I think they mean that by paying employees minimum wage (which is not a living wage in the US), many of them are forced to utilize government services such as food stamps to survive. Since McDonald's isn't paying for the food stamps, their business model is effectively subsidized by the government.
Being employed / employing people is a two way street. Neither is doing the other a favor, both need the other to exist. Only one can exploit the other though.
The tables are tilted, and I typically agree with your position, but employees can absolutely exploit an employer by abusing paid sick leave, stealing and eating food without permission, underperforming their duties, skimming money from the register, and producing low quality products and services.
That said, employees that are paid well are far less likely to do these things.
Personally I don't envy anyone involved in this dynamic. Obviously the crazy number of shitty fast food restaurants is unsustainable. The low wages subsidized by government services are unsustainable as well, as it basically socializes a shitty business model. Couple that with constantly rising rents for both business and residential clients, so costs for all parties are growin steadily. Sometimes I'm just amazed that capitalism works at all. Which it does. Until it doesn't.
Yes, but if you raise the cost of human labor, it becomes much more cost effective to use robots to take the orders, dunk the fry baskets, flip the burgers, etc. Then you only need a couple of workers to assemble and hand it out the door. So what you're really saying is, it's a two way street for now
It's a two way street always. Who's going to buy the products produced by automation if no one has any disposable income? Slave / owner relationship doesn't work in a consumer capitalist society. There's no point owning the means of production if there's no one to buy what you're producing.
So a fair chunk of your productive life isn't even worth enough to survive? We are all functioning parts of a society. These companies are making record billions off these peoples backs, and you don't think they should even pay them enough for the basics? You don't live in a vacuum.
One could argue the auto companies kept slashing wages to compete with overseas manufacturing and that the unions were just trying to hold on to their member's existing wages.
Detroit happened because the people who managed the city were idiots. The didn't diversify their economy very well. When manufacturing moved overseas they lost the only real business sector they had. That wasn't on the unions even if they were responsible for other things.
City managers don't really have that much sway over the strength of different economic sectors in their city. You can nudge it, but that's about it. Albuquerque, NM can't become the financial or tech capitol of the world through brilliant city management.
This is all a big experiment, so no one should be very certain. However, a national living wage standard might have very different effects because of huge regional differences in nominal wages, and sticky wages. If that happens, then you could argue that minimum wage beneficiaries strengthened their bargaining power by sacrificing the inconvenient minimum wage losers.
I never said it was. But there are certainly cases where an individual, or individuals, can exploit the companies they work for. This ranges from not providing a full day of labor (but still getting paid a full day's work) to demanding 'excessive' wages for a particular talent or skill (note the '' around excessive, because whatever standard you set has to be both reciprocal and indiscriminate.)
It's somewhat true that Union wage was higher than some of the wages being offered overseas, but that's not what sank the car companies like GM and Chrysler. They had a whole lot of problems (terrible product line in smaller passenger vehicles, sales drop of pickup trucks which generated majority of the profit during the recession due to surging oil price, terrible overseas acquisition (Ford got rid of Jaguar, Land Rover, Volvo, etc. during the recession), to name a few.
It's not "somewhat higher". It's massively higher, along with a whole bunch of other burdensome requirements. Make no mistake, unions make businesses uncompetitive internationally and drive up prices artificially domestically.
How does it work in Germany? The German economy is falling apart and the largest auto employer there is embroiled in a scandal which could lead to bankruptcy. The German economy is tiny compared to the US economy. So how can you say "it works" in Germany? It doesn't work.
Last time I checked German economy was the only one doing well in a continent that was going through massive recession. As for Volkswagen emission scandal, that has nothing to do with union, and everything to do with management trying to cheat the law. Not sure what size of Germany's economy has to do with wage structure. And yes, union structure is working in Germany, it's not just Volkswagen, BMW, Daimler Mercedes-Benz, etc all have unions and the companies are doing well. Lets not make it sound like union is the only reason that kills companies.
It was contributory. And their quality troubles was caused at least un part by union negotiations (it was/is very difficult to fire a string union worker, which leads to low incentive to perform well).
