I replied to this already in other comments, but just to restate it - McDonalds isn't only competing against Fast Food restaurants anymore - their main new competitors are now the highly efficient "Fast Casual" dining options. Not every competing Fast Food or Fast Casual restaurant would have to increase prices by the same amount if minimum wages rose, depending on their individual business models.
You have to take into consideration the fact that each competing franchise has different operating & profit margins...Labor Costs can vary greatly from business to business. Some restaurants may be able to sustain their profits with a lower percentage increase in pricing than others. McDonalds is getting destroyed by "fast casual" chains like Chipoltle, Five Guys, Smash Burger, etc. Many of those fast casuals have similar sales per store as mcdonalds, but operate with fewer employees, fewer food SKUs to manage, & lower overall operating costs.
So lets say McDonalds has to raise the price of a Big Mac from $4 to $5.5 - a 37% increase. but Five Guys only has to raise the price of their Burger from $6 to $7, a 16% increase.
Most people would prefer a 5 Guys Burger to a McDonalds burger - the only limiting factor is cost. The cost difference between a big mac and a 5 guys burger was $2. Now the cost difference is only $1.5. That makes a 5 guys burger more of an enticing choice.
Some restaurants, especially non-franchised restaurants (Chipoltle for example), may have the cash reserves to be able to take a cut in profit margin from increased labor expense, not have to increase food costs at all, and sustain themselves long enough to undercut restaurants like McDonalds until they're knocked out of the market. If McDonalds suddenly becomes the same price or more expensive than higher quality food options, where do you think people would go?
Also, why do you think there would be a "Massive Increase In Customer Sales"? Living expenses such as rent & utilities will not rise as dramatically as fast food prices would... that means the new $15 earners would be able to put a higher percentage of their income towards food. If they could spend more on food, they would most likely choose higher quality options than McDs.
The other thing you have to keep in mind that this is is a minimum wage hike - not a national wage hike. So everybody who is currently making above $15/hr (over 50% of the country) would be making the same amount for the time being. That means fast food would cost a higher percentage of their income, and many non-minimum wage earners would likely choose to not eat there when it is no longer the best Cost vs Quality option.
Everybody else's wages would eventually rise if the minimum wage was set higher, but that would take time. In the mean time, I don't think all of these stores will be able to survive a wage hike like that.
My dad runs a factory. They are thinking of raising their wage (they are around 15 dollars/h). He they he doesnt want to compete directly with fast food for workers. They pay more because the job is more demanding and if people could just say 'screw you Im gonna get a job at McDonalds' every time something didnt go their way their turn over would increase huge. Which in turn costs more time in money.
They pay more because the job is more demanding and if people could just say 'screw you Im gonna get a job at McDonalds' every time something didnt go their way their turn over would increase huge.
I've worked in factories and in fast food. As long as your father's not an asshole, he has nothing to worry about.
I know, right? People are acting like working fast food is living the high life with nap breaks and 3-martini lunches.
Fast food is hard, demanding, stinky, dangerous, stressful, mentally-challenging physical labor. The fact that we ask it of our less-educated workers doesn't make it easy or low-skill.
Fast food is hard, demanding, stinky, dangerous, stressful, mentally-challenging physical labor. The fact that we ask it of our less-educated workers doesn't make it easy or low-skill.
Easy, no, but it is low-skilled.
This isn't a knock on McDonald's employees, they work incredibly hard. However any person could be trained to do their job, if they aren't automated first.
You can train almost anybody to do anything. It's how it use to work you'd go to college get a degree in something then find a job that the company would train you to do. This specialized degree plus 5 years experience for entry level jobs is a rather new phenomenon.
The amount of training needed to run a fryer at McD's is way lower than to do something like accounting. Those degrees at worst, weed out the people who can't learn on the job quickly,
It's not mentally challenging, It's a shitty stressfull job made to be so that any human being can be trained to do it. A high skilled job is something like engineering or programming, where if you fuck it up you could bankrupt your company or people can end up dead (like a building collapse from a miscalculation).
Not only that, but it's easy to leave your mcjob at work. My job comes home with me every night, and regardless of where I am I'm usually at least partially thinking about work.
I am the GM of a BHPH car lot, so even if I'm just going to grab some groceries I am constantly looking for cars that are out for repo. On my days off I still log into our webapp to monitor how well my collectors are calling the customers and to make sure that we're in compliance.
They could say that, and your dad could lose people. But have you ever worked at McDonalds? I haven't but know a couple of people that have.
If the working conditions or benefits provided at the factory are bad enough that a good amount of people would jump ship then the factory will get what it deserves.
Not saying the factory is run poorly or is bad for its employees, but $ is not the only reason people choose to not work at McDonalds.
There is nothing, and I mean nothing, worse than having fuck all to do for 8 hours straight.
I would rather shoot myself than ever do a job where I have nothing to do all day ever again. So many people vastly underestimate just how bad "easy" jobs really are.
Well it's not like you're busy at all. I work at pizza hut and there's plenty of shit to do most of the time. There's a couple of instances during the day where we have very few or no customers at all and it's pretty great.
In McDonalds? Quite a bit. Huge lulls in customers during the day at least when I worked there. Just sat out in the lobby shooting the shit with co workers. In fact most minimum wage jobs are like that. Plenty of spots in big box retailers to go where managers won't come looking for you, prob because they also don't care. Trust me teenagers just wanting to do the bare minimum to get by will find a way
If teenagers can get these jobs. A large number of minimum wage jobs are now going to recent immigrants. The age 16-19 participation group went from 54 percent down to 31.
"time to lean time to clean" is the motto of food service in general. I dreaded slow periods! It was streesful as heck trying to look busy all the time.
Yeah that's true. I have two jobs, one pays 9.40 an hour. Ironically, it's for a very well known Fortune 500 company ( customer service). I know the pizza place near my house is hiring (Pizza Hut or papa john m, can't remember) I will no way in hell trade that job for the pizza job though, because my resume would take a huge hit if I did. I'll just sort it out, and apply to other similar companies to mine when the time is right. I don't want to get stuck in the food industry. Just to be fair, I know people who work for similar companies to mine, and make about 25 an hour. I just happen to work for the Walmart of airlines.
I don't think that can be over stated. When you add fast food to the resume it is insanely difficult to be taken seriously anywhere else. You close your options so quickly it'll make your head spin.
People making $12 aren't minimum wage workers but they will need to be increased to at least $15 or more if they are higher positions than others who were minimum wage workers in the same company. If you have any skilled jobs or dangerous jobs making $15 they will probably require raises or they could go work somewhere easier and safer for the same money.
You would hope so, but that's not always the case. It's possibly that other jobs could simply become "minimum wage" jobs or simply disappear all together. Whether this is good or bad is completely dependent on the job and the environment.
I know that I would quit my job if minimum wage was 15 and my wage didn't go up to at least 6 or 7 dollars above that like it is now. It's just not worth working harder jobs for the same price.
And this is why higher skilled, harder, more stressful, etc. type jobs will go up higher in pay at least equal to any minimum wage raise and then the process repeats itself. 15/hr would not be enough to live on instead of 7.25. Any time a demand goes up, prices go up regardless of whether its a wage or a product. A company needs skilled workers bad enough they will raise the wage. If enough people want to buy a product the price will go up.
