I have recently seen some discussion of what would happen were the minimum wage to be raised in these USA. Here is one interesting take, that includes some links to other articles that are worth pursuing.
From Truth Revolt:
On Friday, The Daily Signal released a graph demonstrating the full impact of what would likely happen if a $15-per-hour minimum wage went into effect across the country.
The graph stems from a report by James Sherk, senior policy analyst in labor economics at The Heritage Foundation, which demonstrates that top fast-food restaurants like McDonalds and Taco Bell would have to boost prices by 38 percent to make up for increased labor costs. Suffice it to say, the before and after price differences are staggering.
[…]
I don’t eat at these places very often. Once in a while when I am traveling I’ll swing into a place for a burger of some sort. So, it’s a rare stop, but I do use them. As I was looking at those price changes, however, my first thought was, “Sheesh, if those are going to be the prices, I think I’ll just pick a nicer place to eat that has better food!” $9 for a sub? Are you kidding me? $9 for a Whopper? Are you out of your mind?
I’m no economist, but it seems to me that, if this goes into effect, these stores are going to lose a lot of customers and, eventually, there must – as night follows day – be a huge loss of jobs for both young people just getting into the work force and even from some older folks who want to make a buck. Revue goes down be cause of fewer customers, but wages skyrocket because of the minimum wage. What does that mean? These stores will cut their staff and stop hiring. Everyone loses.
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Entry level workers will lose out in several ways. First, the increased wages will attract a higher quality of worker who would not have considered the job at the previous rate, displacing the entry workers. Second, a number of the larger chains will consider automation. Making a fast food hamburger is not a tricky job, even custom orders can easily be handled by robotics. There is a large up-front capital cost, but with r&d spread across a large chain of stores it becomes more manageable. And once the robotics are in place, even realizing the horrible error of basic economics made and reversing the increase won’t help. There would be no reason to go back to live human help.
I’ve heard that there is already a machine that can make about 400 burgers an hour, and they will be fresher and more sanitary.
A sad and insane world.
In London, McDonald’s serves halal whoppers made with halal meat sacrificed (while cruelly killing the animal, the butchers say sacrificial prayers to allah) therefore I never eat at McDonald’s anyway, even here in the USA.
…And Obamacare doesn’t mandate health insurance coverage for robots (yet).
Many of the “chain fast-food” places will disappear, as will lots of jobs.
I think the estimates are a bit optimistic. Without automation, I expect to see $12 burgers.
But automation is coming. Obamacare and increases to minimum wage have guaranteed it. The only thing which has delayed it is that the machines are expensive, and the labor was not. The equation has changed, and the machines will almost certainly enjoy a pretty rapid return on investment.
As this image from the strike of the Kalamazoo Horseshoers Union demonstrates, not all jobs are careers. And really, for a good life for you and your family, a career is needed, not simply a job. The unions did a fine job protecting auto workers, until they bankrupted the employers. Where are those fine jobs now? Detroit is nearly a ghost town.
Liberals have no regard for cause and effect. They don’t understand physics, they don’t understand economics, they don’t understand that one action reciprocates another – or they do and they’re heads are blinded by their ideology, they just don’t care. But these things catch up to them too eventually. By then however, it’s too late for all the rest of us. All they understand is their chip on their shoulder for some unknown force out there to them that they must continue to dismantle, dismantle, dismantle, and delude themselves that this is progress. Their chip on their shoulder is their own guilty conscience that they refuse to address and instead project it towards those who continue to prick it. When they have positions of power, they are scary because they implement their chaotic minds onto the world. What we see in Syria, Egypt, and Libya is a product of their starry eyed chaos of the delusional dream of “the arab springtime of democracy.” Now look at the place. They have now implemented their twisted beliefs onto America with Obama at the helm – now look at us. And their policies are only going to continue to unravel the world around us for a long time.
I’m a fan of Prof Gregg’s Tea Party Catholic and generally for freer markets in general, but I’m not sure if this is a bad thing. The reality seems to me that most people working these jobs are not what you’d call “teenagers.” They’re adults with little opportunity of moving on to better things and supporting families. I shouldn’t let a bias against fast food cloud my judgement though. While this is the daily bread of many of our obese poor, merely disliking an industry shouldn’t be the basis for my opinion. I wouldn’t mind paying more for the occasional Wendy’s burger or nuggets I indulge in if it meant the workers were being paid more. Same goes for the poor sods I see at Walmart. But then again, where did they work before Walmart existed?
How are prices set at an auction? One wonders whether Brussels sets minimum bids for all items in all auctions in the EU. “Bidding on all used envelopes must start at $.75 each; no used child’s bicycle shall be sold for less that Euro$’s 115 and so forth”. Would this work? If not, why not?
What happens to the opening bid if there is only one bidder at an auction? If I start at $4, and no one else wants the cordless, two handed smoke shifter, do I quickly triple my bid? If not, why not? Where does the price go when three of us want the thing, and why?
Has anyone else here seen the video, “If you’re in a car driving 80MPH, how long does it take to go 80 miles”? The two yutes being queried cannot puzzle this out. If they come to my place asking for a $15 an hour job, I’m going to at least wait for the guy with the Transsexual Peruvian parrot breeders Gender Studies and differential equations for retired Merchant Marine’s Master’s Degree. Might even be able to land a barrista or two in Art History, or Marketing. Your 12 year old nephew? He’s SOL. And don’t let that bias against Transsexual Peruvians cloud your sense of basic economics.
