Fast-food workers, urged on by the Service Employees International Union, held protests in American cities yesterday, calling for higher hourly wages.

The minimum wage is now $7.25.  The average fast-food employee makes about $9 an hour. The protesters say they want a “living wage” of $15 an hour.

Fifteen dollars seems like a convenient figure, but why not $16.50 or $18.33 or $55?  The higher the number goes up, the more absurd it sounds, but it’s the same flawed logic that produced the $15 figure.

An artificial wage set by the government suggests that income is simply an amount of money that is available for distribution, but as Thomas Sowell writes in his book Basic Economics, “there is no collective decision about the value of an individual’s work.”

“In a market economy, those who get the direct benefit of an individual’s work decide how much they are prepared to pay for what they receive,” Sowell writes.   On the other side of the equation, the individual doing the work is free to decide whether they are worth more than what the employer is willing to pay and then make career decisions accordingly.

The amount a person is paid is dependent upon many different factors, including productivity.   The guy digging a ditch is no doubt engaging in more strenuous labor than the fellow operating the backhoe, but the backhoe operator commands a higher wage because he is more productive.

In the fast-food business, the shift supervisor making $15 an hour is, in economic terms, more valuable than the worker in an entry level position because of the additional responsibility and the skills necessary to make the operation run smoothly.

Another problem with arbitrarily forcing employers to pay higher wages is that it may actually decrease employment.  A company forced to double entry level wages might choose to hire fewer workers or invest in technology instead of higher wages as a way to maintain or improve productivity.

Economist Milton Friedman argued that forcing employers to pay a higher minimum wage simply guarantees that “people whose skills are not sufficient to justify that kind of a wage will be unemployed.”

The fast-food worker protest also spreads some misconceptions about the industry.  Based on the rhetoric, you would think that most people working at McDonalds or Burger King are trying to raise a family on minimum wage.

Phil Hickey, Chairman of the National Restaurant Association, wrote in the Wall Street Journal this week that “only five percent of the 10 million restaurant employees earn minimum wage. Those who do are predominantly teenagers working part-time jobs.”  According to the bureau of Labor Statistics, half of the minimum wage employees in fast-food are under 20.

(The Center for Economic and Policy Research refutes that claim, arguing that 40 percent of all fast-food workers are over 25.)

At its most basic, people demanding a higher minimum wage want for themselves the same thing opponents want for everyone: prosperity.  The best route to that prosperity is through a market-based economy, which is the most efficient mechanism for allocating resources, including an individual’s labor.

 

 

 

 

 

 

 

 

 

 

 

 

bubble graphic

86

bubble graphic

Comments

  • Jt

    Boy everybody awful grumpy out there, are the so called job creators afraid there profit margins may drop if a high schooler makes 10 bucks an hour, ooooooh how will we ever survive?

  • Joe

    The so-called disappearing middle class seems to a significnant % of them with atv‘s, tattoos, lottery tickets, andplenty of money for cigs and beer. A simple stop to your neighborhood convenience store shows you all youneed to know.

    We do not have a minimum wage problem in this country, we have a personal responsibility problem in this country.

  • Mac

    I'd rather see companies voluntarily paying a fair wage. LMAO! Yeah right, like that will ever happen. Hostess fires all its employees then hires in new, non0union, low paid workers to take their place. This is America and the rich want their new servant class. That's why the minimum wage has only increased 70% over the last 30 years. During that same time the cost of living increase has exceeded 300%.

    America is disappearing. The middle class is the smallest it has ever been. The difference between the middle class and wealthy is the largest it has ever been. When will the sheep wake up and see there is a fundamental problem with this country economically? My guess, only when they're all fleeced and powerless.

  • Shadow

    I foresee the comeback of the brown bag. For you young folks, that is when you make your own sandwich and put it in a brown sack with an apple and that is lunch. Water for your drink as it is readily available.

  • mntnman

    Corporate America is sitting on nearly $2 Trillion in cash. Not investing in jobs. Buying back their own stock. Certainly, that is their right. But don't cry to me about people wanting a living wage when the CEO makes over $1 million a year and the company is making billions a year. You can agree or disagree about the minimum wage issue. But, in our great land, people have the right to collective action and to make demands. These people are asking for a better minimum wage. You don't like it. Fine. But they have the right to do so. They have the right to ask their government to implement it. Opposition has the right to fight back. That's how this works.