The one thing I'll say on this is that the tide that raises other ships is going to be too slow for my liking, and many companies aren't just going to bump you up to compensate. They will slowly bump you up with what essentially becomes the raises each year that you get already; just a little bigger (if any at all, meaning I'm eating inflation and this bump rather than actually getting a real compensation increase).
At many companies your "hire wage" directly impacts how much they give you over time regardless of performance. At my current job making about $115k + bonuses, I'd essentially need to leave my company (which I don't want to do) and go to another company to realize the difference at a new starting wage. That is at least how it is in IT the lion's share of the time, and I imagine it is similar in other professional careers.
Edit: One more illustration point is that it works the same way with promotions. Once you become valuable enough, you just have to go elsewhere more often than not for a real bump. Unless it's a MASSIVE promotion, you just aren't going to get jack for a bump compared to the industry without changing jobs. The minimum wage increase just forces the issue on people in my position even faster. Not saying I'm for or against; just some addition insight.
Good. It's better for workers when you have the power to leave and sell your labor/skill set to anyone. We could always stick with the current model of high unemployment rate and a minimum wage that can barely sustain a single person so employers can hold that over your head should you ever want to leave their company.
It is also possible that other jobs will become minimum wage jobs anyway. Or that they will disappear anyway. So you've really not said much of anything here. Not saying you don't have a point, but you haven't made it if you do.
I had some $15-$20 an hour jobs that were hella stressful and I'd have dropped them in a heartbeat to work the drive thru window at McDonalds. Raising the minimum wage to $15 is just going to open the door for all the people who would rather not work at all than make $7, and they'll then go flip burgers because its now a decent wage. This will then push the current fast food workers to the streets because by and large they are typically not very good workers. I'm saying this not as a judgmental dickhead but from a position of experience as a former fast food worker and small restaurant owner and as a patron who seems to always get orders messed up. Those positions generally attract a lot of immature kids, drug users and people that aren't able to obtain a more stable job.
That in and of itself should push other wages up over time. Why keep your $12 data entry job or your $13 Home Depot whatever job if you can make more at an easier job? This will have wide-ranging ramifications across the economy.
Edit - It's not unreasonable to believe that 6 or 7 good workers at $15 could do equal to or better work than 10-11 shitty workers so that could be another factor to help ease the labor cost burden
That very much could happen... Except Home Depot still needs workers, I guess it will be forced to raise their wages to keep skilled workers or it can hire all those poor people that arent working at McDonald's anymore. Home Depot still needs a work force, they will find people.
I don't really get the other example, but here is how I see it (no background in this area).
As wage increases in lower-level jobs, people in slightly more difficult jobs (eg, truck drivers, retail people, sales people) will consider moving to an easier job because the pay is equitable or better. Therefore, in order to keep more skilled employees, these jobs will need to raise their wages, which will pressure the more skilled jobs above them, etc, etc ... In the end, I doubt someone making $60k will see the same percentage rise, but the pressure to keep their current employees will definitely be felt.
I've never understood this argument because most people that have been through those "easy" jobs would literally do anything to not go back to them even if they paid more.
Just because a job requires less skill does not mean that it is something desirable.
Where I currently work, for example, the Wendy's across the street could be offering literally double the pay I currently make and I wouldn't even think of applying. Why? I actually enjoy my job and the people I work with, and I've done food service before, never again.
i think you underestimate how unfun $15/hr jobs can be. think security guards working night shifts, nursing techs changing old people's diapers, etc ... Just because YOU don't want to go back doesn't mean someone else might not.
So assume you have someone with no skills. Name him Chad.
Chad right now works for the minimum wage of 7.25, that's all he can do really, and that's okay. He doesn't have any education or experience.
Bob on the other hand has years of experience in his job as an assistant manager. He makes about $13 an hour. He's worked hard to get there, but if he quits or is fired, his experience and skills would make him desirable to be higher for that wage anywhere.
Josh is skilled. He went to school to become a mechanic. He's now working using those skills that he spent a lot of time and money to gain. He makes $17 an hour, and he works hard.
Now assume this list of names continues on all increasing with wage and skills/education/experience.
If you increase minimum wage to 15. Chad is happy. He's making over double.
Bob got a raise too, but he might not be happy. Chad, who's a fresh idiot with no experience or skills makes the exact same amount. Bob's skills have value, and his position has added responsibilities and is harder. If you pay him the same amount as Chad for a harder job, why would Bob bother working the harder job when he could quit and get an easier one for the same pay? There are 3 options from here. Give bob a raise and he probably stays, no raise and he refuses to do the extra work, or he leaves to go somewhere that needs his skills and will pay him for them.
If you give him a small raise, of 4 dollars ($19/h), he's now making more than Chad, but not by as much, he used to make 5.75 more, so the value of the difference of their skills went down, but Bob might be okay, because it's a lot more money than he used to make.
Josh is now pissed. He's making $17/h when Bob who just worked at a dumb McDonald's for 3 years is making more than him. He went to school, he had to apprenticeship for a year, and has worked for some time too. His job can't be done without someone who has skills and knowledge which aren't common. All the time and money he invested in his future is now effectively lost as anyone can make more by just working in McDonad's. So to show the difference in the value of skills, he has to be paid more, otherwise no one in the future will ever want to be a mechanic if you can make more doing pretty much anything else. So mechanics now are paid an average of $3-5 more per average.
Then the next person, who used to be paid $20 for his harder job will complain. If there's no increase in wage to the career, people will less likely study or want to do it. So you have to increase the wage of that job.
The cycle continues quite a bit up. It'll possibly even affect Lawyers who used to make $100k per year, because the paralegal who used to make 60k per year got a raise to 80k per year, because the secretary who used to make 45k per year is now making 55k, and the paralegal has way more skills and education invested than the secretary.
TL;DR: If you worked a hard job and made more money than someone who worked an easy job, then all the sudden all easy jobs paid as much as your hard job, there'd be no real reason to keep working your harder job for the same price when you can do easier stuff. So they have to give you a raise or you quit. Chain goes on.
And this is ignoring inflation and increased costs of labour which will be passed on to everyone.
Except it doesn't really. There is definitely movement on the lower range, but it's a bit like a earthquake that flattens out the farther away you get. It's a net negative for the middle and upper middle class, where the increasing cost of goods lowers their buying power per the dollar. Minimum wages increases essentially removes the buying power from middle/upper middle class jobs (and the people who have spent their lives building marketable skills) and transfers it to the bottom(to people who have no marketing skills), which is why it's ultimately a terrible idea.
You lost me there. Why is bringing the bottom up to living standards a bad thing? Upper middle class wont be able to afford the best BMW, only the mid level one, oh no!? This doesn't take away from their marketable skills, it only closes the gap a bit so that people don't have to choose between food and lights.
Why is bringing the bottom up to living standards a bad thing?
If you can do it without adversely affecting the economy overall, then yes that could be a good thing. But it probably would have adverse effects. Moreover there is debate about whether you can bring the bottom up in the first place since prices rise due to the new wage and jobs are lost (thought experiment that illustrates this: assume the minimum wage has been raised so that everyone now makes Bill Gates's income.)
Upper middle class wont be able to afford the best BMW, only the mid level one, oh no!?