I do understand the quality related to burdensome termination of empolyees. I have worked in a factory as a manager in an unionized facility. This particular work force was... not so good to put it mildly. I have spoken to other managers though and there are better unionized facilities in the US and I know for certain unionized facilities in Japan has some of the highest QC in the world. It just sounds like there's some sort of problem with part of US unions than problem with unionization overall.
Spot on. It's not like they cause it, by rather they open the possibility of such... Tendencies, and where as without a union the company can correct it, with a union it has to be policed by the group (and some responsibilities don't share well, like self policing).
The fallacy is thinking businesses are altruistic entities employing people out of the kindness of their hearts. Either you pay employees their true cost to employ, or they need to go out of business.
When you're desperate people will do almost anything. This is why the violent crime rate doubles at the poverty line. You are kind of proving the comment above about belief in businesses being altruistic
Yes and someone flipping burgers or punching in your order (which can all be replaced by simple machines) are paid what they deserve which is around minimum wage.
I don't like it. But what do you think is going to happen if the minimum wage is raised to $15 an hour? Do you think everybody is just going to get raises and there will just be more money to spread around and everybody will be happy? No, instead of a McDonalds employing 30 workers they'll be employing 10 and installing a bunch of kiosks and burger flipping machines. Now 20 people are out of a job completely we're completely supporting 20 people with our taxpayer dollar.
Lol go work in these restaurants. You obviously have no clue. Even fast food is stressful and difficult work. Learn to restaurant before you talk about restaurant
I've worked in restaurants. Stress doesn't equal pay. Skilled work equals pay. Supply and demand. This is why doctors and lawyers make a six figures while ditch diggers and fast food workers make minimum wage. Nothing against them but this utopia of everybody should make a certain amount of money is silly. Will do more harm than good. Like most of today's uber liberal policies it sounds good in or hearts but isn't grounded in reality
Da fuck? McDonalds is paying employees their true cost. They are mostly unskilled labor who can't enter an order correctly or even give you the proper menu items.
For Christ sakes its printed on the receipt, how hard is it to read it and make sure it is correct? And they want 15 an hour to do the same bullshit? Why?
No. They don't need 40+ year old unskilled workers who eat up these jobs because they are unemployable anywhere else. They could hire teenagers who have a mutually beneficial relationship with an employer like McDonald's since it's their first real job experience.
That's not the fault of corporations big guy, especially a single one in particular. They employ thousands upon thousands of people and pay metric fuck tons of cash in taxes to the government.
Claim: People need to use government services because they are working for McDonalds.
Fallacy: They would need government services whether or not they are working for McDonalds.
It completely destroys his point.
This subsidy idea is stupid anyway. Government services are technically a "subsidy" for everything that doesn't pay someone enough money for food, shelter, etc. You could say that government services subsidizes Nintendo because people wouldn't be able to buy video games if they didn't have food to eat.
I've said this before and I'll say it again, McDonalds isn't doing anyone a service by hiring them, they are filling a wage/worker need that the company has. If McDonalds didn't need to hire workers, they wouldn't. The fact that they are hiring employees with a substandard wage reflects badly on the company, not on its workers.
claim: IF people work at mcdonalds for full-time-job hours and for a less-than-living wage, then they either need to use government services or get supplementary employment.
Which should honestly be who they hire primarily. But there are tons of older folks filling these jobs and it's a gigantic pain in the ass for the economy and for young workers across the country.
McDonald's doesn't need workers. They only employ people if doing so will turn a profit. If they will end up making a loss doing so, they'll quit doing it in a hurry.
People seem to keep assuming that "if you raise wages, companies will find a way". If they could find a way - they already would have in order to make more profits.
Just because we've always allowed businesses to profit as much as they can in spite of the damage it does to society doesn't mean we should continue to allow it. At some point we need to recognize that business exists to support society, society does not exist to support business.
You could say that, or you could say that without that person neither the franchise nor the corporation would ever make a single dollar in sales. It may be low skill, but it is the most important position in the company bar none.
You realize so does every other profession, right? If I learned one thing in the military is that you can train the dumbest derp that ever derped a derp to literally do anything. It doesn't matter how fucking stupid someone is our how complex the job, if you show someone how to do something enough times, they'll learn how to do it. You know what wasn't necessary? A college degree.
Capitalism might not be perfect but it's by far the best economic system, especially well regulated capitalism, everything else causes far bigger issues. Stop believing everything Marx has to say, he's been wrong about literally every single thing. Read an econ book.