On this issue, the numbers presented by both sides seem to be exaggerated.
Parts of Seattle recently raised their minimum wage to $15 per hour.
I think the best course of action would be to see how it plays out there.
Locally, fast food already pays around $12 an hour to start. I suspect this is already the case in most major cities, as it’s very hard to find people in big cities that will work for that. First of all they can’t afford to live in the big city, so they have to take public transportation or spend gas to get to work from way out in the cheaper areas they can afford. If they are going to work for minimum wage anyway, they would probably work a minimum wage job in the areas they live in and save the commute time and money.
I would agree that we have strayed from the concept of an entry level job. Entry level jobs should never be thought of as a career, but a place for teenagers to earn some money and learn work ethic skills. It can also be a good supplement for retired people who didn’t or weren’t able to save for retirement.
Adults between 25 and 65 shouldn’t expect to work an entry level job for years and for it to be able to support a home and family.
It is gonna end anyway.
Burger Robot Makes ~360 Burgers Per Hour
MarkG, local wage variations are market forces at work. The minimum wage is government force, and will have two major results: First, it will increase inflation, and second, it will increase unemployment. Local wage variations affect local prices only, and have no major impact on unemployment levels.
Just as the forced use of corn to make alcohol as a fuel additive raised prices of corn, and therefore of meat from animals which are fed corn, the minimum wage will affect everyone. But the politicians will raise the minimum wage as a sop to union contributors, as their contract rates have automatic escalation clauses tied to the minimum wage.
@ MarkG
“Adults between 25 and 65 shouldn’t expect to work an entry level job for years and for it to be able to support a home and family.”
You’re right. The sad truth of the current economy (a trend that began prior to the current Administration taking office) is that an increasing number of people have been displaced from good paying jobs into jobs that were originally conceived as entry level. Companies should not pay wages that are so low that the employees are forced to seek government assistance through programs like food stamps. Nor should companies offshore manufacturing jobs to countries like China that exploit their workers. These companies are in essence collecting profits at the expense of the taxpayers of this country and at the expense of the freedom of the workers in the offshore sites and are consequently neither contributing their fair share nor acting with justice toward those they employ either directly or indirectly.
What, give the lower orders more money? You know they’ll only go and spend it.
Matthew XX: 1-16.
I was not an economics major, but it seems to me that if the minimum wage is raised to #15/hr, those currently making $15/hr will want a comparable increase, then those making $20-25, will want an increase, etc.If the price of whoppers goes up, people currently making $15/hr aren’t going to be able to afford to eat out and will need a comparable increase to maintain their lifestyle. I think this is called inflation. Or are we trying to reach a place where everyone makes the same salary? Is this called socialism, maybe communism? We should let the market determine prices, salaries, etc.
What those advocating for a higher minimum wage, $15 per hour for fast food workers, etc., are arguing is that these corporations are making so much money that, even if they were to satisfy those demands for higher wages, they would still be making considerable profits, indeed, that there bottom line would barely suffer a hit, let alone a serious enough one to warrant lay-offs or significant price increases. All of which, of course, is true. To say that the “free-market” mustn’t be tampered with, that it is infallible and therefore sacrosanct, and all the rest of it, really doesn’t do. Because the idea that, all things being equal, every worker is entitled to a living wage has nothing to do with economics at all, but has everything to do with morality, which of course is not subject to the laws of economics. In any case, one needn’t be an economics professor to know that these fast-food workers are getting screwed by their employers. If McDonald’s wants feed Americans its filth, fine, but they should at be paying their employees living wages. Or else, enough so that they don’t have to rely on food stamp and Section 8 subsidies in order to survive.
Often professional economists, as well as many ordinary folks, say that a hike in hourly pay will result in the elimination of the job. Well here are the 2013 compensations of the CEOs of a few of the companies mentioned above (based on total 2013 compensation, as reported to the SEC, divided by a 60 hour work week–because CEOs work late–at 50 weeks of work for the year–because CEOs need their 2 weeks family vacation).
Taco Bell CEO, Greg Creed–$1342.oo per hr.
Burger King CEO, Dan Schwartz–$1590.oo per hr.
Wendy’s CEO, Emil Brolick–$2535.00 per hr.
McDonalds CEO, Dan Thompson–$9247.00 per hr.
Amazingly, no company I know about has yet eliminated (or even threatened to automate) the job of CEO just because CEO hourly pay rates tend to trend upwards.
All those places are a franchise. A franchise owner of Burger King makes about 50k a year.. after spending at least 500k for the franchise. A McDonalds franchise is a million dollars plus.
So all these loons thinking they are ‘sticking it to the man’ are of course.. ill informed.. the guy who started Burger King, McDonalds ect.. isnt losing a dime.
The Franchise owner would so he would cut costs anyway he could.
Like any socialism.. the rich are fine.. everyone else gets poorer.
There are people besides teens and retirees that take those jobs. The ones who don’t have the brains or money to go to college. They don’t have the qualifications for better paying jobs but they live on their own and have to have food, water, shelter and clothing. Not everyone wants to spend 50 grand on a college degree to be able to have a good roof over their head. There should be another way to earn a living wage.
For example, I don’t think an adult high school drop out with a kid could survive on minimum wage. I wish the minimum wage would just apply to everyone over 25 years old that way people who need the money for necessities would get the raises they need without teens piggybacking it.
A $9 Whopper??