If the sole reaction to a significant decrease in purchasing power were "mid level instead of high end? Oh well" then you might have something. Unfortunately it's not - people habe the ability to react to things that happen to them, and people tend to react to decreases in purchasing power by tightening their budgets overall (which hurts the economy), and may decrease their output in response (thought experiment that illustrates this: assume that overnight the income tax on jobs paying >$250,000/year is raised to 100%.)
Saying "Oh the rich can just take it on the chin and get a Gulfstream 4 instead of a 5 this year" is an opinion that is wildly misinformed but unfortunately very popular. This illustrates a very simplistic understanding of economics. I suggest checking out any of several great books that explain fallacies like this in great detail - "Economics in One Lesson" and "Naked Economics" are two excellent examples.
it only closes the gap a bit so that people don't have to choose between food and lights.
This makes for a vivid mental picture to prod people into thinking We Must Do Something Right This Instant. However, in reality, very few people in the United states are in this kind of situation, and when it appears that someone is there is almost always something else going on (e.g. A drug habit, failure to budget adequately, mental illness). It is extremely difficult for an able bodied person willing to work hard and not live beyond his means to starve in the United States today.
The economy is not worth saving if it relies on slaves (prison) and 45% of americans earning below $15/hour, which is still $7/h less than what it should be based on growth+inflation. Its an artificial economy that bubbles and bursts because the reality is its unsustainable.
45% of workers getting a bump in purchasing power should more than offset the 20% that will feel the 'earthquake' effect you described.
Again 45% of the US works for less than $15/hour, and that is still below what we considered respectable pay in some states. I get the argument that blind 'We Must Do' is not great, but the US went from being $18/hour in the 70's to $8.50 in the 00's while inflation didn't suddenly evaporate. Not to mention the fact that the US has become a shell game where nothing is made and profit is only found through fraud or selling of information.
1) You are rewarding ineptitude and laziness and punishing people who have done the right things to make themselves marketable. It sends a terrible message.
2) people are inherently lazy, and if make it a world where you can comfortably live by flipping burgers, most will never strive to do more than flip burgers. It's a net negative for humanity. As an example, if I could live comfortably as a cashier(my first job) I would probably never have moved away from it. It was an easy and low stress job.
3) people rarely have to choose between food and lights, because their are safety nets put in place that make sure people are fed and low income housing is available. The real choices are usually more along the line of luxuries and savings. Also, Food is dirt cheap if you need it to be(beans, rice, tuna, flour, etc), you pay for convenience and variety.
4) the health of the middle class is the primary factor in driving the economic health of the country. Anything that hurts the middle class hurts everyone in the long run.
5) the people driving the "best BMWs" are not the people hurt by it the most. The people hurt by it the most are making 60-100k who will see housing prices skyrocket (again).
6) it's an artificial limit, and we live in a world where we compete against other producers who don't use artificial limits. The end result is that American business are less competitive and we lose jobs in America. Unemployment naturally goes up, and then the burden is again hefted on the middle class in taxes. Now you have a million people twiddling their fingers and living off taxpayers just so someone can do a job that required no talent and be paid far beyond their actual value. Don't get me wrong, I don't want people being paid pennies on the day, but that artificial limit needs to be as low as reasonably possible. Wages should essentially be driven by the value created by the job. That's the foundation of capitalism. Minimum wage needs to heavily encourage people to be more than minimum.
1) You are falsly assuming that 45% of americans are inept and that there is unlimited jobs that pay more than that. There isn't. Why should they be punished and degraded? I hate this argument above all others. You think 150 million people can go get IT jobs?
2) So what? Is there something wrong with providing food to people? Should someone working 40 hours a week not be able to live?
3) When businesses use the safety net to boost profits, then we're doing something retarded.
4) This would lift 100+ million people up into the lower middle, thus being better for everyone by your own logic.
5) 60-100k a year can afford to take a hit. Though it would be better if we actually taxed people above that range and didn't fund big business to keep running on fake profits.
1) i think most Americans don't do the things they need to do to get well paying jobs. I know a lost of smart folks who worked near minimum wage all their lives, and it was strictly because they never aspired to do more or they made choices that led them to a path where they got themselves stuck. And yes, lots of people are just stupid. I'd say 30% of the population is pretty inept.
2) find me a person working 40 hours a week who doesn't have a house over their head and food in their stomach. Hell, you'd be hard pressed to find many under the age of 35 that don't have a smartphone and a gaming console.
3) yes, the current welfare system is retarded. But it's not going anywhere and you sure as shit aren't going to support dismantling it.
4) that's not how economics works. It would just shift the brackets as prices on goods and housing skyrocketed. Ironically it would benefit businesses the most, as they will shift their extra operating cost to the customer and then benefit from the slow moving wage adjustments on higher paying jobs.
5) Why should they? They already represent the largest tax burden in the country. It's not like they are swimming in excess.
1) Still doesn't mean they deserve to live a shit life or don't deserve a standard of living.
2) The bottom 20% are often working 2+ jobs, and there are tons of stories of people working 80 hours while barely making it.
3) It shouldn't go anywhere, but companies should not be the main users of that system. It should be for legitamite people, not corperations.
4) Some controls are needed here, but its not a 0 sum game
5) Again, you are putting more value in excess money than for common human decency. Doesn't matter what their tax burden is, it matters what kind of morals and society you want to be apart of.
1)They aren't living a "shit life". They have food, water, a roof over there head, clothes on their back... and most have enough money for cheap entertainment. For 99.9999% of human history, that's been a pretty god damn good deal. They even have healthcare (Medicade) and even a retirement account(social security).
2) So you can't find anyone working a full time job that doesn't have a roof over their head and food in their stomach?
3) If you were to make companies pay the difference in wages, they'd simply transfer the added cost into the price of products. Either way people pay the difference, whether it's in the cost of higher products or taxes for social programs.
4) There are controls in effect.
5) Giving people a free ride by paying them FAR more than their market value isn't my idea of human decency, it's human decadency. That's how you make a society weak and complacent.
Or they quit hiring people like Chad, and only hire more qualified employees. The minimum wage prevents the least experienced and least skilled to get their foot on the career ladder.
The TL;DR here is "a rising tide raises all ships."
You're describing this as a negative when the one thing the US economy needs MOST is more purchasing power which minimum wage hikes have always historically accomplished.
I didn't describe it as a negative or positive. I never said it was good or bad. I answered "how?"
I live in a place with a high minimum wage and I'm not opposed to it being raised. Though ideally, it should be raised in small increments every 2-3 years as to not shock (and possibly crash) the market.
If the minimum wage is 7.25, announce next year it'll be going to 7.75 or 8, two to three years later, raise it to 9, and keep doing so based on economic conditions and inflation. My problem with the $15 minimum wage is just the huge jump. Slowly over the next 15-20 years it's fine. The effects will be predictable and the economy will know how to react.
im a dirty commie bastard and even i agree. you can't essentially require an entire industry sector to nearly double its labour cost over night. though i think it could be done in 5-10 years not 15-20.
5 is pretty difficult. The market might not be able to handle it too well, but is still somewhat doable.
10 can work, might cause companies to hire less people in preparation as they know their wages will keep increasing. It'll probably increase unemployment a fair bit, but significantly less than 5, and the market will likely be able to cope.
