Monday, October 7, 2013


Two or three weeks ago I read in the news where fast food workers in most major cities were going on strike for higher wages.  They were demanding $15 per hour, but the strike turned out to be a flop.  Apparently common sense prevailed.

Just recently however the subject came up in a discussion with an extremely left wing friend of mine.  (Yes, I do have a few friends who are left wingers).  
Before continuing any further, I would just like to say that arguing with a hard core liberal is a lot like baptizing a cat.  Try as you may, you don’t get much accomplished and when it’s over, you have to wonder why you ever attempted it in the first place.

Some people might think I’m a cruel and heartless person for opposing an increases in the minimum wage.  Quite the contrary, I think this world be a wonderful place if every working human being made at least a minimum wage of $15 per hour?   But, don’t hold your breath.  For better or for worse, fast-food jobs are relatively low-productivity positions, typically filled by inexperienced workers.  Many of which are part time students.

Most fast food customers want a quick, inexpensive meal.  They will not regularly pay premium prices for a burger and fries.   Doubling McDonalds’ wages would raise their total costs by 25 percent — well above profit margins. But raising prices would drive customers away.  If they are going to pay more, they expect a better dinning atmosphere.

If Congress mandated fast-food restaurants to pay $15 an hour, they would have to change operations to deliver the kind of productivity to justify those higher costs.  That would mean replacing current workers with machines and hiring fewer, more skilled workers to maintain them.

Restaurants could do this in a variety of ways, such as using customer operated kiosks instead of cashiers to take orders, or installing the new robotic burger flipper that makes up to 400 hamburgers an hour.

At current wages these high-tech investments make sense for only a few restaurants; if wages doubled they would become widespread.  The end result: far fewer jobs in the fast food industry and higher pay for those who remain.

Robots have already replaced thousands of higher paying jobs in manufacturing in spite of the labor unions efforts to prevent it.  I recently read about an automobile manufacturing plant where the assembly line is 100% robots.  I’m not sure, but I think it is located n Belize. 

If you do an internet search, you will find page after page of information about industrial robots. 
Here are a couple of examples.

Those who consider such a trade-off worthwhile are missing the economic role minimum-wage jobs play in our economy.  For most workers, they are entry-level positions where they can gain experience that makes them more productive and helps them command higher pay in their next job.
Businesses value skills like reliability, discipline, and the ability to accept instructions. Fast food jobs instill these basic skills in inexperienced workers.

Most Americans started out in a job paying within a dollar of the minimum wage.  Few stay there long. The average fast-food employee stays at his or her restaurant for less than a year.  These are simply gateway jobs, the first step on a career ladder.  That is why the vast majority of fast-food workers are under the age of 25.

Super-sizing fast-food wages would eliminate many of these entry level positions, making it harder for young people to land that all-important first job and start climbing the ladder of success.

Every time minimum wage goes up, managers find ways to operate with fewer employees.  That’s the reason you have to pump your own gas at the gas station.  Just think how many minimum wage jobs disappeared with that simple change.

My advice to the minimum wage worker would be “be careful what you wish for”.  It won’t matter if minimum wage is $100 per hour if you can’t find a job…

If you disagree with anything I said in this article, let me know.  I’m getting pretty good at baptizing cats.

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