Fast Food Workers Strike, Protest Low Wages

This should give you a pretty good idea of what corporations think of the American worker.

If McDonald’s doubled wages for all employees, including CEO Don Thompson, Big Macs would cost 68 cents more, increasing from $3.99 to $4.67, reports Caroline Fairchild at The Huffington Post.

Dollar Menu items would cost 17 cents more, according to HuffPo.

Fairchild cites a University of Kansas researcher, who crunched numbers to see what would happen if McDonald’s doubled the salary of every employee then passed that cost on entirely to consumers.

According to the report McDonald’s only spends 17% of its revenue on salary and benefits. So what about we take a novel approach, the humane approach and just double the employee wages and not pass the cost onto the consumer. McDonald’s revenue last year was $27 billion of that it payed it spent $4.7 billion on salaries and benefits. Doubling salaries wouldn’t mean doubling that 17% number because the benefits would still remain the same.

It’s not like it’s a completely unprecedented move in American history. Almost exactly 100 years ago Henry Ford doubled the wages of everyone working at his production plants. Ford’s thoughts on paying employees well were revolutionary to say the least.

If we can distribute high wages, then that money is going to be spent and it will serve to make storekeepers and distributors and manufacturers and workers in other lines more prosperous and their prosperity will be reflected in our sales. Country-wide high wages spell country-wide prosperity, provided, however, the higher wages are paid for higher production.

The kind of workman who gives the business the best that is in him is the best kind of workman a business can have. …[I]f a man feels that his day’s work is not only supplying his basic need, but is also giving him a margin of comfort and enabling him to give his boys and girls their opportunity and his wife some pleasure in life, then his job looks good to him and he is free to give it of his best. This is a good thing for him and a good thing for the business.

Of course, these days it’s beaten into our heads that rather than pump money into the working class where it’s actually needed that we are far better off subsidizing big business and giving them billions of dollars a year in handouts because they’re the “job creators”. Which, as we’ve seen over the past 40 years is utter nonsense.

What do you think? Should McDonald’s double the salaries of every fast food worker in America?

Posted by James Poling

A socialist, tinkerer, thinker, question asker and all around curiosity seeker. If you'd like to reach me you can use the contact link above or email me at jamespoling [at] gmail [dot] com.

8 Comments

  1. This sounds like a perfect opportunity for James Poling, Fairchild, the University of Kansas researchers and every other “do-gooder” out there to start a “humane” hamburger franchise and compete with McDonald’s by paying their employees a “living wage” which is twice as much as McDonald’s pays. Heck if its only .68 cents more, then I’m sure every “do-gooding” socialist will patronize the “living wage” franchisees over McDonald’s. So who’s with me? Every do-gooder, socialist, economically challenged progressive who reads this blog, put your money where your bleeding heart is and start a “humane” franchise with higher labor costs and lower profits. Let’s see how long you survive.

    Like

    Reply

  2. BTW, anyone in the picture notice that one of the signs is for the National Guest Worker Alliance. So let me see if I get this straight. In a time when youth unemployment for black teens is nearly 50%, unskilled foreigners petition to come to America because they can’t find a job in their country (or if they do it’s for pennies a day) to earn money which they send back to their country, and they’re demanding to be paid more.

    Like

    Reply

    1. Max, I changed the photo and just wanted to comment on that here so it didn’t look like you didn’t know what the hell you were talking about. Thanks for the comments either way.

      Like

      Reply

      1. Please enlighten me James? When are you going to start your humane burger franchise and compete against McDonalds by paying labor costs that are 2x the market rate? Please let me know the grand opening so I can patronize your establishment before you declare bankruptcy.

        Like

        Reply

        1. Max it would be nice if you could potentially learn to have a discussion with someone, even someone that you disagree with, without seething with sarcasm and coming off as kind of an jerk.