LOL, Fr. Z, I already pay that much here in NY for my favorite fast-food MacDonald’s lunch, the double-quarter-pounder with cheese meal. Believe me, it can be done! And my wallet survives.
That said, I totally agree with fib09002; workers deserve a decent living wage. The whole idea that MacDonalds offers “starter jobs” for high-school or college kids is just woefully out of tune with reality, at least where I live.
I’m well acquainted with the MacDonald’s just around the block and its workers. But first about where I live: My Bronx neighborhood is just up the road from Fordham University, my alma mater. I live on a nice shady street. But on the other side of the block, where the MacDonalds is lcoated, it’s the inner city: the neighborhood is 80-90% black and Hispanic. Some Asian as well. The most common employment in the inner city, wherever it might be in New York, seems to be running a street vendor cart. Others hawk illegal pirated videos, because it’s cheap and needs little capital. Others, who seem to have totally given up on the system, run scams on the subway — they jam the electronic fare-card machines and then sell “swipes” on their own purchased unlimited 48-hour passes, thus siphoning off money from the city to make a living. Others panhandle or sell drugs.
The ones who work at MacDonalds and other fast-food places at least have a legitimate employment with a steady income, and are willing to work at it. And they work pretty darn hard at their thankless jobs. I’ve been a waitress and have had similar experiences, on my feet for hours and hours, dealing with rude people. With my comfy job working at home on my laptop with my feet up, I wouldn’t change places with them for anything, but I admire them. I have no idea what they are actually paid, but I bet it isn’t as much as they deserve and need.
Most are quite young black women (a few guys), and given demographic statistics, they are most likely unmarried with one or two kids. Or married with more kids. Raising a family requires a living wage. A good living wage might mean they can save their money for night classes at nearby Monroe College (I doubt they can even dream of Fordham’s tutition). Then they could find a job that’s really going somewhere.
Would I pay $11 for my MacDonald’s meal if it meant these workers could feed their families and someday get an education? You’re darn tootin’ I would!
But, along with John of Chicago, I think it would be a good idea if MacDonalds’ CEO gave up some of his pricy lunches and gave his workers a decent hourly wage so I won’t have to, seeing that I earn only $20 an hour myself (I would very a very small secular nonprofit and that’s what they can afford to pay me). I believe that is perfectly in line with Catholic social justice teachings.
America has a problem. There is a whole class of us who have no hope of a living wage job. America’s solution for a vast number of less-capable workers is to put people on disability. This isn’t charity, it’s more structural. A person on disability is probably about as economically well off as someone in an entry level job (in other words they scrape by) but they don’t have to work. Of all the classes in society, the ones we should have compassion for are the entry level workers, those who are laboring and scraping by. Those below them on the social ladder get by but without having to work. Those above them on the social ladder work but they’re able to actually build wealth and get ahead. Some people seem to think “entry level jobs” are only for kids–no, I know quite a few adults who have worked low paying entry level type jobs for years (generally going from one to another) and have no prospects for better. Common sense says people are unlikely to pay $9 for a hamburger very often. But can we be Catholic enough to look at the people rather than mainly the product and the market forces? There are no easy answers. It seems good for paid workers to be a step better off than people living on a disability pension, which I do not believe is really the case currently–so they would have some sense that work actually pays better than giving up.
1. The fed minimum wage is mostly political theater that benefits candidates from both sides. If it weren’t, it would have been made subject to a COLA some time age.
It is now $7.25, and affects few; there is no way it will be doubled. The simple fact is, as others above have pointed out, that technology has replaced union jobs (also middle management jobs). In fact, before the auto companies moved so much manufacturing out of the country, the consideration was not between US or foreign labor but rather between US robots or foreign human labor.
2. It’s always amusing that people complain about CEOs salaries, but never about what LeBron James makes. CEO pay is usually a function of two factors: The value of the assets of the company, and the profits. Alan Mulally made $23 million last year as Ford CEO. In so far as the company was losing money when he took over (and it’s all but unanimous that he saved the company), and its net last year was over $7 billion, it would seem that he was worth it.
[Looks like my earlier comment didn’t go into moderation but simply disappeared, so I’ll try again].
A $9 Whopper!!? and $7.42 for a Big Mac meal??!! LOL, I already pay over $9 for my MacDonalds meal here in NY. Believe me, it can be done!
I agree completely with fib09002: all workers deserve a living wage. It is a matter of morality (i.e. justice), not economics.
Let me tell you our MacDonalds here, but first a little about my New York neighborhood. I live on a nice shady street a short stretch of road up from Fordham University, my alma mater. But around the corner on the other side of the block, where the MacDonalds is located, it’s all inner city. Jobs are very tough to find. Those who can’t get them are reduced to selling watery Sno-Cones from carts. Those who don’t have too many scruples sell illegal pirated videos. Those who have fewest scruples or else have totally given up on the system, work subway scams. For instance, they will plug up or jam the fare card machines then sell “swipes” from the unlimited 48-hour passes they’ve already bought for themselves, siphoning off money from the city to make their living (No wonder the subway fares keep going up).
Then there are the jobs at MacDonalds and other fast-food places. You don’t remain employed there long unless you work hard, and boy do they work hard at their thankless jobs (I’ve been a waitress so I know what it’s like). I don’t know exactly what they are paid, but I’m sure it’s nothing close to what they deserve — or need.
