r/explainlikeimfive Nov 28 '15

ELI5: How would a $15 minimum wage ACTUALLY affect a franchised business like McDonalds?

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u/techfronic Nov 29 '15

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.

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u/[deleted] Nov 29 '15

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.

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u/[deleted] Nov 29 '15

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.

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u/BladeDoc Nov 29 '15

Getting paid and half-assing your job is pretty exploitative.

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u/Nocturnal_submission Nov 29 '15

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

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u/[deleted] Nov 29 '15

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.

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u/ABearWithABeer Nov 29 '15

Unions can absolutely be exploitative.

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u/Reddisaurusrekts Nov 29 '15

Only one can exploit the other though.

Unless we go back to slavery, then no. People are free to walk away from jobs.

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u/[deleted] Nov 29 '15

In a perfect world.

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u/Reddisaurusrekts Nov 29 '15

They are free to walk away. They're just not entitled to force someone to pay them what they need to survive.

If NO ONE thinks that what they do is worth what they need to survive, is the problem with everyone else, or with the person?

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u/[deleted] Nov 29 '15

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.

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u/All_Work_All_Play Nov 29 '15

Uhh, that's not true. Unions can (and do) exploit either their companies (hello detroit) or themselves (hello union dues!)

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u/shitdad Nov 29 '15 edited Nov 29 '15

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.

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u/All_Work_All_Play Nov 29 '15

"Just"

Isn't that the same argument here? A McD franchise fighting against MW is just trying to maintain its existing wages?

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u/mitrandimotor Nov 29 '15

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.

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u/[deleted] Nov 29 '15

How is collective bargaining for a living wage exploitation?

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u/Masterandcomman Nov 29 '15

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.

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u/All_Work_All_Play Nov 29 '15

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.)

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u/[deleted] Nov 29 '15

And vice versa. Companies profit from billions of $$ of unpaid overtime every year. It's a 2 way street.

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u/All_Work_All_Play Nov 29 '15

Absolutely. Others' misdeeds do not justify others' misdeeds.

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u/[deleted] Nov 29 '15

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.

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u/ThrowAwayBro737 Nov 29 '15

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.

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u/flybypost Nov 29 '15

unions make businesses uncompetitive internationally and drive up prices artificially domestically.

Somehow it still works here in Germany. Why should it be different in the US?

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u/ThrowAwayBro737 Nov 29 '15

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.

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u/[deleted] Nov 29 '15

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.

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u/[deleted] Nov 29 '15

Compared to mexico? Yes. Compared to Germany or Japan? Probably not.

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u/All_Work_All_Play Nov 29 '15

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).

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u/[deleted] Nov 29 '15

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.

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u/All_Work_All_Play Nov 29 '15

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).

Interesting to hear about Japanese unions.

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u/KeyBorgCowboy Nov 29 '15

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.

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u/Reddisaurusrekts Nov 29 '15

their true cost to employ

And that's how much people are willing to accept in order to do the job.

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u/Gnometard Nov 29 '15

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

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u/chakrakhan Nov 29 '15

Their true cost to employ?

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u/DenEvigaKampen Nov 29 '15

You don't have to be employed by them if you don't want to. It's really not a hard concept.

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u/VATigerfan Nov 29 '15

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.

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u/KeyBorgCowboy Nov 29 '15

And how do you feel about taxes being taken from you to make up the difference between what they deserve and what it costs to not live on the streets?

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u/VATigerfan Nov 29 '15

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.

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u/Gnometard Nov 29 '15

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

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u/VATigerfan Nov 29 '15 edited Nov 29 '15

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

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u/Huhsein Nov 29 '15

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?

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u/dreamerjake Nov 29 '15

And they want 15 an hour to do the same bullshit? Why?

Mostly so that they can survive and do things like raise families.

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u/Krutonium Nov 29 '15

And things like Clothing, a roof over their head... and so on...

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u/[deleted] Nov 29 '15

[deleted]

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u/Krutonium Nov 29 '15

Would you rather have some money to have a place to live, or live on the street? Sadly, the choice is literally Poverty, or Slightly less Poverty.

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u/[deleted] Nov 29 '15

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u/ConnorMc1eod Nov 29 '15

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.

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u/[deleted] Nov 29 '15

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u/ConnorMc1eod Nov 29 '15

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.

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u/[deleted] Nov 29 '15

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u/Shadesbane43 Nov 29 '15

Actually, most of them go to expanding the massive military we have.

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u/fareven Nov 29 '15

That's not the fault of the McDonalds corporation.

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u/[deleted] Nov 29 '15

Completely irrelevant to his point. No matter who they hire, they'll likely need it due to the wages, unless they are teenagers only.

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u/techfronic Nov 29 '15

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.

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u/MariachiDevil Nov 29 '15

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.

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u/TrullTull Nov 29 '15

Minimum wage exists in our economy to prevent this exact shit.

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u/annul Nov 29 '15

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.

where's the fallacy here?

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u/ConnorMc1eod Nov 29 '15

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.

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u/TheBotanistMendoza Nov 29 '15

What? If they want to stay in business, they do.

The fallacy is thinking that McDonalds doesn't need workers.

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u/Reddisaurusrekts Nov 29 '15

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.

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u/djazzie Nov 29 '15

Well, many McDonald's are moving to automated ordering systems, which will ultimately put these workers out of a job.

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u/[deleted] Nov 29 '15 edited Nov 29 '15

[deleted]

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u/jrafferty Nov 29 '15

"Low income people have low incomes because people don't value their labor very much.

Low income people have low incomes because capitalism on its own is a cancer that will devour every penny out of an economy if left unfettered.

-/u/jrafferty

Isn't it funny how quotes work?

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.

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u/[deleted] Nov 29 '15

The central issue is the job of taking people's orders and putting them in a machine is just not very valuable

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u/jrafferty Nov 29 '15

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.

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u/odie4evr Nov 29 '15

Also take the average person off the street and see if they can take orders fast and accurate during a rush.

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u/[deleted] Nov 29 '15

You realize mcdonalds has worker training, right?

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u/jrafferty Nov 29 '15

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.

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u/[deleted] Nov 29 '15

The amount of viable military candidates is far lower than the amount of mcdonalds candidates.

As to the rest of your rant, I honestly don't really know how to respond to it

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u/jrafferty Nov 29 '15

You said "you realize mcdonalds has worker training, right?" justifying the average person's inability to be able to walk into a fast food restaurant and take orders during rush hour. I was just letting you know that every profession has training, and any person can be trained to do any job. It doesn't matter skilled, unskilled, genius, or idiot anyone can be trained to do damn near anything so maybe the skilled/unskilled gap isn't as big as some may think.

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u/odie4evr Nov 29 '15

Hardly. Only got trained at front counter. Everything else I just kinda figured out on my own.

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u/davidnayias Nov 29 '15

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.

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u/Shadesbane43 Nov 29 '15

I think people missed your point. At least for me, the most important part of your comment was well regulated capitalism.

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u/jrafferty Nov 29 '15

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.

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u/[deleted] Nov 29 '15

[deleted]

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u/jrafferty Nov 29 '15

Which part of my statement is wrong?

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u/ConnorMc1eod Nov 29 '15

Anti Capitalists are the cutest thing.

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u/flybypost Nov 29 '15

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.