Could economy handle a $15 minimum wage?

McDonald'sIn recent weeks, organized workers have protested outside various fast food restaurants demanding an increase to their hourly wages to $15.  The federal minimum wage is $7.25 ($8.25 in Illinois).  Protesters are demanding their hourly wages more than double so that they can better support themselves.  They argue that their current pay is insufficient in coping with a meek, economic recovery.  They don’t want to struggle to support their families. 

I am not in support of such an increase.  Supporters might deem my opinion insensitive to their plight but I will try to reason my stance.  An increase in the minimum wage to $15 per hour will subsequently raise the prices of commodities and foods; thus creating the same predicament for these workers. The reason McDonald’s is consistently competitive in terms of pricing is because they pay their workers low wages.  I doubt many of these supporters will consent and be content with such an increase.  If these restaurants are forced to raise their wages then I expect them to lower the weekly hours of their workers and essentially create more part-time positions.  This would enable them to cut benefits.  These businesses will not absorb these costs.  The costs will trickle-down to the consumer.

Supporters of the wage increase state that the workers can’t support their families with only this job.  The honest truth is that these restaurants don’t have to provide wages the workers deem appropriate.  Arguing that it is difficult to strive in this economy again is not McDonald’s fault.  McDonald’s, Burger King and other fast food restaurants are businesses.  It is not their jobs to provide exorbitant wages to their workers.

minimum wage protesters

Would I support a higher minimum wage than $7.25?

Yes.  My only caveat is that wage increases should be gradual.  To more than double the minimum wage in a short time would only hamper economic growth.

The hard truth is that businesses are not responsible for providing wages you deem appropriate.  Businesses provide wages they deem competitive.  If you do not like your pay then you should find another job.  If jobs are scarce, then that is a byproduct of our inept Congress, Senate and presidential administration.  Why not protest in D.C.? 

What do you think?

Email: realtalkdebate2012@gmail.com

Twitter: @adrakontaidis & @talkrealdebate

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About adrakontaidis

A conservative who doesn't pander to the GOP.

12 responses to “Could economy handle a $15 minimum wage?”

  1. Kamil Zawadzki says :

    It’s not the businesses’ job to ensure that their employees can afford to live… that’s why the government has the minimum wage laws.
    That being said, if we accept that if as a business needing to remain competitive and meet a bottom line, McDonald’s (or Burger King or others) can do as they please and pay their workers a low wage, then we need to also accept that those workers will likely need to turn to some assistance to survive, up to and including government welfare. Because, well, they are humans and they do need to survive – and you cannot make it on $7.25 an hour. You just can’t. So let’s think about that next time we glare at someone paying for their groceries with food stamps. It’s quite possible that they’re not simply lazy but that they aren’t paid enough on the job to make it on their own. That means companies that depend on low wages are kind of part of the problem – we’re delusional if we think we can build a strong economy again on low-wage, low-cost labor.

    It’s also not as easy as McDonald’s top honchos seem to think it is to just get a second job to make up the difference, either – if their employees are full-time at all, for instance, when the hell are they supposed to find time to get a second job, much less work the other shift and ensure that their work schedules don’t conflict with each other? Or what of those who already squeeze in a second job to make those ends meet? Should they get a third, and work through their days like zombies? I’m sure they’ll do great work and offer chipper customer service then.

    Few people in fast-food, a revolving door industry with easily staffed but with generally high turnover rates, think that the company they work for really cares for them or values them. That kind of idealism dies quickly after you heat and serve your first few packages of McNuggets. But when that company does what McDonald’s just did by announcing that paychecks will be deposited onto debit cards that workers need to suffer fees just to gain access to their own EARNED money – and then turn around and say ‘oh just get a second job, stop whining’? That is insulting.

    If they wanna be hard and flippant about how little they value their rank-and-file and how they don’t care about addressing a single grievance, okay. But don’t be shocked when that rank-and-file declares they’ve had enough and walks out. Everyone needs a paycheck to survive even if it is meager – but at some point, enough is enough.