What I don’t know about them personally, I can fill in from demographics. Behind the counter they are mainly young and black, both male and female. The girls might be unmarried and have one or more kids. They might be married and have more kids. The guys might be working two jobs just to hold on. They would not even be able to dream of Fordham tuition, but they might be able to afford Monroe College (community college) night school, and get a degree that will give them access to a job that’s going somewhere. Those who can save their money and want to make something of themselves can do so, if they stick to it, though it might take several years.
Would I pay $11 for my MacDonalds meal to make sure they are paid well and have a chance at an education? Darn tootin’ I would. I think that is in line with Catholic social teaching.
Of course, I’d much prefer it if MacDonalds’ CEO would give up a few of his pricy lunches at the best restaurants and make sure of it himself, rather than passing on the cost to me, seeing that I only make $20 an hour myself. That would also be what you might call justice.
John of Chicago, et al,
I have to comment that the hourly wage that you can derive from a CEO’s salary is pretty much irrelevant to the matter at hand. Not only is a CEO’s job not paid by the hour, the CEO is not paid by the same people as the hourly laborer. From what I’ve heard about McDonald’s–and know from my own experience with Dominos–the vast majority of your hometown fast food stores are franchisee-owned and operated. They’re literally home town businesses. Royalties they pay to a corporate entity likely contribute to the corporation’s ability to pay the CEO, but no local McDonalds pays the CEO for his effort directly.
They each DO, however, pay for the hourly labor they hire. If the minimum wage would be raised, it would mean that costs for paying labor would rise, perhaps dramatically, so they’d likely be required to either raise prices dramatically, or lay off staff. Possibly both.
Ultimately, trying to force the minimum wage higher could easily mean the food would be much more pricey, but the service in acquiring that food might actually be much longer. In the end, the result could well be that consumers won’t wish to wait longer for a more pricey meal, so they’ll cease shopping at the various fast food chains.
That’ll mean that local businesses..will go out of business.
Interestingly, it’s possible that fast food CEOs might lose some of their salary because they have fewer stores operating because of businesses closing. Most CEOs likely would not lose salary nearly as quickly as hourly laborers would lose jobs though.
I should say this too:
For those who insist that we all need to earn a living wage, I’d like to agree. Unfortunately, I’ve had too many people over the past several years who, while I think they could make a great living if they’d discern what sort of career path they wish to take, simply won’t make any choices along those lines.
I won’t say they don’t work hard; I will say they’re frequently they’re own worst enemies. When I hear from someone who’s complaining that he doesn’t make enough to pay the bills easily, but the same person will talk with other about a video game that he knows how to play well, I’m forced to think that the problem isn’t always one of imposed poverty, but rather one of poor priorities.
Within the past two years, I’ve recommended to two of my employees that they should seek further education, the better to be capable of..getting toward where they want to go in life. One said he wanted to do so sooner or later, but went no further than that, the other actually told me that he couldn’t afford it. ..I think I had suggested a local community college!
It makes no sense to me that people howl about tough personal financial straits, but who proceed to do effectively nothing to change their lives’ circumstances.
I can’t help a guy who won’t do anything to improve his lot in life.
“Would I pay $11 for my MacDonalds meal to make sure they are paid well and have a chance at an education? Darn tootin’ I would. I think that is in line with Catholic social teaching. ”
I think you’d be badly mistaken with that idea, Lori. Your line of thought assumes that the guy who’s being paid to provide you with that $9 burger will actually use it to get an education. Problem is, you have zero ability to require that of anyone. Once you’ve spent your money on the burger, the nice guy at the counter can spend his money just as easily at the casino as he can at the college. Your idea might be well-intentioned, but it won’t work as well as you think.
If you want to give money to a scholarship fund to allow more people to attend school, that’d be great. I should think that WOULD in line with Catholic social teaching.
Unfortunately, simply handing a group of people some extra money guarantees nothing about how they’ll use the extra cash.
Well the basical idea behind a minimum wage, sentimentalism set aside, is that unemployment is better than undignified employment.
And this is, in fact, true.
There is, of course, the problem in a seemingly unending possibility to set the minimum wage at some height or another. But if it would indeed, as robtbrown mentioned, amount to actual doubling, I can’t see it being done. How can a labor at $ 8/hour be considered dignified in one second and a labor of §14.50 undignified in the next?
So, I’d think that a creeping, small but constant increasement is the greater problem inflation-wise.
(That said, I wonder whether a feelable minimum wage can be upheld for a long-time without protectionary customs against those competition-distortionary low wages in the East and elsewhere abroad. Which, however, would be a strictly prudential measure – there may be many arguments against it on the practical side, but it would not break an iron rule and principle.)
1. Mandated wage changes produce only a temporary relative change in recipient purchasing power. Each worker’s real wealth production pushes the matrix to restore relative values to nominal wages/prices. That is, if [nominal] $20.00/hour or /burger is too high, inflation will occur to lower the [real] value of $20 to its market level.
2. While cursing/carping at corporate profits, keep in mind that pension funds are among the largest shareholders of publicly-traded firms and that these profits feed us oldsters and keep us out of our children’s basements. That is, cut corporate profits and prepare to have grandpa to dinner more often.
Hi robtbrown,
If memory serves, Henry Ford doubled the prevailing hourly wage of workers in his auto factories way back when and seemed to survive just fine.
The average ratio of CEO total compensation versus that business sector’s workers compensation is:
–technology = 82 x
–manufacturing = 138 x
–finance = 156 x
–retail = 230 x
–general hospitality (all hotel and restaurant) = 543 x
–all fast food = 1200 x
It seems to me that either the poor CEOs of technology, manufacturing, finance etc. are being tragically underpaid or else, perhaps, something is way out-of-whack with the fast food sector. And…
Who is LaBron James?