          Since you asked the question I will answer it. If you take a look at this post this is something I’ve actually addressed in the very recent past here: http://slothed.com/2013/07/18/is-there-a-reason-why-employee-owned-companies-arent-more-prevalent/

          And since that post I’ve been in touch with several venture capitalists to consider moving forward with it. http://slothed.com/2013/07/20/a-venture-capitalist-responds-to-my-employee-owned-company-post/

          It’s sad that you think that McDonald’s would go bankrupt if they spent 25 or 28% of the revenue on salaries rather than just 17%. Those figures aren’t taking into account that if they were to double their employees’ salaries that turnover would plummet and one of the highest costs any companies has if finding and training new employees. Those savings aren’t even factored in to those numbers.

          Here’s a post I wrote back in 2011 http://jamespoling.wordpress.com/2011/04/13/tax-the-rich-stupid/
          Take a look at the amount of revenue brought in by corporate taxes compared to individual taxes and notice how that number is continually decreasing.

          I don’t think that there’s anything wrong with sharing the wealth and history has proven repeatedly that unless they are forced to, the wealthy corporations will continue to take more and more regardless of the effect it has on the working class families.

          If you think McDonald’s $27 billion worth of revenue just isn’t enough for them and it’s completely outlandish to even consider giving their employees a living wage then, by all means continue to give them your support.

          At one time Nelson Rockefeller was the richest man on Earth and do you know what his tax rate was? Close to 90% of his income. Whether you choose to believe it or not Max, the system is broken and if I had the means I would most definitely love to start a business where every employee got their fair share.

          I think for this subject however we’ll have to agree to disagree. If you think it’s ok that McDonald’s hands out a packet to its full-time employees on how best to budget their money in order to survive which calculates in another full-time job just to be able to make ends meet, if they’re lucky then we are pretty far apart on what is humane and what isn’t.

          Like

        2. Hi James,

          This article is such economic nonsense that I was just having a little fun, however if you’d really like to have an economic discussion then so be it. I apologize in advance for the length, however there are so many fallacies in your argument that at minimum I wanted to address the most glaring ones.

          “since that post I’ve been in touch with several venture capitalists to consider moving forward with it.” Good, I wish you the best of luck with your business. The beauty of a truly free market is that entrepreneurs can try new things and succeed or fail on their own merit. If they succeed then others will copy the model. If you can start a company manufacturing toothbrushes (or any other basic good) with labor and manufacturing costs that are 10x to 100x higher than what they are in places like China, India, Indonesia, etc then more power to you, though I’m fairly certain you will be bankrupt in a matter of months. However, I would love for you to prove me wrong. At minimum, as a small business owner myself, I encourage everyone to start a small business, especially people like you who seem to have no comprehension of economics. That way maybe you will see first hand how much damage to the poor your counter productive economic policies are.

          “Take a look at the amount of revenue brought in by corporate taxes compared to individual taxes and notice how that number is continually decreasing.” This one statement alone shows that you have no comprehension of economics and tax policy. CORPORATIONS DO NOT PAY TAXES. Only people pay taxes. Corporations are legal fiction, pieces of paper (I have a couple of articles of incorporation sitting in my desk drawer right now). ONLY PEOPLE PAY TAXES. Any tax imposed on a corporation is immediately passed to the people in some combination of lower wages, higher prices or lower dividends, there is no other place for the tax to come from. And before you comment on dividends, remember that for small business owners dividends are their take home salaries. In addition, pension funds and retirement accounts live off of dividends. I would venture to bet that the number of pension funds (including public & private sector unions, everyone’s 401K plan, etc) that hold McDonald’s stock is somewhere close to 100%. So cutting dividends would significantly hurt all retires and everyone else who has a retirement/pension account.