    Like you, I don’t think that the minimum wage should be doubled in one fell swoop to $15 an hour. And like you, I do support an increase in it, but a more gradual one.
    The fast-food minimum wage protests are just one symptom of the greater issue surrounding wages in this country in general – they have been just barely above stagnant for years even before the Great Recession wrought its havoc. The low wages at fast-food joints may have been acceptable before the median age of the fast-food worker was 28 for men and 32 for women. It’s no longer the world of Fox’s Neil Cavuto where McDonald’s was a part-time gig you got in high school to learn some responsibility and the worth of the hard-earned dollar. Older people, with degrees sometimes, are fighting those teens for these jobs now because the job market remains so tight.

  2. JF Owen says :

    Here I was all set to give you a lesson in economics, only to find that you were really listening in econ 101. You’re absolutely right in your assessment.

    The reality is that ANY increase in wages that is not directly tied to a corresponding increase in productivity is nothing more than an inflationary catalyst. We don’t have to look back any further than the sixties and seventies to see that in action. The fad at that time was the inclusion of automatic pay increases in contracts that were based on the change in the Cost of Living Index. They were called COLA (Cost of Living Adjustments)

    If inflation cause prices to rise 5% the workers that had a COLA clause in their contract got a raise. When they got a raise the company they worked for raised their prices to maintain the profit margin. That trickled through from one company to the next and the end result was an increase in prices that cancelled out the wage increase. That lead to another wage increase which started the cycle all over again.

    By 1980 annual inflation was over 14% and mortgage rates were up to…over 14 %. Worse, even after the COLA clauses started to be eliminated, the effects lingered on. Inflation came under control in a few years, but it was nearly fifteen years before mortgage rates returned to normal and they peaked at over 18%.

    The minimum wage was NEVER meant to be a living wage. It was meant to be a starter wage for people entering the workforce who were building a work history that would lead to higher skills and advancement. If we try to make minimum wage a living wage, all it will do is create run away inflation. If the guy or girl behind the counter at MacDonalds is worth $15 per hour, what’s a highly skilled machinist or a dedicated nurse worth? It takes years to learn a skilled trade or to get a college degree.

    If a fast food worker’s wage is increased to $15/hour and they work a forty hour week, they’ll be making over $31,000 per year. I know a lot of young people who invested four years in college and will be paying back school loans for years who aren’t making much more than that.

    If a worker in a minimum wage job wants more money, they should do it the way it should be done…get an education or skills that make you a more valuable employee. That helps them, it helps society and the low paying job they vacate opens up for another new person entering the workforce. Everyone wins.

    • realtalkrealdebate says :

      I loved Econ in high school and college. 🙂

      You make a great point. The min. wage was never supposed to be a liveable wage. It was like you said supposed to be a starter.

      Also if they make 15 bucks an hour I’m sure other skilled positions, especially ones with college degrees, will want increases. Inflation was skyrocket.

      I was hoping you’d comment on this post. You always provide great insight 🙂

      • Kamil Zawadzki says :

        And that’s where it gets problematic, though.
        Again, this is no longer an economy where the fast-food minimum-wage jobs draw in only teenagers and college students looking for something to do in their off-time from school to earn a little cash.
        These jobs are also being sought now by older people and people with college degrees who ARE worth more and ARE trying to find jobs in fields that will compensate them as such but cannot find those jobs. In a recession, when companies lay off professionals, that’s what eventually happens. To make ends meet, those laid-off professionals with their degrees and experience will start looking for those lower-paying jobs to at least try and get by until better days come – after all, unemployment benefits run out eventually.

        After graduating, I spent 8 months looking for a full-time job in journalism before finally snagging one where I make quite more than the minimum wage but still struggle from paycheck to paycheck some months. And in those 8 months of job hunting, I wasn’t merely applying to journalism jobs. I was also applying to positions at Starbucks, Jewel-Osco, Walgreens, etc. Minimum wage jobs that, if not for being able to live with my parents while still in Chicago, would NOT have afforded me a living wage. I would’ve ended up on government assistance and spent the 2012 election cycle being berated daily by the likes of eventual GOP presidential candidate Mitt Romney as lazy, unmotivated, etc. But I was lucky that while still in Chicago, I would’ve had the safety net of my parent’s house and refrigerator so I wouldn’t have nearly as many bills to pay on those low wages. If I had to live on my own, I wouldn’t make it.