—
Dear robtbrown,
It’s always amusing that people complain about CEOs salaries, but never about what LeBron James makes.
That is indeed interesting. And I might think there is something deeper behind it.
Basketball players, or soccer players, or rich heirs of noble families, or lotto millionaires are never begrudged their wealth. I wonder why that is. The only conclusion I have is that they didn’t deserve it; know they didn’t deserve it; and just have had the luck. And people, being despite all failures still generous, rejoice alongside with them and expect nothing more that they behave like decent fellows with a lot of money.
On the other hand, successful businessmen are very often begrudged their wealth (though, if they are decent fellows, very rarely by their own employees). I wonder why that is, too. Perhaps it is because they, or at least others from their class, think they deserved their wealth, and did not get it by luck but by their own efforts. Perhaps also because some of them, and at any rate of those who speak out for them politically, have a cold heart for the poor. By which I don’t mean they don’t give them money (the sensible will know that this cannot be done at any time), but that they don’t give them the feeling of pity. Or at the very least the feeling of hot-blooded anger for the sins that brought them to their state (if there really were such), because that, too, is a sign of sharing the common bond of the human race. Some, though, of them give them cold-blooded justice (or what they perceive as) in the latter case, or contempt, or indifference, or inspired by them being political opponents hatred.
If I may add a rather lengthy Chesterton quote,
In a pub or any other collection of ordinary people, some celebrated idiot, who is always spotting winners that never win, will be treated with almost tender derision; and, especially among the poorest, there will be a true Christian pathos in the reference to those who have been “in trouble” for habits like burglary and petty larceny. And as all these queer types are called up like ghosts by the incantation of gossip, the enquirer will gradually form the impression that there is one kind of man, probably only one kind of man, perhaps, only one man, who is really disliked. The voices take on quite a different tone in speaking of him; there is a hardening and solidification of disapproval and a new coldness in the air. And this will be all the more curious because, by the current modern theories of social or anti-social action, it will not be at all easy to say why he should be such a monster; or what exactly is the matter with him. It will be hinted at only in singular figures of speech, about a gentleman who is mistakenly convinced that he owns the street; or sometimes that be owns the earth. Then one of the social critics will say, “’E comes in ’ere and ’e thinks ’e’s Gawd Almighty.” Then the scientific enquirer will shut his note-book with a snap and retire from the scene[…]. He has got what he wanted. He has been intellectually justified. The man in the pub has precisely repeated, word for word, the theological formula about Satan.
[…]The poor men in the public tavern[…] tolerate the tippler or the tipster or even the thief, but feel something fiendishly wrong with the man who bears so close a resemblance to God Almighty.
And this pride is what a basketball star doesn’t have, precisely because everybody knows and he himself knows that his salary is a fantasy number; but a highly successful manager is may be associated with having, though possibly innocent himself. After all – I’m not accusing anyone personally of the sin, but if it had not had some hold on some permeating tone within society, how come Atlas Shrugged would ever have become a celebrated bestseller among parts of it?
That said, I quite agree that there’s nothing immoral or problematic in Alan Mulally earning what he does earn.
Companies “should do this and should do that, and CEO so and so who makes 37 zillion dollars a second should do thus and such’. Maybe they should. (And Chelsea Clinton who made $27,000 a minute for NBC should do what…?) Who should make them be good, make them do the right thing, make them play fair? And what caliber firearm should be used to enforce the living wage “deserved by all workers”? (Been to Mass recently, one hopes? “Do not consider what we truly deserve, but grant us your forgiveness.)
The difference between a wage, and a “living wage” is envy.
What would be the effect if the Feds, those happy men with guns and no email back-ups, whose man at the top hasn’t slept since the first time he promised to ‘Go with out sleep, blah, blah, ba-blah, blah blah, jobs..’, if the ‘living wage’ was raised to $33 an hour?
What’s that you say? “They can’t do that!” Why not? Don’t all workers deserve a living wage?
John of Chicago,
1. LeBron James is the best player in the NBA.
2. Although it was portrayed differently, Henry Ford increased the wages of Ford workers to stop high turnover. It was a simple matter of economics, the market at work. It was also an example of the creation of skilled labor by Industrialism.
3. Most of the labor done in the fast food sector is low skilled, thus easily replaced. If it were otherwise, then, like Henry Ford, the industry would increase pay.
As for Ford,
the way it has been reported to me was that he wanted to sell a comparatively cheap car for comparatively high wages so that his own workers would by said car, and that worked.
More: “Boat!”
Boatman: “I have a boat sir”.
More steps in boat.
Boatman: “Well, I expect you’ll make it worth my while Sir”.
More: “Do you have a license?”
Boatman, slapping the license on his arm, “Bless you sir, I have a license”.
More: “Then you know the fares are fixed”.
Boatman: “Yes sir. Chelsea to Hampton, up stream, penny an’ a half, Hampton to Chelsea downstream, penny an’ a half. Whoever set the fairs doesn’t row a boat.”
(Editorial comment on the word “fixed”, as in the phrase, “The fix is in”.)
I pay $9 for a real hoagie, but I would not pay $9 for a pretend hoagie from Subway.
For what it’s worth, many of the people working at fast-food places don’t need $15 per hour. We need to break away from the “equal pay for equal work” mentality and pay people according to their state in life. For example, all things being equal a father with wife and children to support should be paid more than a single person with no children.