          “I don’t think that there’s anything wrong with sharing the wealth and history has proven repeatedly that unless they are forced to, the wealthy corporations will continue to take more and more regardless of the effect it has on the working class families.” Well thank you for using the word FORCE, so I didn’t have to. Your entire economic policy is based off of FORCE. When you couple FORCE with a complete lack of understanding of the Law of Unintended Consequences then it’s painfully obvious why the youth unemployment rate (ie. unskilled labor) is hovering over 20% and why black youth unemployment is nearly 50%. When gov’t policies artificially manipulate labor rates they price unskilled labor out of the market. The same people (ie. YOU) who argue for a higher minimum wage laws are the ones who then complain about companies outsourcing jobs to lower labor cost countries, yet they can’t seem to make the connection. Your counter-productive policies do nothing more than create a barrier to entry into the job market for low skilled workers, relegating them to a lifetime of poverty and gov’t dependence. In addition, the market will always adjust, and your counter-productive policies will continue to destroy the low & lower middle class and increase poverty. Did you happen to see the 60 minutes episode about robots that can do the work of low skilled labor? (http://www.cbsnews.com/video/watch/?id=50138922n), Their cost is roughly $3/hr. Your counter productive policies have already priced many cashiers, bank tellers, etc out of the labor market as they’re being replaced with self-checkout terminals, ATMs, etc. How much higher are you going to FORCE labor rates for low skilled workers before that $3/hr robot starts looking more and more attractive to nearly every business out there? You keep advocating for artificially high labor rates, just don’t complain when the unemployment rate for low skilled workers soars and more and more poor people get stuck in generational poverty.

          Also, when it comes to “sharing the wealth” last I checked, two hundred years of Capitalism in the US lifted more people out of poverty and increased the standard of living for more people across the entire world than every other economic system combined in the 5000 years that proceeded it.

          “If you think McDonald’s $27 billion worth of revenue just isn’t enough for them and it’s completely outlandish to even consider giving their employees a living wage then, by all means continue to give them your support.”
          First of all, I don’t patronize McDonald’s. I have 2 kids under the age of 10 and they’ve never had McDonald’s food because I think it’s terrible, however, what I think about McDonald’s food is mostly irrelevant. Obviously $27 billion worth of revenue think McDonald’s is good and seeing as McDonald’s doesn’t hold a gun to anyone’s head and force them to eat Big Mac’s then the market has spoken. Also who is “them”. As I pointed out earlier, “them” is the people. It’s not just the employees but the consumers and all the people with retirement accounts that count on McDonald’s to sell $27B in crappy food so they can make payroll, higher contractors to expand their business, issue dividends, etc.

          “At one time Nelson Rockefeller was the richest man on Earth and do you know what his tax rate was? Close to 90% of his income.” This is more progressive propaganda. The 90% rate was the highest marginal rate and NOBODY paid it. There were so many deductions and loopholes that the EFFECTIVE rate (this is the rate the people actually paid) was far less. In fact, check out the link below of effective rates going back to 1979. What you will notice is that all effective rates have been going down, however it has been the poor who have seen the biggest percentage drop.
          http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=456
          (BTW, I’m not protecting the so-called rich, I’m just pointing out that your statement and belief that that rich don’t pay taxes is demonstrably false).

          “I think for this subject however we’ll have to agree to disagree. If you think it’s ok that McDonald’s hands out a packet to its full-time employees on how best to budget their money in order to survive which calculates in another full-time job just to be able to make ends meet, if they’re lucky then we are pretty far apart on what is humane and what isn’t.” No we don’t have to agree to disagree because you’re wrong. Trying to interject emotion into a false economic argument is nothing more than a straw-man. Also, stating that I’m ok with something I never said I was ok with is another fallacy. As I said earlier, I’m not defending McDonald’s. In fact, I truly put my money where my mouth is and do the one thing that could possibly change McDonald’s behavior and that is I don’t buy anything from them. However, seeing as I’m outvoted 27,000,000,000 to 1, who am I to force the other 27B to spend their money differently?

          I encourage you to do some research on who makes up the “minimum wage” class. Despite the rhetoric, MW workers are overwhelmingly young, unskilled minorities who are breaking into the job market. Overwhelmingly minimum wage jobs are not careers but the first rung on the economic ladder. By creating a barrier to even get on the ladder, people like you are actually destroying the poor unskilled worker’s chance for any type of upward mobility.
          Here’s a good gov’t study to start with: http://www.bls.gov/cps/minwage2011.htm
          Here’s a research study showing how black male youth are disproportionately affected by MW increases – http://www.epionline.org/study/r137/

          And finally, I will leave you with two quotes.

          The following comment is from Don Boudreaux who appeared on the Joy Cardin show to discuss MW laws.