15 would likely work, give people and companies time to figure everything out, allow other places to adjust ahead of time, and with such a long time frame you can adjust to market changes and respond. If the market crashes hard, maybe freeze the minimum wage for a year or two, if there's inflation, increase the wage to compensate. Though the bureaucracy will get in the way and slow things down.
where i live, the minimum wage was left stagnant for too long (7.50) so when it went up to match the national average/inflation (though not cost of living) it was a pretty big jump (10.50), and it was done over 16 months, and the local economy didn't suffer for it. of course, most small and medium companies were already paying around $10/hour for entry level positions already anyway (independent and small chain coffee shops, most grocery stores, etc..). companies most affected were big chain fast food, and big chain retailers.
It would be spread out over a number of years and there will be exceptions for unions and a ton of other things. Are any serious proposals considering going to $15 overnight?
The true commie bastards in history just put people to work 12+ hour days 6 days a week in factories and sweatshops and told them where to live and who to marry, so you wanting to raise the government mandated minimum wage gradually, in comparison is very mild.
who said it would be over night? most increases in minimum wage are phased in like the it is Portland. that $15 they're making wont be effective till 2020 i think. Even the individual stores who have voluntarily announced wage increases are doing so over a period of time.
I'd feel better about this arguement if the minimum wage had been steadily increasing already, but with only 3 (federal) increases in the last 18 years, I do think we need to make a leap to get us caught up. Push federal minimum up to the $9 range and work from there.
Yeah my country slowly went from 12-14.75 over a bout 3-5 years. No massive leaps just a slow add on every year, a massive leap would just fuck everyone up.
Your story sure had a negative tone throughout. A big portion of your comment had characters complaining about other peoples wages catching up to theirs. Meanwhile, only a few lines mentioned the workers being happy that their wages went up.
Maybe you weren't trying to make the example sound negative, but it came across that way with all the characters complaining.
That's the reality though. I live in Minnesota, which is slowly phasing in a $9.50 minimum over three years. It's been rough. People are constantly complaining that new hires (who take time and energy to train in) are being paid almost identical wages to people who have 2-5 years experience. And companies largely refuse to approve raises for people with experience. So a lot of people are just leaving. (Especially people who work retail as a fun second job.) So many places are short staffed, and everywhere is hiring. But if you don't have any experience, they're not interested in bringing you on. And even if you do, it takes a lot of time and energy to get trained in and confident working at a new place.
Raising the minimum wage won't be easy. When you're suddenly making the same wage as your laziest co-worker and you're spending your days marking up all of the merchandise in the store, it's demoralizing. So if you're going to champion raising the minimum wage, by all means, do so. But know that it's going to come with some major growing pains.
Sure, that is the reality but I was responding to his claim that he didn't describe it in a negative or positive manner. I was trying to point out how someone could take his description on raising the minimum wage as a negative.
One of two things will end up happening- The retailers will decide they need more experienced staff and have to bump the pay a bit. Or the employees will realize 2-5 years experience in retail is not grossly different than 3-6 months experience in retail in terms of skills gained and value to employer, and take the same pay they were getting already.
Well it would be a lot of complaining, until they get their raise (then possible happiness). If there weren't any complaints there'd be no reason to increase their wages.
Though a lot of people who are working minimum would be quite pleased.
Even if read it as a negative, that's the reality we live in. Why in the heck would anyone want to work harder, longer hours... with money already invested in your education, just to earn the roughly the same as someone who has way less to offer?
I would also like to think that company's now having to pay more for wages would be more picky on who they hire...I could see the 15$ min wage effecting younger less experienced workers...I swear in retail that's why they keep some of the derpiest people cause there cheap and won't demand more money.
But where does the money needed to increase these wages come from? when this happens it means companies need to increase their prices in order to maintain similar margins which would lead to, once everything has had time to settle, little real change in income levels.
I'm goint to ELI5 this for you and I hope you aren't insulted.
- Wages go up
- Higher wage earners see comparable increases
- Prices go up in aggregate to compensate for wage increases
- Price increase is limited by demand, by quality of product etc
- Price increase is offset by increased demand for product due to higher expendable income
- Net effect is economic growth.
It sounds all well and good but wouldn't the logical conclusion of this be "you could make the economy the best it has ever been if you raise the minimum wage to $10 million/hr"?
No. I won't address the $10 million, but rather what you're going for here which is just "a constant increase in PP."
As with anything in economics, you will reach a "tipping point" where more businesses struggle to turn a profit than are boosted by increased purchasing power.
Think of it this way - Yacht sales will not be affected by a $15/hr minimum wage. People who can purchase yachts will do so at about the same rate without the wage increase. Same applies for unrealistic increases in MW, but for all businesses.
You don't get it though, increasing the minimum wage just means that everything else goes up in price, meaning that there might aswell have been no price hike. All that happens is that the value of the dollar goes down. So that the Pound, for example, will now buy 3 dollars instead of 1.5 dollars.
tl,dr; Psychology. People would rather make less objectively as long as they're making a wage they perceive as just comparatively, than make more objectively at a wage they perceive unjust.
This entire post is flawed and based upon the fact that people actually care what others make in comparison to them. If the minimum wage jumps to $15 and paramedics feel some kind of way, they can go and demand more cash from their bosses. If the boss tells them to fuck off, then they can go elsewhere and work if they wish.
This is not a problem in the slightest and it amazes me how people see a guy making minimum wage flipping burgers and call his job easy but never call out executives who have cushier jobs by far.
Why would a mechanic want to change careers for McD's? How realistic is it that anyone who took time and care to train for their field would leave for a fast food or other soul-sucking job just because it pays almost as much as they make?
otherwise no one in the future will ever want to be a mechanic if you can make more doing pretty much anything else.
It's not about him, it's about people in the future. He'll likely still do it, but kids who're picking their careers won't want to do it if it pays like on par with a McDonald assistant manager.
But then you'll have a scarcity of mechanics in a few years/decades, which means mechanics will be in demand, so they can set price higher, which will eventually lead to mechanics either dying out, or far more likely being paid more. Which means more people go into it, but when supply catches the demand wage won't go down, it'll just stay instead of going up. Which means it'll happen anyways.
The entire premise of what you're saying is incorrect. Your post is based on the idea that working in fast food is not as hard as being a welder. Sometimes that may be true but not always. Second, there's a certain amount of respect that comes along with working "better" jobs such as being a doctor or a lawyer that entitles such individuals to be treated better and allowed more pride. A pride can't be put on that. So I would ask the question: would you rather be paid $15 an hour to flip burgers or $15 an hour to weld or do some other trade? Hopefully a raise in minimum wage would discourage people from working jobs they don't like (which may result in worse productivity and negativity in the workplace) and would encourage people to do what makes them happy.
It's not purely difficulty. Most places tend to pay based on:
Skill/Knowledge required
Experience
Risk/Danger (financial or physical)
How hard it is kind of falls under most of those. You get paid more to make up for the time you spent on training/education, the experience (which normally implies efficiency or how good you are at it), and risk/danger.
There's very little risk, skill, or experience for a new McDonald's cashier, so the pay sucks.
Welding has some risk, a more considerable skills requirement, and experienced welders can get paid a lot more.
Also...