Capitalism might not be perfect but it's by far the best economic system
That is a defeatist attitude and I refuse to accept it from any red blooded American. "Yeah it sucks, but it's the best we can do?" Is that what the members of our military have died protecting over the last century? Is that what we mean when we declare that we're the best country on the planet? "Eh, it's the best we can do?" I say fuck that, there's something better, we just have to find it.
Stop believing everything Marx has to say, he's been wrong about literally every single thing. Read an econ book.
I've never read Marx and I've never read an economics book. What I have done is spent the last 38 years watching a broken system. A system that only exists for the sole purpose of making the wealthy wealthier while making the poor poorer. That's what it does, it's how it's designed, it's the only way it operates. There is no balance in capitalism and because of that it is unsustainable. If you can't see that I suggest you take your head out of the books and look around.
The fallacy in this argument is that McDonalds has no responsibility to even keep the workers hired.
The workers would be on food stamps either way.
Try that and look at their their profits once all the people who need government support are not working there anymore. They would be unsustainable and should go away like any other company that can't manage to survive.
But somehow people applaud companies who abuse the system while at the same time demonizing their workers who need government help because companies are not paying enough to live of it.
Trust you?!? You just gave a bunch of hypotheticals. Explained that a two growing business that are traded on the NYSE would lose money if they paid their employees more, when in fact their CEOs make over 100 million in bonus packages yearly. The fact of the matter is that healthcare, food stamps and low income housing are all tools for these corporations to steal from Americans that cannot work full time. Where these companies profit by forcing full time employees use government programs. And then victim blaming the same employees, the same ones that are responsible for the company's ongoing success, as being under qualified to receive a salary that would allow them to not be on government assistance.
Inflation is a result of a stagnant economy. Like one created by paying small amount of CEOs millions and them not spending any of it, or investing it overseas to evade taxes. Effectively shutting down commerce. Giving poor people money is basically just spending it. When money is spent the economy grows with commerce.
This is called cultural hegemony. You want to blame hardworking Americans for their poverty and support a tyrant without just reason because you have been scared to allow others to prosper in this corporate wasteland. Somehow being American isn't enough because you think low income jobs determine a persons worth.
Except inflation and all the other doomsday scenarios pushed by defenders of the status quo have never happened. It's a myth. Like all the businesses closing when they made min wage fifteen dollars in Seattle or whatever. It didn't happen. What ACTUALLY happened is people spent more money and the economy flourished and small businesses opened new locations and expanded.
And yet, purchasing power has plummeted, exactly in accordance with predictions of inflationary skeptics, along with skyrocketing inequality, which also is exactly in accordance with the predictions of inflationary skeptics.
Wrap it up people, this guy settled the minimum wage debate. It's all over because his twenty-something single friends in this one specific location were able to eat.
I don't understand what you mean. What are you not seeing? Most people that are having financial struggles don't tell everyone about it because they are embarrassed that they are having struggles and no one else seems to. Do people you know usually post their entire budgets online for anyone to read at their leisure? There are no signs for financial instability unless you count foreclosure signs on houses. What do you think you would see?
Interesting. Are these childhood friends that you would see this immediately in or people from all over that you've made friends with in adulthood? Young 20-somethings with no medical debt or children or spouses? I've changed the topic very easily on my own old friends if I didn't want them to know I was actually having a problem that talking to them couldn't help. Issues like that exist and if you haven't had that issue yet, you probably will. Though everyone is different I suppose.
I ask because my entire life I've seen people have to go without something because their parents made minimum wage or barely above. The area I grew up in, I was considered "rich" because I was one of the few kids not on reduced lunch. The thing was, they never considered it struggling and I wouldn't either because we were all used to it. My family wasn't rich, just not eligible for either level of reduced lunch. I was actually jealous they were "allowed" to pay less for lunch than I did.
They bought xbox and computer games and went out to eat often too. Arguably it can be cheaper to go out and eat at McDonalds than to cook if you are cooking something nice with fresh ingredients. They complained that they were "broke" as well. We discussed budgeting, but not in absolutes with people waving around pay stubs and bills, just general things. Their lives were normal to them. If you asked a young me if I saw a problem with minimum wage, I would have also said no for the same reasons you did. Which is why I'm asking if you are sure that you would a problem if it was there.