          Yesterday morning, on the Joy Cardin Show on Wisconsin Public Radio, I debated Laura Dresser on the merits of the minimum wage.

          There’s one point that I especially wish that I would have addressed with greater strength and more eloquence. That point is one made several times by Ms. Dresser (and by many other advocates of the legislated minimum wage). It is this: the minimum wage should be increased because working even full-time at the current minimum wage yields too little income for a typical American family to live on.

          Let’s grant without qualification that this claim is true. Its truth does not strengthen, much less prove, the case for raising the minimum wage. Ms. Dresser’s argument (as I’ll call it here) assumes the very conclusion that is in dispute – namely, that raising the minimum wage will in fact increase the incomes of all or most low-wage workers.

          Everyone this side of sociopathy wishes that all honest and hard-working people would earn fortunes. But wishes such as this one cannot be made into reality simply by legislating that these wishes be granted. The desirability of the wish is not at issue. What’s at issue here is the proposed means – a legislated minimum wage – of achieving higher incomes for low-skilled workers. Repeating the wish and detailing the hardships that people suffer because the wish is not a reality does absolutely nothing to address the pertinent question: does minimum-wage legislation improve the well-being of the workers whose well-being is being discussed?

          ….

          Consider this … hypothetical. We all (again, at least those of us this side of sociopathy) would love to see everyone with severe physical and mental disabilities earn a great deal more income from working. Yet it is, I’m sure, impossible for the typical quadriplegic, or the typical adult whose intelligence is no more advanced than that of a four-year-old child, to earn enough money by working to support himself or herself and his or her family. This fact is sad; it is regrettable; if I could snap my fingers to enable all such people to earn, without any ill side effects, at least, say, $50,000 in annual income while working in the market economy I would snap my fingers immediately.

          But snapping my fingers won’t succeed, no matter how fervently I want such snapping to improve the economic lot of those folks.

          Nor will legislating a minimum wage for such people work. Suppose that Congress legislates that all severely physically and mentally disabled workers be paid at least $25 per hour (which is about the hourly wage that will generate an annual income of $50,000 per worker). Does anyone older than the age of seven think that employers will hire such people at that minimum wage? Of course not.

          Very much the same analysis holds for low-skilled workers. The only difference between the reality of the actual minimum wage and the disabled-worker hypothetical above is the severity of the situation.

          Here’s a more direct one:

          Washington, DC, like most cities, has many beggars. I’m sure it’s difficult to support a family on the earnings from begging. So let’s pass a statute that mandates that the minimum hand-out to a beggar be, say, $10.00. If you can’t or won’t give to a beggar, on any particular encounter with that beggar, at least $10.00, you are not allowed to give anything to that beggar.

          Similarly, many U.S. cities have very poor people trying to earn money by selling the likes of pencils or cheap flowers. I’m sure it’s difficult to support a family on the earnings from such sales. So let’s pass a statute that mandates the minimum price of pencils be, say, $5.00. Ditto for each stem of cheap flowers. If you can’t or won’t pay at least 5.00 for each pencil or stem of semi-wilted rose that you buy, you are not allowed to pay anything for such items.

          Question: will beggars and poor people be helped or harmed by such legislation?

          Like

  3. One final comment. The story says that it was written by a University researcher. It turns out the “researcher” was an undergraduate.

    Like

    Reply

  4. Don’t forget they also have to pay payroll taxes and unemployment insurance. So if an employee is getting $15 an hour, McDonalds is shelling out way more than that. And if prices rise, then there can be increased costs like sales tax and corporate taxes.

    Then you have people who already earn $15 an hour. Will they be happy making what an entry level McDonalds worker now makes?

    Further, many people who work at McDonalds are teenagers who blow much of their earnings as disposable income. They live at home and really don’t have many bills. Doubling the amount of money they put into the economy is highly inflationary. Yeah, they may be now earning $15 an hour, but gasoline will cost $20 a gallon. A new home will get even further out of their reach. When they move on to a better job and move out of Mom’s, their rents will be sky high.

    Why should we have any minimum wage or living wage?

    Like

    Reply

Speak Your Mind

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s