hour for minimum wage.  As a general free market capitalist myself, though a relatively poor practitioner of it, I believe putting in artificial wage controls is a mistake in almost all cases; free market forces of competition, worker supply and demand, etc. will generally make a fairer system of natural wage controls.

 

  

I won't go through all the scientific arguments (the links in the article below does a little more), but a brief synopsis beyond that reasoning is that raising the minimum wage does not combat poverty nearly as well as people think it does.  The poor living on fixed incomes (welfare and social security) and those living on their savings or annuities will actually get relatively poorer as inflation kicks in on commodities and services they normally use.  Jobs get lost, and some businesses go obsolete because they can't afford the new cost or are able to survive only by dramatically raising the costs to consumers. 

 

But Reason Magazine did a little foray into the New York protests, and found some interesting things that highlighted why the protests were little more than window dressing for a union agenda:

 

 

 

 

Consider last Thursday, when the Service Employees International Union (SEIU) coordinated "wage strikes" in over 100 cities and called for a minimum wage of $15 an hour for fast-food workers. Reason TV covered the event held in New York City and filed a report that you didn't see on your evening news.

 

Yesterday, Naomi Brockwell and I attended a demonstration demanding that fast-food restaurants boost their minimum wage to $15 per hour, or a little more than double the current federal minimum wage. The strike, which was led by a group called Fast Food Forward that’s affiliated with the Service Employees International Union (SEIU), was one of more than a 100 similar demonstrations held in cities across the country.

The New York demonstration had about 150 people, but the number of actual fast food employees participating in the strike was small. It was business as usual at every restaurant we dropped by yesterday morning and, at a McDonald’s restaurant on 23rd Street and Madison Avenue in Manhattan, employees behind the counter said they had heard nothing about a strike.

We caught up with the protesters in front of a Wendy’s in downtown Brooklyn, where the crowd consisted of union organizers, fast-food workers, and their sympathizers. An estimated one-third of the demonstrators were fast-food employees, meaning that less than one-tenth of 1 percent of New York City's 57,000 fast-food workforce participated in the strike.

 

The group was traveling from one fast-food restaurant to another, before winding up at Foley Square in Manhattan around 1pm.

Multiple strikers told us they had received compensation through a union strike fund to appear, but declined to say the amount they were paid.

Artificially doubling wages to $15 an hour would change many things in the fast food industry, including the easy path it provides for low-skilled employees to break into the labor market. Substantially higher wages would mean that existing employees would be less apt to look for other positions, and senior staffers would be more inclined to hog shift hours. Franchisees would likely move more aggressively to replace human service workers with automated cash registers, which is already happening in European McDonald's. Evidence of how artificially boosting wages destroys opportunities for entry level workers was best documented in a 2006 study by economists David Neumark and William Wascher, which was updated in 2013. 

In interviews, several striking workers described how it had been relatively easy for them to get a job in fast-food service. Shenita Simon, who works as a shift supervisor at KFC, told us that she doesn’t know where else she would have been able to find a position, because fast food is the only industry that "will allow you to have minimum education.” Isaac Wallace, a Burger King employee, described how he was able to get his job immediately after moving to New York from Jamaica by simply walking into a Burger King in Brooklyn and approaching the manager. 

Once the strike moved to Foley Square, organizers from Fast Food Forward began obstructing our efforts to talk with protesters.

http://reason.com/blog/2013/12/08/eyewitness-to-fast-food-strikes-a...

[Dave]

First off, $15 an hour would just be stupid. How they came up with such a figure I would really like to know... specially when you consider that there are plenty of college/university educated people that wont make that kind of money even a few years out of college (with the assumption that said college/university students were able to find a job in their selected fields of study after earning their degree) or the good chunk of First Responders/EMT's that don't make that kind of money and they have to deal with making life and death decisions.... somehow a person flipping a burger (in places that still do that) or standing at a register taking your order (occasionally getting it right) just doesn't quite compare to that of someone that makes life and death decisions.

Also, there is the unintended consequences of such a drastic raise. If you was one of the people that got this awesome new wage you'd think it was great.... but if you were one of the people that has been with a company for a few years and this new person is making more money then you, you are going to make it known that you want a raise. The people that have been with a company for several years are probably not going to be exactly happy with the situation either and will want a raise of their own as well. In the end what will likely happen is a business will simply not hire as many people to compensate for such a raise.

Some people feel that a person in any job should be able to have a 'living' wage... while that sounds nice, I just don't agree. And don't get me wrong, I've worked jobs that didn't pay a lot... most of us have. At the end of the day though, if you can walk into a business and start working within moments of accepting a position, minimum wage is exactly the wage you should earn.