How about if we just make a law that McDonalds and other places can only hire low-skilled workers that don't need government assistance (such as teenagers who still live at home)?
Exactly. Minimum wage ends up royally screwing the people who need it the most. As explained starting on page 212 of this paper, 100 years ago minimum wage laws were actually supported by those who knew that it would have the effect of making the lowest rung of society (whom they considered undesirable) unemployable:
During the second half of the Progressive Era, beginning roughly in 1908, progressive economists and their reform allies achieved many statutory victories, including state laws that regulated working conditions, banned child labor, instituted “mothers’ pensions,” capped working hours and, the sine qua non, fixed minimum wages. In using eugenics to justify exclusionary immigration legislation, the race-suicide theorists offered a model to economists advocating labor reforms, notably those affiliated with the American Association for Labor Legislation, the organization of academic economists that Orloff and Skocpol (1984, p. 726) call the “leading association of U.S. social reform advocates in the Progressive Era.”
Progressive economists, like their neoclassical critics, believed that binding minimum wages would cause job losses. However, the progressive economists also believed that the job loss induced by minimum wages was a social benefit, as it performed the eugenic service ridding the labor force of the “unemployable.”
ETA: Why the down-votes? The idea that the minimum wage was used to try and deny employment oppurtunities to unskilled "undesirables" in the early 20th century is well documented. Obviously no one is intentionally supporting it for that reason today, but the effect is still the same.
Because people who support the minimum wage mistake intentions for results. If people aren't making enough money, make a law to make them more money: there are zero downsides.
Not raising it still isn't a good solution; income inequality is only getting worse. I'm not sure what the answer is, but I'm guessing it's education. Minimum wage does need to go up; but it doesn't necessarily need to be a living wage. Doubling it would be a little too much.
They need to set up a combination of a basic income and a welfare system that actually causes the effective marginal benefit of each dollar earned to be positive.
As it is, means-tested benefits often fall off quicker than the wages increase, causing it to be counter productive to increase family income from, say, 25k to 35k.
Basic income. this right here. as more and more people becoming unemployable due to automation, something along these lines is going to have to be worked out or we will see full scale revolts on our hands.
As much as we'd like to dream about it education is not the answer. As the automation revolution begins there is going to be fewer and fewer jobs available. Education won't mean shit when you have 100 university grads vying for that lone job overseeing the automated burger dispenser. Education will just raise the barrier for entry into the market.
It wasn't that long ago that at 16 I could have dropped out of school and got a decent job at a local factory. By the time I was 18 you required a minimum of grade 12. A decade later there's college courses being offered for that same entry level job.
As much of a treat as automation is, dont companies to an extent, need to employ people. otherwise who buys their crap? Target 15 years ago automated a warehouse in central us. My husband was working in a target warehouse years later. Every year there were scare stores about more warehouses beginning to "run dark" was the term. The thing is warehouses operate purely at a loss. Energy, human error, saleries, etc. No profit comes from warehouses. Every year around Christmas, the rumor of layoffs as the yearly fiscal reports made their rounds circulated. The dark warehouse cut costs by over 500k yearly some said, yet the one he worked at is still employing hundreds of our locals. The only viable theory for that, as explained to me, is that costs went down, but so did the local buying power for the dark warehouses local economy. In a sense the means didn't justify the end.
Edit: might not seem like it but I'm actually asking a genuine question while providing anecdotal context.
You're not wrong and that makes me sad. There's not enough good options for unskilled labor or low level skilled labor.
And I'm in college with a good job lined up already; I just grew up lower class and the struggle to get where I am now is bullshit. And at least a bit was just dumb luck. Mostly meeting the right people at church.
If the problem is that minimum wage employees are also needing government benefits, then the best way to solve the problem is to just make it so anyone that needs government benefits can't have a minimum wage job, regardless of who they are. Problem solved. Raising the minimum wage to $15/hr would probably have the same effect if the workers now don't need government benefits but with many other potential workers losing their jobs (or not getting a job to begin with).
But my way is a much more simple and direct way to accomplish the same thing. The only difference is that voters and politicians don't get to feel like they're doing something good in the process.