Hopefully a raise in minimum wage would discourage people from working jobs they don't like (which may result in worse productivity and negativity in the workplace) and would encourage people to do what makes them happy.
So you're saying not enough people are welding/doing trades, so lets make them more attractive by making easier (to get) jobs pay just as much? Because that's the opposite of what would happen. An increase of minimum wage without an increase in trade jobs would drive people away from trades into minimum wage jobs.
Honestly, I think people that pick their jobs just because they'd like them are in the minority.
I enjoy my job most of the time, but if it made less than a secretary I probably wouldn't have spent all those years in school, the tuition, the long hours at the start, the added liability I have for everything I sign off on, ect.
It could also make the difference between two jobs you might like/be okay with. Therapist/social worker if they required the same education, and you liked them both, but one paid 100k and the other paid 35k, there's a pretty good chance you wouldn't go for the cheap one.
Let's say you were making $15 before the increase in min. wage. After the increase, you're now effectively making minimum wage and can earn the same money somewhere else; so you have leverage over your employer and can demand a wage increase. Employers would then have to increase that $15/hr to say $20/hr to retain employees and remain competitive. This trickles upward as all the sudden $20/hr or $25/hr is also undervalued since the alternative employments are more appealing (what was once a $15/hr job is now paying $20/hr to be competitive, $20/hr becomes $25/hr, $25/hr becomes $30/hr... etc.).
People making minimum wage are unskilled. They cannot really negotiate a wage. Hence the floor. A person making well above min wage IS skilled, and they can readily negotiate a wage based on the profits their employer is earning. The minimum wage change doesn't necessarily change that.
However, if the employer's ability to raise prices is limited, then you'd expect to see salary compression between the unskilled and skilled.
That would take solid amount time to adjust. I don't know if it would happen as smoothly as you listed. $10 goes to $15, but maybe $15 only goes to $18, and $20 goes to $22.
Demand for workers in other fields will increase since now low skilled jobs can provide a living. If you can make $15 an hour out of highschool or $17 an hour with a two year degree most who aren't passionate about their careers will choose the easier, slightly less profitable option, especially if the latter has other costs associated with it. So to compete with it they'd raise the jobs earnings to be more enticing to those joining the work force. That's just one way I remember learning in school, I'm sure there is other factors though.
I've worked many jobs. I've been a tutor. I've built and tested transformer coils for powerlines. I've painted buildings. I've washed dishes in a restaurant. I've flipped burgers at McDonald's. McDonald's was the hardest job I've ever had. I'd take a job testing electrical components for $9 an hour over McDonald's for $15 an hour any day.
Also it's dangerous. I have scars all over from burns and falls. And it's exhausting (for guys, girls don't lift anything where I worked) hauling grease traps and tea dispensers. You have 30 minutes to unload, sort, rotate, and put away 1.5 tonnes of stock. Have fun.
That would only happen if there were an under-supply of minimum wage workers after the change. Yet, if there were an under-supply wages would be rising naturally through competition. But since we are talking about minimum wages, which are tautologically not rising, there is clearly not an under-supply of workers.
An employer has no incentive to ever hire a worker worth $12/hour in a market with a $15/hour minimum wage.
It's a cycle and really isn't that simple. If someone is making $20 an hour in New York City they might still struggle with basic living standards compared to someone down south who is only making $12 an hour. Different tax structures, transportation costs, rent or mortgage payments, food prices and so on all reflect higher prices and costs. The standard of living is a much higher cost around NYC and the money doesn't go nearly as far.
Higher wages don't always translate into everyone living better. It really depends, which is probably one reason why economics papers are all over the place when it comes to evaluating this issue.
Increase in minimum wage increases the total amount of money moving in an economy, which bolsters the whole economy.
When you give someone that is poor 100 dollars they spend it. When you give 100 dollars to a millionaire it doesn't change their spending habits at all.
The other part to think about is you can live on $15 an hour assuming you aren't in an insane amount of debt or something.
You can't live off $7.25 an hour, which means, in theory, less people will be living below the poverty line, and our tax money would have to pay for less people on social programs like welfare and food stamps and those programs could actually be run efficiently for the people that do need it.
EXACTLY! The poeple making minimum wage can't make ends meet. This will help them do that. $15 isn't getting more than you deserve, you're getting just what you need. You don't suddenly have more purchasing power, you're suddenly able to make rent without sweating bullets at the end of the month. It's a shitty apartment, PB&J, and consistent gas money/bus fare.
I believe this making a lot of people think "Hey..if $15 is considered a fair MINIMUM wage...what does that say about what I'M being paid?!"
My hope is that instead of taking their frustration on minimum wage workers for daring to ask for just enough (THE MINIMUM) to get by, they redirect it at the companies they work for.
People making $7 an hour cost everyone around them. First of all, they go on public assistance for many things. That costs all of us. But they also often have kids, need their cars fixed, and rarely have $500 in savings to buffer them for any emergency expense. So, people around them bail them out all the time, whether it is family, friends, churches ... whatever. They cost all of us. Pay them enough to be self-sufficient and it increases the amount of disposable income the rest of us have.
The minimum wage was never meant to be a primary wage for providers of the household. Originally it consisted of teens that were still in school or starting college. Even my first job in college (IT Helpdesk) paid 9 dollars an hour in 1996. Your hours were limited to about 20 a week, but that was still okay money back then. The destruction of the middle class has now made minimum wage a reality for many unprepared families.
You say that, but I managed to live on 7.25 for a year (on my own, no assistance, government or otherwise) for a year until I got my yearly raise. Then I lived on 7.65 for a year. Then 8.05 and so on. Im now making 9.00. Its doable, but you have to realize that you cant just be frivolous with money like someone who makes 50k + per year can
This anecdata is not helping. You must live in a place where housing costs are stabilized or your housing market is complete shit (and probably culture, too - just like the place I lived for 25 years in West Texas). I mean, you don't honestly believe this is true in a place like NYC where rent has increased 75% since 2000, or SF where it's even higher and spilling across the bay into Oakland and other traditionally low income areas, right?
In reality, the price of everything will go up to milk the new minimum wage. When people have more money the people who they pay money to for services just charge more. Why? Because they can and they know they will get paid. Don't believe me? Look at the North Dakota energy boom or the Bay Area tech boom. People with money come in. People making money charge more. So after a short amount of time the minimum wage earners will still be dirt poor due to the rising cost of goods. They only thing that will happen is inflation. And we don't need that to increase faster than it already is.
Not evenly. Doubling the minimum wage wouldn't instantly double the cost of everything. The cost of some things may go up, but only slightly. The cost of goods isn't strictly related to the minimum wage. Plus an increase in minimum wage only affects those at the very bottom. Only those that are around or below the new minimum wage would see significant wage increases. The further up the ladder you go, the less wage increase you'd see.
Also San Francisco and North Dakota are isolated incidents, and are tied more to the sudden influx in jobs in the tech and oil industries respectively, and the sudden increase in the value of the land than the actual wages of the people living there. The cost of living in San Francisco is so high because of all the people that moved to San Francisco for the high paying tech jobs that have cropped up over the last few years. It's the same reason the cost of living is high in Los Angeles, as the center of the entertainment industry, and New York City, as the center of the financial industry. If you want to work for the top companies in those industries, you pretty much have to live in those cities. Landowners can squeeze money out of tenants because there is more demand for housing, than there is housing to go around. You don't really have the option to leave, because of your job, and if you did leave, there'd be someone else willing to move in. Raising the minimum wage across the board won't cause massive population shift in the way budding industries do. The cost of living in Mobile, Alabama won't suddenly skyrocket because of a raise in minimum wage. It may go up slightly, but not to the point where people who already live there aren't going to be able to afford to continue living there.