[XLFD]

These 'burger flipping economist' don't seem to get that when minimum wage doubles, that their employer's wherewithal does not also double, it remains static or may even drop.  Thus a fast food joint that can pay out $60 per hour of operations in base salary before to get by, still has that limitation when these raises go in effect, so instead of having say six workers at $8 and a supervisor at $12, they now can only afford three workers instead of seven, unless the supervisor is paid the new minimum.  If the drop in workers isn't fatal to the business itself, then other problems develop from being understaffed (customer satisfaction drops, food quality suffers, quickness of service plummets, etc.), and they lose business and more wherewithal, until everyone loses their job.

[Dave]

As much as it would be nice to make more money.. I mean who doesn't want to be paid more? Certain jobs earn a certain wage.. its how the free market system works. As far as I'm concerned, when you signed the dotted line to start working somewhere, you have already negotiated the wage you will earn... to work and demand more money later and in this case, a sizable raise, is idiotic. If your an employee that is having trouble making ends meet, you have a variety of options... you can get a 2nd job... you can try to find a better paying job and quit the one you have... you can go to school and get a better paying job when you graduate... other options out there as well.

I've basically worked retail type jobs all of my adult life, its what I do best at... one job I was in for 12 years and the job I'm currently in I have been for nearly as long at 11 1/2 years. The current one actually pays reasonably well for what it is.. some of the others paid ok too. The moral of the story is that I accept the fact that the kind of jobs I've had are never going to be jobs that will make me rich and I'm ok with that.

[Jane]

IF people want $15/hr learn a skilled trade. Go to college. Start a business with a skill you have.

These people asking doubling of there wages are crazy.

They should be at minimum wage as their intelligence suggests, they can't or won't realize that they could actually put a business out of business or put others out of a job at the least, and raise the price of the goods that business provides. Everything someone has said already above and elsewhere.

This gimme, gimme, gimme, mentality is sickening. You are a fast food worker for eff's sake, That is a job meant to be transient for college students and teens, unless moving into management positions at those jobs. Why do these people think they are worth so much?

[Dave]

Some of them will say that they can't feed their families on the wage they make. My question to them... and not to sound cold, just being matter of fact... why did they start a family if they are working a low wage job? I know sometimes that things just happen and all, I get that, but why is the business owner responsible for a decision the employee made in their personal life? If someone wants to have a family, great! Its not the business owners responsibility though to pay someone more because they got pregnant or have a family already.. business owner is simply trying to make money and often isn't making nearly as much money as the employees think.. depending on the type of business of course.

[Jane]

AND don't forget the SEIU wants those workers UNION DUES, not the raises like they pretend!!

[XLFD]

Who could forget them?  For sure, the unions will eat up a lot more of your combo meal when they give themselves 'due' credit for raising your wages by raising their 'dues'.

[Dave]

The thing is though is that when you hire in, your hiring in at a specific wage... if it isn't as much as you want, you don't take the job. Its silly to take the job and then down the road suggest that now it isn't enough. While companies tend to be very profitable, the individual franchises may or may not be.. as with anything it depends on location. The McDonalds in Ludington probably does alright... the McDonalds in Hart probably does good in the summer and so so during the off season and is likely less profitable (percentage wise) then the Ludington location.

If a worker wants to picket/strike, that's up to the worker... the employer has the right to release the worker if the worker is not going to show up for their shift.

[Willy]

Words of wisdom regarding minimum wages

Classic Friedman

Williams

[easymoney]

All Mickey D's are franchises, at a cost of close to 1mil. apiece. How long must you run your business to re coup your initial investment? The franchises were $20,000 for a KFC in about 1970 when I first checked into it. A lot of money back then. Check into what they cost now.

The ones I saw interviewed we're young adults who had children, and, they're basically children themselves. You see it every day, kids with kids. They don't understand the concept of entry level jobs to learn work ethics. Simple things, like show up on time and be there everyday.

My wife is a cashier at  Wally World, where she finally found employment after the plant she was at for 20 years closed there doors, and, you cannot believe how many new hirerees can't make it thru there 30 day probationary period without missing a couple days, or calling in on Sat. sick. That's exactly why you see so many older people working there. They are dependable..

Oh ya, not all jobs at wally world are low paying. At first they are, but you work your way up, just any other business.

I've said it for years, if you don't like your pay, find another job.

Just like the joke going around these days concerning the colored guy complaining of being let go because he's black, when the boss informed him , that he was hired cause he was black, he was let go, cause he couldn't do the job.( I'm sure in this polictical correct climate we live in that I'll get some feed back on this.) To those people I say, lighten up and enjoy life, it'll be over before you know it.