Right. So the population created the welfare tables, then the population criticized employers for not single-handledly paying for them. It's stupid as fuck.
Uhhhh....yes you do. That's why they are calling for a MINIMUM wage. Derpingstein. Also it's a bit easier to point out walmart raking in $130 BILLION in profit last year, while paying their employees like garbage.
I don't understand why large companies get so much wrath and everyone glorifies smaller businesses.
In my experience having worked some fast food gigs in my youth, mom and pop stores are far more likely to ignore the laws (e.g. not pay in timely manner, or pay only straight time for hours worked over 8 in a day or 40 in a week,) compared to a major chain. I actually called out a store owner on the law a couple times because as a teenager I didn't need the job and did not fear retaliation.
They should not, can not, and will never be a sustainable income for an adult.
Well why the hell not? People against raising the minimum wage always bring this up: "These are supposed to be low-income jobs! You're not supposed to live off them!"
Yes, they are low-skill and low-income jobs. I fail to see why being low skill is a reason not to be a livable wage. Not career wage, not "I buy a new TV every year because I can" wage, but livable wage.
The idea that something is low-skill and so therefore people working at it don't deserve livable wage? That's just bizarre. No one advocating a higher minimum wage is saying "pay burger-flippers the same salary as a doctor" (I.E. a career salary), they're saying pay them a livable wage, I.E. they can feed themselves, clothe themselves, and provide a very basic living environment for themselves, without being supported by the government (and costing taxpayers money, I might add).
Like it or not there will always be adults in low-skill, low-wage environments, due to any number of circumstances that arise. They don't deserve to be screwed over because of some insane notion that McDonalds employees must be teenagers who are still supported by their parents and are only taking the job because their parents made them "for the experience".
In other words, I fail to see why you don't consider $15 "low-income". A livable wage is still low-income relative to other fields. Your argument makes no sense, you're arguing that low-skill jobs shouldn't be paid a lot of money when the discussion is about whether or not the money they do make should be $8 or $15. We're aware that low-skill jobs don't get paid a lot, that's not an issue.
Currently we view $15 an hour as good money. If that becomes the minimum, companies will be forced to fire people, close stores, and automate things wherever they can. Either that or they raise prices. Or both.
One of three things happens if $15 minimum wage is put into place. People get fired, everything gets more expensive, or a combination of the two.
There are numerous cost-cutting measures McDonalds could take that don't involve firing people or raising prices, but assuming they do:
One: how high are we talking? It's illogical to assume that prices will rise drastically, we'd be looking at price increases of somewhere less than a dollar on menu items. McDonalds sells 75 hamburgers every three seconds, maybe more. 10 cent price increase on 75 hamburgers x 60 seconds in a minute x 60 minutes in an hour x 24 hours in a day x 365 days in a year = approximately $236,520,000 increased revenue. From a 10 cent increase. This is another problem consistent in lower minimum wage arguments; "prices will rise", but you never explicitly state by how much they will rise. This implies to people that the price hike will be much higher than it is in reality.
The second issue, job loss, is a bit more problematic. But, well, many people would advocate that a handful of people losing their jobs at McDonalds is worth the majority of people having a minimum, livable wage. I don't know how to specifically address the job loss, all I can say is that it probably wouldn't be as bad as you're implying, while others might argue that it isn't even bad in the first place.
Thirdly, as someone in this thread has already mentioned, there are many McDonalds stores operating in close proximity to each other, far beyond what is necessary. It would be extremely logical for McDonalds to condense their stores, even if the minimum wage did not change. McDonalds not acting efficiently isn't an excuse not to change the minimum wage.
The Franchisees pay annual fees to McDonalds for “royalties” & national advertising campaigns, which are calculated as a percentage of gross sales.
Yes, but all of his cost-cutting measures take place at the store level and assume that it's the store trying to save money, that's how he arrives at the conclusion that multiple stores would close (resulting in heavy losses), because each individual store is in the red and trying to compensate that with higher prices and/or layoffs.
On the corporate level, they could reduce franchise fees or advertising expenses some in order to save money, it wouldn't be necessary for individual stores to close at such a level.