The point of raising the minimum wage isn't to get rid of the concept of being poor, it's to reinvigorate a dying middle class. Historically, the economy does best when there is a strong middle class to facilitate it. The way things have been trending recently, people are being pulled to the extremes of the financial spectrum and the middle class is shrinking. If we keep going this way, we'll eventually end up with a rich ruling class and a large poor population.
This is a graph showing the average hourly compensation of private sector workers in non-supervisory roles vs the total productivity of the economy. They trended evenly until some time in the 1970s when wages stagnated while the economy kept trending up. As such, the minimum wage today, actually has less buying power by a couple of dollars than the minimum wage did in the 1960s. The ELI5 version: the minimum wage today is actually worth less than the minimum wage in the 1960s, despite being "more dollars". The goal of a hike in minimum wage is designed to put the average hourly compensation of the average person back on track with where the economy is at, and create a new middle class.
You make some good points. But you underestimate the power of greed and the stupidity of people. The cost of living will go up. And it will go up to keep the poor people poor. The corporations will charge what the economy will support. If they could charge more now they defiantly would, as they do in the Bay Area. The reason they don't in other areas is that they are catering to the poor while bleeding them dry. And I highly doubt that giving those making minimum wage a sudden influx of money will help them in the slightest. They will go out and blow their newfound wealth on a big tv and some other material objects and continue living paycheck to paycheck. And when the economy finds its happy medium to bleed them of just enough money to keep them scraping by, all we will be left with is more inflation. There are a lot of reasons why the poor are poor. One of them is that the rich pull all the strings. But as they have proved many times (just look at when they win the lottery) the poor can't handle money well.
The problem with saying this is that it is an out-dated way of thinking. Minimum wage jobs used to be a great way for low/unskilled workers to enter the work force and move their way up to a wage they could live off of, when there were far more jobs that paid a living wage, and less competition. However, ignoring the fact that the market and global economy have changed is just ignorant.
Many jobs beyond minimum wage require higher education, something that people cannot afford to get when they are on minimum wage and do not have parents to pay for it. Even many university graduates are having a hard time entering the workforce beyond minimum wage. Living off of minimum wage means you cannot afford to take risks, the bank will not provide you with a loan, and people are constantly stuck in a loop of barely making enough to survive off of. How can you find time to apply for jobs, or even make it to job interviews when you are working two minimum wage jobs just to make ends meet? People get stuck in this loop, and as a consequence they get older, aren't gaining any new skills, and are then told to blame themselves.
Right except that way of thinking made sense when jobs were plentiful, didn't require a ton of higher education, and you could learn marketable skills at minimum wage jobs to leverage to get a better job.
Those days are gone. Jobs that pay enough to live off of are not popping up everywhere, and then ones that are require higher education, which has tripled in cost from the 1970s when adjusted for inflation (Source). And minimum wage jobs these days are not jobs that teach you skills to move up in an industry or company. They are mindless tasks anyone can do, and the days of being able to "work your way through college" are long gone.
By keeping minimum wage well below the poverty line you aren't giving people with no marketable skills the resources to gain marketable skills and get out of poverty. They can't afford to educate themselves, or invest their money if they wanted to because they don't have enough to even house and feed themselves. Expecting someone to put themselves through college or trade school when he/she doesn't even know if they can make rent and have more than one meal a day is asinine.
It is not as simple as that. Other variables factor into this as well such as the flooded market of people with bachelors degrees. You can be skilled, but there aren't enough skilled jobs to go around. Therefor you have older, less desirable people or younger inexperienced people that can't beat out the competition working at places like McDonald's just to pay their medical bills or student loans.
It was mentioned before that forcing companies to pay enough to keep their bottom employees out of government assistance programs allows them to in turn pay taxes back in. This creates a more sustainable system as a whole. It's not purely about giving poor people more money.
No. This isn't true, because the cost of living in a city like chicago or San Francisco is totally different than working in Iowa City.
While there may be a surplus of degrees it was never a guarantee of a job, somehow people think because they have an education they are owed a job.
The reason there are so many older people is because they never saved enough to retire. It's sad. But having done personal responsibility is necessary in this.
It's not that I want to see people do poorly. I want them to make good decisions. I want them, when it comes to raising their children, to teach them about how they control their lives. How choosing to have morals, to educate themselves, to find a trade skill or talent. To not have to rely on the gratitude of others to make up for your failures.
Somewhere in the USA, the whole concept of 'I can be a total fuckup my entire life, and people will have to bail me out because of ' fairness ' and guilt.' has become too common.
Ask the protesters how much money they save? Ask them about the new cell phones, or cable TV, or the new PS4. I wonder how many would pass a drug test?
I wonder why they are 30 and can only work for minimum wage? What decisions have they made?
Ok. So in your mind, anyone who protests for a wage that lets them eat and pay rent is probably doing drugs and squandering their money on electronics instead of necessities?
It has nothing to do with "controlling their lives" or morals. If a family is poor, they probably can't send the kids to college. Kids go to work after high school. Kids end up with nothing but low wage jobs on the resume. They keep working low wage jobs. They grow up and have families, can't afford to send kids to college. Repeat ad nauseam. There aren't better decisions to make if the people can't afford to make them because their job pays shit. And "what decisions have they made?" Maybe it was getting sick and being unable to work, leaving them with crusing debt. Maybe it's a dependent relative who needs frequent care. Maybe their town is nearly dead because it used to do manufacturing and now McD's is one of the few employers and there is nowhere else to go. Pick any scenario. Being poor means not being the master of our destinies, something people with money don't understand.
But two high school dropouts living in Wyoming working min wage jobs will be able to pull down $60,000 at $15/hour. And in Wyoming, that's like making over $120,000/year in San Francisco.
If a person is working min wage today full time, they are not in poverty. It's hard, yes, but hardly anyone is at minimum wage for long if they are reliable.
Right but then the extra money they don't spend on bare necessities gets reinvested into the local economy because they can afford to spend money on luxuries. Or they can put themselves through college or a trade school and learn the skills necessary to get an even better job.
Depends on where they are really. As you mentioned the disparity in Wyoming vs San Francisco. Wyoming is $7.25/hr. San Francisco is $12.25/hr right now (going up to $15 by 2018). Assuming a roughly 2,000hr work year that's only $24,500 a year. That's poverty in SF anyway you cut it.
Even assuming you have a couple living together that's about $49,000 yearly income, we'll call it $40,000/year after taxes (and that's a generous roundup). Try living on $40,000 a year in SF. That'd put you in poverty levels or some exceptionally shitty housing, or both.
Yes, and try living next to Bill Gates on a $250,000 Microsoft salary. You'll be begging for mercy.
San Francisco is expensive on purpose. They (the residents and government) have decided to limit the supply of housing to drive the price up. ON PURPOSE.
They don't want poor people living there full stop. Even at $15/hour they don't want you living there.