        In an economy like this, the minimum wage may be INTENDED to be a starter, but let’s be real here – it’s actually more of a non-starter. If there are no wage increases, and few opportunities for promotion as companies keep their belts tight to maintain profits, you’re going nowhere fast with your job at the drive-thru.
        The job market remains tight for aspiring professionals who have their degrees in hand, so I’m sorry but it is not as simple as “if you can’t make it on minimum wage, go find a job that will pay you more.” These low-skilled jobs at McDonald’s are, sadly, no longer sought only by low-skilled laborers. People are searching and applying for any jobs just to put food on the table and keep their lights on even if they are searching for better-paying jobs – but until they get them, they still have to pay the bills, so they continue to take lower-paying jobs. But that’s not any long-term plan nor is it any path to economic success.
        There’s no such thing as a ‘starter job’ anymore. There’s just ‘jobs you want’ and ‘jobs you want to maybe pay your bills on time.’

        We need to be realistic about the ties of labor costs and wages and inflation of prices, yes. But we also need to be realistic about what cost of living means, as well.
        The federal minimum wage has been raised a pathetic 3 times in the past 15 years. Costs of living have increased nevertheless. The current minimum wage of a whopping $7.25 an hour won’t go as far as it did in years past.

        The minimum wage needs increases, and it needs to be consistently increased because costs of living are rising regardless. An sharp increase from $7.25 to $15 would make the economy and prices lurch far too sharply in response. But modest and consistent increases year-to-year? That’s what people should be asking for to actually have a slight chance of the issue being brought up.

        Regardless, if the minimum wage is fine and is not meant to be a living wage, okay – but again, if that’s what we’re willing to accept, then let’s also accept that people on that wage will need alternative ways to make their ends meet and LIVE. Up to and including government assistance. Let’s make that a part of the message. And get that message into our politicians’ offices and stump speeches.

  3. JF Owen says :

    Kamil, You’re missing the point. The wage of a job isn’t and shouldn’t be based on the person who is filling it; it’s based on the value of the job. Period. It doesn’t make any difference whether the person flipping the burger is a high school teenager, a thirty something college graduate, a fifty something displaced worker with a PhD or a senior citizen trying to augment their social security income. Flipping a burger requires a skill set of a particular level that has a value associated with it. If you pay more than that value is worth then you have enabled and created inflation. I’ve seen first hand what happens to an economy when you do that on a wide spread basis and it is not a pretty sight.

    My son is a journalist and he went through exactly what you did. I sympathize. I also sympathize with other people who are trying to get by on minimum wage while looking for a job that better fits their training and education. But, just because a person is over-qualified for a job doesn’t make the job worth any more.

    To use your vernacular, let’s be real here. To artificially inflate the wage just to make it easier on the low end wage earners has a couple of very nasty effects. First, as I mentioned earlier, it will cause ALL wages to go up accordingly and prices will crank up along with them. That eventually (in this case eventually is a very short time span) will NEGATE the increase in minimum wage. Second, it’s PERMANENT. At least if the government gives displaced workers, and others who qualify, aid it has the potential of being temporary. Either way, society is footing the bill.

    Look, I am not unsympathetic to the plight of low wage workers trying to make ends meet. I applaud them for trying to stand on their own two feet rather than taking a handout. But history has shown time and time again that simply increasing the minimum wage does NOTHING in the long term to pull them up.

    I’d much rather spend society’s resources on doing things that will provide long term improvement like:

    – Developing training programs that give them the skills to fill higher paying and available other jobs.

    – Providing low cost or free childcare to make working or getting training easier.

    – Providing relocation assistance so that they can afford to move to where the jobs are.

    – Training guidance counselors to actually provide guidance to high school students so that they pick educational paths and training that can truly lead to a good job.

    The problem isn’t that low wage jobs won’t allow a person to make ends meet. The problem is that too many people don’t have the skills or opportunity to move from those low wage jobs to higher wage jobs that are available. The reasons for that are many and varied.

    – Too many people have obsolete skill sets and aren’t re-training.

    – Too many people are training for dying professions.

    – Too many many people focus their education too narrowly – how many art history graduates do we really need?

    – Too many people are geographically locked because of family ties, personal preference or inertia.

    – Some, and I emphasize some, people don’t have the drive to improve their position.

    Again, I sympathize and empathize with people who are trapped in low wage jobs, but society’s responsibility is not to artificially give them more money; its responsibility is to give them an opportunity to earn more money by being more valuable.

    Flipping burgers is worth what flipping burgers is worth.

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