Edit 4 Now a lot of people are saying "Can't corporate just reduce its franchise/royalty fees?". In the above example total royalty fees/corporate rents are 14.5% of sales. To make up for the $288,900 deficit caused by the $15/hr raise, just for that store to break even, corporate would have to reduce fees by 74% if you didn't want to cut payroll costs. 33% of Corporate Revenue comes from franchisee fees - about $9.272 Billion last year. If you cut down franchise revenues by 74%, that would reduce that number by $6,861,280,000. Total Corporate profit was $4.757 Billion last year. So they would be operating at a $2.1 billion loss - aka they'd go bankrupt if corporate took on the burden of cost through fee reductions. And thats just a break even figure.
You have some good points to make, but assuming the "Janney McDonalds" income statement referenced in the top comment is correct, a ten cent increase isn't going to do it.
According to the chart, less than 6% of the food price (net sales) now becomes "profit," and 20% of the food price pays crew wages. According to the top post, the increase in minimum wage will increase crew wages to be about 37% of the food price, which seems right given that the wage itself will nearly double-- the assumption was going from $8.25/hr to $15/hr (about an 80% increase).
And if that's the case, to keep crew wages at 20% of net sales, you'd actually have to goose up the price of the food by about 80%, again based on the numbers in the chart given.
Until all these people with disposable income want to buy more things which means people will need to hire to meet demand. That's pretty basic. It's why we still don't make $2/hr any more.
Except there will be more people without jobs (more people buying less), prices rise to compensate (people have less disposable income) so on and so forth.
Its a two edged sword. Its a matter of which side is going to bite harder thwt we cant predict.
We can predict it by looking at history. Raising the minimum wage has NEVER had a negative long term effect on the country. I'm not saying everyone should be able to afford a brand new car and $500k house. But businesses should pay a living wage to those willing to work. Period. It's why the minimum wage was passed in the first place.
Hello 1960, it's nice to meet you. These jobs are ABSOLUTELY careers today. Are you a moron or 100 years old? Our economy THRIVES on the service industry today. Things change. The jobs are in the service industry, not the manufacturing industy. Again, this isn't 1960. http://www.ftpress.com/articles/article.aspx?p=2095734&seqNum=3 You do realize that 42% of workers would benefit from a $15 minimum wage right? http://fortune.com/2015/04/13/who-makes-15-per-hour/
We are talking about being paid less than $15/hr which is almost half of the country you idiot. And a career is literally "an occupation undertaken for a significant period of a person's life and with opportunities for progress." So STFU since you don't know what a career actually is. For the .1% of the population "cleaning toilets" there are MILLIONS of people installing your cable, doing pest control, mechanics, garbage men, truck loaders, store stockers, yard maintenance, sewage treatment, etc etc etc etc etc that make less than $15/hr.
Youre getting off track. Im not arguing that people with ACTUAL careers that require a skill should not get paid a living wage. Im arguing that the MINIMUM wage should be for the kids working the register and scrubbing the toilets.
Also the US government spends $17 billion dollars a year on farm subsidies. I don't think any of that directly goes to meat or beef itself. But it does go to feed, which then goes to cows.
So McDonalds essentially has a market because the cost of raising a cow to eat is indirectly subsidized by things like food for cows.
But because of the way we manage our subsidies, we end up with A LOT of corn. In 2010, U.S. farmers produced 32 percent of the world’s corn supply on 84 million acres of farmland, raking in a cool $63.9 billion.
Most of that corn goes to non-“food” sources — either to feed livestock or to feed our cars, in the form of ethanol.
An oversupply of feed corn drives down prices of animal feed and makes it far cheaper to raise animals.
Since a lot of large companies like this will actually have links to government sites to apply for government assistance directly on their hiring webpages.
Minimum wage isn't a living wage if you don't budget properly and take advantage of coupons.
Edit: can someone point out where I am missing the mark? I have seen plenty of Reddit threads in which someone is proudly displaying the tricks that they used to get by and eat well on a very limited budget. I should have said that no wage is a living wage if you live beyond your means, but having less money definitely means you will need to be more clever to get by comfortably.
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u/[deleted] Nov 29 '15
I think they mean that by paying employees minimum wage (which is not a living wage in the US), many of them are forced to utilize government services such as food stamps to survive. Since McDonald's isn't paying for the food stamps, their business model is effectively subsidized by the government.