Failed CEO’s are obviously overpaid. Their compensation has been driven up by:
Founder-CEO’s, e.g., Gates, Ellison, and Jobs, whose wealth obviously should be tied to the value of the company.
Uber successful CEO’s, e.g., Mulally, during whose tenure a failing corporation became profitable or a good corporation even more profitable, e.g., Welch at GE.
IMHO, CEO’s, whose reckless policies have ruined the company but for a time driven up the stock price (thus their compensation from stock options), should recompensate it (Buffett says about the same thing).
Happy to report that I haven’t had any fast food or pizza since 2002 :-)!
I agree with Lori Pieper. A living wage should be just that.
Amused by Vexilla Regis comment. Reminds me of my brother’s boast that he has never eaten a McDonald’s meal in his life and he is 70!
Totally agree that state in life needs to be taken into account. It is unjust to pay less than a living wage for typical fulltime work, but what constitutes a living wage varies. On a more general level, the social purpose of businesses to benefit individual people, families and the community and not just profits and investors needs to be asserted. Hopefully groups like Acton Institute that say they follow Catholic principles have that in mind and are not just baptizing the free market.
Hopefully groups like Acton Institute that say they follow Catholic principles have that in mind and are not just baptizing the free market.
I’ve seen no evidence that this is the case, at least with respect to the Acton Institute. Generally it seems that articles on their web site that discuss living wage cast the discussion in terms of increasing minimum wage. A possible exception is this article: http://www.acton.org/pub/commentary/2014/05/28/giving-just-wage-its-due .
fib09002, while it might be true that some corporations actually do own many or most of their stores (McDonald’s, I believe, is one), most fast-food chains rely on the local franchisee to run the stores, supply the stores, and pay the workers. Corporate is there to run some stores, market everything, and control what’s being made. I work for a Little Caesars franchisee at home. If minimum wage is raised from $7.25, even to $8 or $9, we will have to raise prices from $5 to $6 (at a minimum) for our hot and ready round pizzas. Most of the mangers don’t even make that currently. It’s between $7.50 and $8. Above that it’s full time work, so it’s salaried.
Forcing us to raise prices to increase wages for a job that is definitely not supposed to be full time compromises what we aim to do, which is make a quality product at a good price. My franchise owner, an upstanding Catholic man, has 10 children at home (the 2 eldest are at school and in religious life respectively) to feed, loans to repay, tuition to pay, etc. Should he and his office staff take a hit too? On the other hand, LC’s is still cheaper and better than the other guys… and positions will definitely be cut.
Now, does corporate always request a fair fee for the franchise rights which would allow wages to rise without massive price increases? I don’t know. Probably not. But that is yet another discussion.
Dear Elizabeth D,
Hopefully groups like Acton Institute that say they follow Catholic principles have that in mind and are not just baptizing the free market.
I see what you mean and agree, of course.
However, there’s at least as little wrong with baptizing the free market as there was with baptizing heathen customs: viz., none at all, and if there was any problem inherent in the thing before, it will have just gone away in the baptism. :-)
Assorted observations:
1. A vibrant economic system, such as what emerged during the deregulation, corporate breakups, restructuring, and entrepreneurship of the 1980s, attracts capital and creates jobs, wealth, and opportunity for innovation. From the mid-1990s forward we’ve seen the reverse: mergers, oligarchy, corporate cronyism, statist encroachment, and capital flight.
2. The only thing mitigating wholesale economic disaster at present has been resurgence in the energy sector. Statist wonks are working to impede that, so get ready to be hotter in the summer and colder in the winter and to walk more and eat less. The price of a Gigaburger is about to become the least of your worries.
3. No matter how many bishops and nuns tell you otherwise in the MSM and the putative Catholic media, statism is not solidarity with the poor. (Neither is plastering an “I Heart Obamacare” slogan on the bumper of your Yuppietruck.) To think and act as though the works of mercy can be outsourced is to bludgeon those who need them most.
I believe that raising the minimum wage will result in the same effect that most of the other regulation does. It will drive out of the market smaller players and allow those CEOs who are making absurd salaries to continue making even more absurd salaries, because some of the competition has been knocked off and their businesses benefitted from it.
That is all I see government doing right now, knocking off smaller competition, leaving us with fewer jobs total and those at crony companies who get rewarded for their political contributions with an unnaturally safe environment for business..
I am not against paying a bit more for food, I am not against sharing the wealth a bit more evenly. I just think that these overpaid CEOs have no intention of sharing the wealth or they would be doing it already (Hobby Lobby). And I believe what the market needs the most of all is more competition, not less.
This is not happening in a vacuum. I know of a young college age kid who–although he has some
help from his family -is working to be able to finish his degree. He was able to do it with one job–he worked enough hours at that one job to do it. Then Obamacare began to kick in and suddenly small businesses- with a few more than 50 people and could continue growing- realized they would have to either cut hours for many employees to make them part time or fire people. Because of that the student had to go out and get another part time job in order to continue. It has made it much more difficult for him. There are many reasons older people are working at these fast food restaurants but the rules and regulations coming from this administration and Obamacare have stopped a lot of small businesses from growing and loss of jobs or potential jobs. People have to go out and find another job-that probably does not pay all they need. Two part time jobs become necessary. If you raise minimum wage–every employee in the company gets the same raise. If any business does not make a decent profit–they will be out of business especially small business. There are a lot of expenses(like taxes) that must be paid. Believe it or not many small business owners do not take all or any salary in the beginning–because employees paychecks comes first.