    Wendy meal costs $8 now. Many sandwiches run $5-7 dollars. The companies are making good money. The were formed to make money. I get that. On the other hand, their employees, who in large part are the reason for their success (no restaurant operates without employees), want more pay. Let the market work it out. They go to their employer and ask. If the employer says no, then those employees try to summon the political umph to get a law passed. That's how this works.

    As for the wisdom of increasing the minimum wage, two points. First, I think that there probably needs to be a floor on wages. Simply because there are too many unscrupulous people out there who would pay near to nothing if they could. (My son and daughter worked as wait staff for a local restauranteur -- if a customer paid with a card, the employer charged them 5% back against their tips. Keep in mind they are already paid sub-minimum wage. Also look at what happens to workers in places like Bangladesh, etc -- paid slave wages.) Having a floor lets people work in jobs that at least pay something fair. Second, it is expensive to live in America. Rent, utilities, food, insurance, transportation, etc are pricey and if you are going to get by, you need to make a decent living to do so. Tough on minimum wage.

    As for $14 an hour. That seems a bit extreme. On the other hand, at $7.25 an hour your yearly wage is only $15,080 a year BEFORE taxes, FICA and Medicare. Even getting a tax refund, FICA and medicare eat up $1148.00. That leaves you with about $13,950 a year net. Your average paycheck is going to be about $450 every two weeks. Try paying rent, utilities, transportation, etc on that. Forget medical insurance. Try having children on that. So, we probably need to adjust it -- just not double it.

    The lessons to be learned? Get an education so you don't have to work for minimum wage. The better educated generally get better jobs (Although that is getting tougher these days.) Next lesson -- You can work hard, be a great employee and still be earning a wage that is insufficient to live on in America. Finally, like ti or not, minimum wage will not destroy America; it is not socialism. It is bargained for or passed into law in our government after debate and vote. That's how democracy works. Just because you don't like the outcome doesn't make it any less democratic.

    • Joe

      It's suppossed to be tough on minimum wage. Therein lies the incentive for hard work and advancement.

      • mntnman

        Wages are not a societal lesson. Wages aren't supposed to be tough, they are payment for services rendered. It has nothing to do with advancement and everything to do with payment for services.

        • Joe

          Mtn....

          I absolutely could not agree with you more. Wages are tobe be paid at market rates for the services rendered.

  • ConservativeRealist

    "See um, I didn't like school because it was like a drag ya know...so I dropped out and then caught a charge because the cop had it out for me and I got 6 months probation for weed - which should be legal anyway which is why I can't get a good job because I now have a rap sheet. No, I don't think all my tattoos or my facial piercings stop dudes from hiring me - they allow me to express myself. I have a right to $15.00 a hour 'cause my friend Johnny who graduated and got a job with the plant is making $15.00 an hour, like why shouldn't I get the same thing...Its not my fault..."

  • steve

    let me explain this problem--Free enterprise in this Country no longer works due to greed and more greed. Guess how much the corporate profits are from the major fast food chains!! (more than you know)---why dont more employers think " how much can I afford to pay my employees , not "what do I have to pay them to get by" there may be better qualified people and more customer satisfaction than ever...........................who knows........................

    • Shadow

      Did you ever think that if you didn't like the price of a product, find another, make your own, or do without! No one is forcing you to pay a high price for a hamburger. The buyer controls the market, not the provider. The provider's "greed" is that he makes a product that people will pay more than his competitor's price because they want his product. That is the Market System.

    • Wowbagger

      Investors kind of like dividends or capital appreciation ...er "corporate greed". Without earnings most investors loose interest and move the money that they have saved and invested all of their working lives elsewhere.

      Alternately the manager of say your retirement fund moves the money for you.

  • AX MAN

    Automation will solve the minimum wage problem.

    • mntnman

      Didn't work in the auto industry, extraction industries, etc. Lots of automation, still have high paying jobs.

  • Joe2

    How much would that increase the budget for the state of WV if a min wage of 15 per hour were required? Hello new taxes. Hello higher prices. Goodbye business.