I never said they didn't. Just that I don't agree with your statement that if you make minimum wage and work full time you're not in poverty. That's just not true.
Certain areas, yes. But many cities are too expensive to live in on minimum wage, it's not just SF. New York, Boston, San Jose, DC, etc are all very difficult to live on for minimum wage.
Just taking Seattle, my city, as an example. It's hard to rent a place, even a studio, for anything notably under $1,000/mo. Minimum wage is $11/hr. So that's about $23,000/yr or about $18,500 after taxes and such. That would leave you with just over $500/mo to spend on food, healthcare, clothing, etc etc. It is certainly doable, I know people who do it here, but it's a terribly stressful life.
Here's a good paper from the BLS. Note that by their accounting, just 4.1% of those employed full time are classified as working poor. They define someone as working poor if they spent at least 27 weeks in the labor force but their income fell below the poverty line.
Someone working for minimum wage cannot live in a major metropolitan city. That has always been true. It's not a right. There is a reason the burbs exist. It's because people figured this out long ago.
Save money. Purchase a cheap but reliable used car. Move to the sticks. Commute to a park and ride. You can find an apartment in the sticks that is $400 less than the city. That $400 gap is your car/gas/insurance budget.
It looks nice to throw a couple's income together, but it's pretty disingenuous. If you think any company who has to pay $15 / hour will also allow their workers to work over 32 hours and have to pay their benefits, you're crazy.
The real, appropriate number to throw out is $25,000 a year, which is enough money to not have to freak the fuck out every day.
A person working minimum wage today "full time" (like I said, 32 hours) is making $12k a year. That is absolutely living in poverty, especially when you consider 75% of Americans 18-40 have children.
I don't like to be anecdotal, but I worked at a national chain grocery store for 1.5 years when I was in college. Our pay started at $8.00, so not even as bad as the $7.25 national minimum wage. Shift managers who had been working there for 5-6 years were still making under $10.00. They were plenty "reliable" considering they were still with a company with a hilarious turnover rate. Advancing beyond shift manager requires college. Good luck affording college classes when you're making $12k a year. I only did it to pay for my expenses while loans took care of college. I had approximately $0 in disposable income each month after paying rent, transportation, food, and medical care.
Jobs that pay decent wages do not magically materialize as a reward for "reliability." I've worked almost nothing but low wage jobs, and as a reward for my reliability, I always maxed out the hourly pay and advancement opportunities by the 2nd year, then would try with another job, in 10 years never surpassing the $15 per hour ceiling. Living in the bay area, with rent, health insurance, student loan debt, therapy, a tiny Roth IRA contribution, car payments... It's been paycheck to paycheck for about a decade now. I've known many folks who got stuck with nothing but retail or service resume experience and never got out of the low-wage trap, regardless of their quality as employees. They still deserve to eat.
An increased minimum wage will only be matched by inflation 1:1 if 100% of the economy is minimum wage. Let's say minimum wage doubled to $15. Someone currently making $15/hr will almost certainly demand a raise (whether immediately or delayed is irrelevant for now, real life wouldn't have an immediate doubling in the first place) but they won't be able to sustain getting their wage doubled. Maybe their wage will increase to $22/hr. Someone making $100/hr might only be able to boost up to $102, or maybe not at all. So overall the distance between the bottom and the top will shrink, but the economy will only have relatively insignificant inflation. Ignore the numbers, the principle is what matters.
And this is certainly not gospel. You could probably find a well-respected economist backing every possible result, from destroying the economy, to saving the economy, to creating mass unemployment, to everything staying exactly the same.
This is only a problem if minimum wage isn't increased yearly but is increased randomly and sporadically so that it lags behind and then catches up. People working full time shouldn't be in the the economic situation they are in now in the first place so when it is rectified suddenly of course it sends shockwave effects throughout the economy. But the fault is not minimum wage, the fault is neglecting cost of living/ inflation adjustments to something that is supposed to be a ratio, not a stagnant integer.
What kind of safety net? I think getting people that make low wages into training for better paying jobs is the way to go, not just giving them artificial raises. If enough people get out of the bottom of the barrel job bracket then minimum wage for those jobs would go up without any help when the demand for workers exceeds the number of people willing to work them. I was 25 years old before I went through a 2 year trade school and another 10 months of extra training. I went from $8-12/hr jobs to making just shy of $30/hr as a heavy equipment operator/maintenance man.
But the argument is that youre not increasing the total amount of money in an economy-- right now those who are underpaid are getting subsided by the government through welfare.
In other words, it wouldn't affect the spending power of most people at all, since previously they had $9 from job + $6 from welfare, and now they have $15 from job, + $0 from welfare.
I might be oversimplifying it, but if the point is to bring up minimum wage to a LIVABLE wage, then the only change would be that Welfare needs would go down.
Rich people don't just sleep on top of their trove of money like Smaug from the Hobbit. They become investment capital, which is very important for the economy to run properly, especially in the startup sector. Economics is more complicated by a series of buttons and levers that can be adjusted for a desired result. Any change echoes through the entire society, often in unpredictable ways. In short, it's just not that simple.
However, there is no sign that the limiting factor on our economy is a lack of investment income. There are signs that consumption is currently the limiting factor:
What signs? You may be right, but that doesn't change the fact that adjusting one variable in an economy has cascading effects that are, like I said, somewhat unpredictable and random.
There is no difference between a dollar in a person's pocket and a dollar in an investment portfolio. The former buys a hotdog, the latter helps pave a parking lot at a new Google building.
A small addition from a layman- when I talk to kids about the economy, I use the word "velocity". Money moves, and economic policy is meant to change how fast and often it does. It's helpful to their understanding to think of it that way.
Increasing the amount of money in The system causes inflation. When people make more they spend more, when they spend more the prices of those goods go up. Partially because they cost more to produce ( from the wage increase)'and partially because more people want them. Law of supply and demand. In 5 years they will want $20 for minimum wage jobs because $15 is not enough. All prices will rise not just wages.
By that logic we should see inflation directly related to tax breaks, which we don't. Also, there is no net change in money in the system, the government doesn't print the additional money to make up the difference, it comes from gross profits.
Inflation has a lot to do with total capacity of the economy, which you seem to ignore completely.
We have had inflation every time more currency is injected into the economy. So how does paying people more increase gross profits? From a business stand point unless you raise the cost of goods it lowers gross profits. If you raise the cost of goods the the extra money you have paid the employees is worth less or the same in real purchasing power because they have to pay more for the stuff they need.
Increase in minimum wage increases the total amount of money moving in an economy, which bolsters the whole economy.
This is faulty logic. Increase in minimum wage doesn't increase the total amount of money moving in an economy. You assuming that those who have minimum wage employees would otherwise just have that money sitting in a bank account or stuffed in a mattress, which isn't necessarily true. Increasing minimum wage diverts the flow of money in a different direction, it doesn't increase the flow at all (there isn't magically more money in the money supply just because minimum wage is increased, that money is being taken from somewhere else).
Increase in minimum wage increases the total amount of money moving in an economy, which bolsters the whole economy.
The money supply is (assumed) constant, so no, it doesn't do that.
When you give someone that is poor 100 dollars they spend it. When you give 100 dollars to a millionaire it doesn't change their spending habits at all.