Also –we are not supposed to be having much inflation but I certainly do not see that to be true at the grocery stores–especially if you want to eat in a little more healthy way. That has to be affecting the food industry. Of course we are printing a lot of paper money — and artificially controlling interest rates. History tells us where that is going. You may seem to make more money–but costs keep going up so you still do not have a lot more disposable income. Also I expect to begin to hear about income taxes needing to be increased –insurance rates are going up and deductibles are being raised along with forcing mandates on everyone. I will leave it at that.
As I said–this marching for a pay raises is not happening in a vacuum-unions were involved. Top union bosses make huge salaries also.
Hi again robtbrown,
Thanks for the info on LaBron James. I haven’t paid attention to pro basketball since Jordan retired–boring.
Not being versed in economics or its history I’m depending on unverifiable memory but prior to Ford’s innovative production line weren’t cars bench-made by versatile craftsmen. An engine, for example, was drilled and ground by one or two workers who might even sign their work. With Ford’s introduction of the production line a worker did just one or two operations on passing engines over
and over again–boring. To keep his skilled but bored workers from going to more interesting jobs with bench-made manufacturers, I thought Ford doubled their hourly pay thus increasing
production, cutting cost and, also, increasing the number his employees who could be potential
buyers of his cars.
I agree that most fast food jobs are low skilled but doesn’t that mean that if there were no minimum wage whatsoever, then the hourly pay of current workers likely would plummet to even lower
levels. Currently, a bunch of minimum wage workers must also go on welfare to survive so lowering unskilled pay rates would increase welfare–unless, of course, we eliminate welfare. Reminds me a bit of Dicken’s England or the coal mines of Scotland a 100 years ago.
John of Chicago,
I think it worth noting that most fast food jobs are not intended to be long-term, full time, let’s-make-a-living jobs. They’re entry-level jobs, intended to give someone a taste of the working world.
Lori,
Paying $9 for a Whopper with the idea that the laborer will use the extra to go to school is a well-intentioned idea. Trouble is, once you’ve spent the money, you have no control over how the laborer spends it.
If you want to encourage someone to get an education, you’d be wiser to contribute to a scholarship fund.
John of Chicago,
Ford said it was so his employees could afford to buy his cars, but in fact they would have been an almost unrecognizable addition to his customer base. Whatever the reason for his employees leaving, they nevertheless did leave. And there is serious cost to absenteeism.
And I agree that assembly line work would be boring. But as we know, later on those boring UAW jobs provided solid middle class existence for many, many families.
IMHO, most of what were seeing now is a consequence of technology, which has eliminated so many entry level jobs that could lead to middle class income.
Living wage of course varies according to whether there are dependents.
But if two people are doing the same work, and one is paid more because he has dependents, then we have an unjust situation–unequal pay for equal work.
Matt R says,
Now, does corporate always request a fair fee for the franchise rights which would allow wages to rise without massive price increases? I don’t know. Probably not. But that is yet another discussion.
Selling franchise rights is not like selling food to a starving man. If the price of franchise rights is too high, then it wouldn’t be smart to get into the business. Quiznos seems to have put too much financial pressure on their franchisees–thus 1000 stores have closed.
To whoever says that Subway has phony subs: IMHO, they dress their sandwiches well, so I usually have my own sliced turkey or cold cuts to enhance the sandwich.
Dear robtbrown,
if two people are doing the same work, and one is paid more because he has dependents, then we have an unjust situation–unequal pay for equal work.
I don’t think this is true. It is true if the one without the dependents is given less than his due, of course; and also the Catholic Encyclopedia mentions somewhere that it is no demand of justice to pay for the dependents. But if someone gets more than his due on his employer’s graciousness (as the latecomers in the vinyard), there’s nothing unjust in that. By the way, this is how in Germany civil-servants actually are paid.
@Lori Pieper
LOL, Fr. Z, I already pay that much here in NY for my favorite fast-food MacDonald’s lunch, the double-quarter-pounder with cheese meal. Believe me, it can be done! And my wallet survives.
Hmm. I find your lack of economic understanding disturbing. Have you not considered that your Whopper in NYC will now cost $16.00. You forget that cost of living is greatly increased in the Northeast corridor. So much is this the case that your former friends in the banking industry are living here in Charlotte, NC with me. Your obvious expectation will be that your employer will begin paying you more for these increased costs you are enduring. What if your employer decided enough is enough, NYC is no longer competitive, and they picked up and left for Dallas, Texas where State tax policy is much fairer, and people will work for half of your wage? You would eith have to find a new job in NYC (good luck), move to Texas (assuming your company would maintain your wage, which they likely wouldn’t), or you can join the rest of the unprofessional in NYC and go on welfare. Needless to say, you wouldn’t be buying too many $16.00 burgers.
People need to think when it comes to economic policy. All business follows the path of lowest cost/ maximized profit. These microeconomic conditions are transitory and temporary. Most cannot hide forever.
One last comment: The “living wage” for minimum wage workers is not Social Justice. It is Societal enslavement. The minimum wage was made so that people could enter a job and then improve their skills- driving them into a better job. This takes sacrifice and a little pain (which is good for your sanctification). Letting people “live” on a wage that keeps them in a position of a burger flipper offers no incentive. One need look no further than the 37 or so states where welfare pays out more than the minimum wage. People stay on welfare.