  • Joe

    Look, if you go to a fastfood restaurant and pay $3 for a burger nobody is forcing you to pay only that. How many of you add $5 more everytime to make sure the employee is receiving a income. Some of you make this argument than hypocritically expect to pay the absolute minimum for what YOU want.

    • mntnman

      Does that mean since I generally tip at 20% that I can have a say? Since I do, here's my two cents worth.

      You attempt at logic is illogical. Customers pay what is charged for the food. Tips are for the employee. If you pay $5 for the burger, the owner gets that $5, not the employee. It is a nonsensical example with no true application to the real world. Straw man.

      • Joe

        A 40 % tip from you would mean twice as much to the employee. Why stop at 20?!

  • Jeff L

    First of all, there was one fact coincidently left out of this story. These protests were not nationwide. They were in select cities where the cost of living is considerably higher than in West Virginia.
    Second,lets look at what the words "minimum wage" means....it is a an employer telling their employee "if I could possibly pay you any less by law, I would." I have never hired an an employee in at that rate for that very reason. I want them to feel like their more inportant to the company than what I absolutely am forced to pay them.
    Finally, the same arguments were made against raising the minimum wage from $3.35 an hour. Opponents said that it would cause people to be laid off and prices would skyrocket. Yet the Bureau of Labor Statistics reported neither of those things happened.
    I'm not saying that the minimum wage should be raised to $15. However, I am saying that the issue has to be continuously addressed by congress because if not, some employers world still be paying less than .50 cents per hour!

    • Joe2

      America, where employers hold guns to the head of potential employees and force them to take $.50/hr. Get real.

      • mntnman

        When unemployment is high, employers could theoretically do what they chose, if there was no minimum wage. Employees would have to take whatever was offered. Get real Joe. I don't know what world you live in, but I live in the REAL world.

  • FungoJoe

    Sorry for off topic. What has happened to Obama?? What is he doing in Syria??
    He was going to "restore" America's image abroad. Be friendlier to our enemies in hopes that they would be friendlier back. He was going to build coalitions like never before. I guess he was right.
    Obama: A coalition of ONE. Only ONE.
    Not one foriegn leader will back him. Not one single ally. Talk about Rev. Jerimiah Wright being right, "The pigeons have come home to roost."
    Bwaaahaaaahaaahhaahhhaaaa.

    • CaptainQ(Moderated)

      FungoJoe, to be fair, the President is in a very difficult position at the moment. He has only two options in how he has America respond to the events in Syria, and each of them has some bad repercusions.

      One, he does nothing. If he does nothing, he's going to get hammered by the press (surprisingly, BOTH brands of the bias media, Main Stream and Right Wing) for NOT acting to help save the lives of the Syrian rebels and civilians who are allegedly dying due to their own government's actions. NOT helping them would keep America on good terms with the Arab world and Syria's allies Russia and China.

      The other option, intervene in Syria. Even if all America did was send cruise missiles to attack Syrian government forces, the world reaction would be immediate. Russia is already hinting about mobilizing part of their fleet to the area. The Arab world (which doesn't like America anyway) will have even MORE reasons to hate us (and use TERRORISM on us). And if the truth be told, this development would split the major news media. The Main Stream Media, who wants to make Obama and the Dems look as great as possible, will try it's best to justify the military actions taken. The Right Wing Media (in a hypocritical twist) would be the ones screaming and yelling about this becoming another 'Vietnam'. It would be odd to say the very least.

      In summary, Obama is in a true 'Catch 22' situation with Syria. There's no way he (nor America) can 'win' on this issue.

  • Tag

    Yet more demands from the grievance and gimme society. As a result, upward mobility via education and hard work is diminishing quickly in this country. Throughout their working career, it is the employee's responsibility to establish a value for their skills. If one chooses to be stuck in a minimum wage job, so be it. And don't think for one minute that the SEIU's involvement is out of compassion for these people. They are nothing but vultures looking for a fresh carcass to pick clean by the way of union dues.

  • NorthernWVman

    Just curious if it is so hard to make it on the minimum why do all these folks have "Smart" phones, cable tv, and a plethora of other non essential "needs"???

    • BigBadJohnHenry

      Like tatoos. That "body art" gets expensive.

  • Fubar

    NCWV - thank you for bringing reality to this issue. It doesn't take long to see which workers understand what has to be done to advance themselves and their employer.