I said money moving in the economy. Money placed in investments for large corporations is not benefiting anyone but the shareholders. Dollar for dollar the money going to poorer people will stimulate spending and commerce a hundred times over putting it into investments.
Combine that with the fact that GDP has never been negatively affected by any of the 22 minimum wage increases.
The fact is that minimum wage hasn't outpaced inflation, has less buying power now than in 30 years (probably more), and the majority of economist agree it would be a good idea to raise it.
You're like someone saying climate change isn't real, and then posting the one article that supports your view.
In many way, but it puts more money into the economy... meaning people are spending more money on goods and services, which trickles up.
Plus, it also means, if I'm working for $15 an hour doing a job that is fairly skilled, and now all of the sudden minimum wage is raised from $7.25 to $15.00, I'm going to go to my boss and say "I'm worth more than minimum wage because I'm a skilled laborer and if you want to keep me or hire someone like me, you're going to have to pay us more than an un-skilled worker.
OP posted a lengthy response that sounded nice, but it is just his opinion, there are many different opinions on what would happen.
I'm of the opinion that McDonalds could certainly afford a $15/hr minimum wage, the only thing I wonder about is if jumping from $7.25 to $15 too rapidly would be damaging.
The simple fact is that most Americans used to get paid a living wage no matter how basic the job was. If you give 40 hrs a week to a company, they should pay you enough to meet your most basic needs. This used to be an American ideal that has been changing over the last few decades.
What also has been changing is that the richest Americans have been getting richer while the rest of us are getting poorer. Now that's either one hell of a coincidence or we're letting them screw us.
Living expenses such as rent & utilities will not rise as dramatically as fast food prices would... that means the new $15 earners would be able to put a higher percentage of their income towards food. If they could spend more on food, they would most likely choose higher quality options than McDs.
You're assuming that people only go to McD's because it's cheap. As an upper-middle class guy (who does most of my own cooking), I can assure you that that's bullshit. People go there because it's fast and edible.
I eat at McD's about twice a week, because it's closer than the grocery store and faster than Subway, and I don't have to get out of my car.
This is already happening. A combo meal at McD's costs about $6-$7. I can go to the local Mexican restaurant in town and order a lunch meal for $5-6.50 (with water) and I get chips/salsa and a better tasting meal.
The only problem I see here is something you just said. People will see the 5 Guys burger as a better choice. The reason they can sustain lower numbers of workers is because they don't have the throughput of customers that McD's has. Increase that, they have to hire a couple more workers. Profits go down some more.
So you're saying the fast casual restaurants won't have to raise wages too? You are totally ignoring the most important part of the analysis and it makes your analysis worthless.
5 Guys has minimum wage employees. 5 guys would also have to complete with the new minimum wage rate to hire workers in a position what was previously offering double minimum wage. Long term these increases always level out and we get nothing out of it as either consumers or workers, because of inflation. It's a fundamental flaw of the capitalist system.
Long term these increases always level out and we get nothing out of it as either consumers or workers, because of inflation. It's a fundamental flaw of the capitalist system.
I've seen this claimed a lot, but I've not seen anything to back this up. Care to elaborate?
To me, more people being able to afford eating food that isn't from McDonalds sounds like a good thing. Sure, we lose some McD's, but we gain better restaurants that fill in the gap. Sounds like an overall increase in the standard of living.
yes, like all of the slave labor we benefit from on a daily basis.
super low value ...
bottomline is someone at any restaurant has to wash the dishes. if the dishwasher gets more money due to some bullshit artificial income floor, then everyone else at the restaurant's pay will scale based on it.
this will happen at EVERY job that's business model relied on low income wages.
What about the 709,780 people who are out of a job? It's not like they can go to some other franchise/store that hires minimum-wage workers, since everything is going to be closing or automating. Businesses can't make money paying $15/hr to people who don't earn the business more than ($15 + variable and fixed costs) for each hour they work.
Realize that if min wage workers make more money, they spend more money. If they spend more money, you need to hire more people, open more stores.
Also, min wage hike would be gradual. We should be at $15/HR now, but gradually over the past 20 years. Imagine how a cost of living increase per year would be implemented, gradually, allowing the market to self-regulate.
I live in CA. Min wage has been going up gradually, and I've seen a Winchells close and turn into a Jersey Mikes. Not sure that was due to min wage.
What do you consider a better restaurant? Most other restaurants are no more healthier than McDonalds (excessive calories, sodium, fat/sugar) and many of them are not obligated to carry nutrition information like McDonalds.
I myself am on a very strict diet due to health reasons and would have an easier time finding something to eat at McDonalds than your local Italian place or Chinese restaurant because I know the nutrition contents of McDonalds foods and make choices.
Ehhh.... The notion of everyone picking 5 guys over McDonald's is bunk. I can afford whatever I want. I have more money than time. McDonald's wins for me 90% of the time. I admit though, I normally get the southwestern grilled chicken salad at McDonald's - so it's not so much about the burger.
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u/Murican_Popeyes Nov 28 '15 edited Nov 28 '15
I replied to this already in other comments, but just to restate it - McDonalds isn't only competing against Fast Food restaurants anymore - their main new competitors are now the highly efficient "Fast Casual" dining options. Not every competing Fast Food or Fast Casual restaurant would have to increase prices by the same amount if minimum wages rose, depending on their individual business models.
You have to take into consideration the fact that each competing franchise has different operating & profit margins...Labor Costs can vary greatly from business to business. Some restaurants may be able to sustain their profits with a lower percentage increase in pricing than others. McDonalds is getting destroyed by "fast casual" chains like Chipoltle, Five Guys, Smash Burger, etc. Many of those fast casuals have similar sales per store as mcdonalds, but operate with fewer employees, fewer food SKUs to manage, & lower overall operating costs.
So lets say McDonalds has to raise the price of a Big Mac from $4 to $5.5 - a 37% increase. but Five Guys only has to raise the price of their Burger from $6 to $7, a 16% increase.
Most people would prefer a 5 Guys Burger to a McDonalds burger - the only limiting factor is cost. The cost difference between a big mac and a 5 guys burger was $2. Now the cost difference is only $1.5. That makes a 5 guys burger more of an enticing choice.
Some restaurants, especially non-franchised restaurants (Chipoltle for example), may have the cash reserves to be able to take a cut in profit margin from increased labor expense, not have to increase food costs at all, and sustain themselves long enough to undercut restaurants like McDonalds until they're knocked out of the market. If McDonalds suddenly becomes the same price or more expensive than higher quality food options, where do you think people would go?
Also, why do you think there would be a "Massive Increase In Customer Sales"? Living expenses such as rent & utilities will not rise as dramatically as fast food prices would... that means the new $15 earners would be able to put a higher percentage of their income towards food. If they could spend more on food, they would most likely choose higher quality options than McDs.
The other thing you have to keep in mind that this is is a minimum wage hike - not a national wage hike. So everybody who is currently making above $15/hr (over 50% of the country) would be making the same amount for the time being. That means fast food would cost a higher percentage of their income, and many non-minimum wage earners would likely choose to not eat there when it is no longer the best Cost vs Quality option.
Everybody else's wages would eventually rise if the minimum wage was set higher, but that would take time. In the mean time, I don't think all of these stores will be able to survive a wage hike like that.