This is a principle of basic economics. An increase in the minimum wage results in a higher binding price floor, which decreases the supply of jobs and increases the demand for jobs, thus leading to a greater shortage in employment(ie. unemployment) and higher prices.
Simply put, a business cannot employ the same amount of people at a higher wage. The increase in wages also means an increase in expenses which will be offset by an increase in prices for food, products, etc. Without an increase in wages across the board( which is unlikely since the low skilled worker has to be payed more), an average or high skill worker will see no gain in wages and has to pay more food, clothes, etc. , thus inflation increases.
If you consider the amount of illegal immigration in this country, then the poor have greater competition for what few jobs are available. So an increase in the minimum wage would be bad for the economy.
Imrahil,
That it is done in the German civil service does not make it just. And the workers in the vineyard had agreed to a certain payment for that day. On another day or another project they could negotiate a new payment.
If someone is paid more because of dependents, then the pay is not for the work. Just remuneration is not only measured against the work place but also the against the market. If the one without dependents knows that his pay is just according to the market rate, then he doesn’t have much complaint.
The equal pay-for-equal-work problem also pops up because of pay raises due to years of service. Of the 7 years I spent in IT, 4 were with federal civil service–and it was a continuous problem. We had a shop that had many who had been clerks, then moved into IT during its early years. Most of them were nice people but not very productive. There were also younger people who had studied at a university and were very, very competent. Consequently, the older people were making sometimes twice as much as those who were actually important to the project. This didn’t make for happy campers.
One of the last places where I did consulting work was converting to much more sophisticated software (those were the days of online, main frame data bases). This was a county office, and the head of IT there was a year or so from retirement. In today’s dollars his salary would have been about $125,000. He told the powers to be that he had no interest in being a part of the migration, which of course was not merely a matter of new software but of major changes in the organization of the office. Anyway, the solution was that he kept his salary, but was moved to the highway dept, holding the STOP/SLOW signs on road construction projects.
Dear robtbrown,
thank you for your detailed answer.
However,
That it is done in the German civil service does not make it just.
is of course in itself quite true, which is why I never doubted it; which is why I said “by the way”.
My point about the workers in the vinyard was that the first ones made a contract to get $ 1 for the day, which seems to be about the usual prince for their service at the time, and which was agreed upon anyway, and which was fulfilled to the point. Hence they can’t complain.
Now this, by your logic, sets the price of a working our at 10 ct (I won’t bother with fractions here), and so, the Lord would have been unjust in giving them extra 90 ct as a gift.
Which he of course he was not. As the owner of his own money he is free to give it to whom he will, including to his workers in surplus to their deserved wages. And it is only the height of the deserved wages that actually fall into the realm of justice; in giving more than deserved, a man can act on whichever caprice he wants to*.
So, in so far if you say, “If someone is paid more because of dependents, then the pay is not for the work”, I concede (without going deep into it; it certainly seems so instinctively) that you’re right. But the employer is certainly at liberty to do so, or to make a company-wise policy out of doing so.
And it would, of course, be actually laudable of an employer to do so.
In addition, societally speaking, that if it is enacted seems to have a positive effect. Let’s say that on elevated work at university-degree level, employee A, unmarried without children, is exceptionally skilled and/or industrious, and consequently gets $ 83,000 before taxes. Employee B does, on the same level, an honest job without much striving for improving his position, nor with exceptional skills. Were he unmarried without children, he’d receive $ 68,000. Now he is, however, married and has five children, and thus he actually receives $ 89,000. (I modelled this on the said German civil servants to draw a realistic scenario – because in that case you can look that up on the Internet in fact.)
Is that bad? No. Assuming A said: “With all due respect, B is profitable allright but I am more profitable: why does he get the more money? What ought I to do?” And what would the answer be? The answer would be: “Go get yourself a wife and start to procreate and educate children.”
And that might be exactly what we as a society would wish him to do.
[Note that I’m only touching the topic and thus cannot appropriately respect the fact that some don’t find wives and that some couples don’t succeed in procreating. They don’t have to pay for children anyway either…]
Imrahil says,
Now this, by your logic, sets the price of a working our at 10 ct (I won’t bother with fractions here), and so, the Lord would have been unjust in giving them extra 90 ct as a gift.
I already answered your objection.
Once again: In the story the first worker agreed to specific pay for specific work. That is a contract to which both parties freely consented. It is irrelevant whether the payment was low or high compared to others. (Further, just from a business point of view, we cannot assume that the price of labor would have been consistent throughout the day. A good example is airline tickets for a specific flight on a specific date, the price of which often depends on when it is purchased.)
That is not the same as a salary for someone who is not obligated to stay. In fact, we once hired a programmer who worked one day, got a better offer, and left the next day.
Also: An employer is certainly free to pay whatever he wants to pay. And those who work for him and are dissatisfied are also certainly free to leave.
When I first started working in computers, it was with a large US insurance company that didn’t pay well. We had 100 programmers and had 25% turnover every year. Can you imagine the effect that had on efficiently completing projects? Why do you think IBM has been so dominant so long? It’s because they have hired good people, gave them the best training, and paid them well.
NB: Nothing is more expensive than cheap help.
Dear robtbrown, thanks for your answer!
an employer is certainly free to pay whatever he wants to pay, indeed, and in a way this is all I’ve been saying. He is also free to make his decision depending on the existence of dependants, to make such a policy company-wide, and to include it into contracts binding himself upon it.
The only thing he must not do is pay anyone less than his due.