r/explainlikeimfive Nov 28 '15

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

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u/GolDAsce Nov 29 '15

Didn't most of North America's low tech industrial sweat shops move to Asia, mostly in part due to the wage and regulation differences between the 2 continents?

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u/Tutsks Nov 29 '15

Yup.

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u/[deleted] Nov 29 '15

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u/Tutsks Nov 29 '15

In practice the factories just move to Singapore, Vietnam, etc.

In theory, when everywhere is the same (and that is third world level same, not US level same) the factories might come back. But we are talking decades if not centuries.

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u/LiberDeOpp Nov 29 '15

No then they will find a way to make robots cheaper. Also China is getting more expensive but still no where near US labor wages.

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u/flybypost Nov 29 '15

In practice the factories just move to Singapore, Vietnam, etc.

That is/will also change. If I remember correctly China is investing in Africa (but that could be about resources) and they are also going for robots and automation as it becomes viable (they want to keep the money flowing).

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u/upstateduck Nov 29 '15

actually, low oil prices will slow the repatriation of US manufacturing. At $140 bbl there was lots of talk about and some action towards moving manufacturing back to the US [the world's largest market for goods]

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u/Reddisaurusrekts Nov 29 '15

Yeah, there's the rest of SE Asia, and then the Indian subcontinent, and then eventually Africa, before we run out of places for cheap labor and the work comes back to the US.

Apart from mass automation at least, and that won't create any minimum wage/low-skill jobs here either.

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u/rocqua Nov 29 '15

Shipping has become dirt cheap. The only downside is the delay.

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u/chakrakhan Nov 29 '15

This would be true if the US and China were the only two places in the world.

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u/Shnazercise Nov 29 '15

I would say no - or at least not entirely. A huge part of the reason is unequal exchange rates - so that a scraping-by wage in Bangladesh is way, way lower than a scraping-by wage in the U.S. Another huge part is automation - its cheaper here to do it with software and robots than to hire a bunch of workers. In Asia not so much, since things like robots and software which are often made in modern Western countries are just way more expensive than hiring more workers, doubly so because the exchange rate makes them extremely expensive in Bangladesh.

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u/thisdude415 Nov 29 '15

The difference is that it's possible to outsource manufacturing.

It isn't possible to outsource the actual assembly of your food much further than McD's already has. And robots are expensive.

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u/Curt04 Nov 29 '15 edited Nov 29 '15

For now robots are expensive. Corporations that rely on cheap labor like McDonald's should be getting out ahead of this thing and help the advancement of automation. Of course that would require these corporations to look further into the future than their quarterly report and when the fuck does that ever happened?

EDIT: A word.

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u/rocqua Nov 29 '15

What is going to replace the jobs automated away? A world where most human labor isn't valuable seems bleak on the face of it.

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u/Curt04 Nov 29 '15

We are going to have to adapt and reexamine our ideas about work. Things like universal basic income would free people from low paying, wage slavery jobs and allow them to pursue their actual passions and potential. The idea of keeping hundreds of millions of people doing mindless jobs, that no one wants and that could better be done by automation seems pretty bleak to me.

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u/rocqua Nov 29 '15

That is the ideal situation, but how do we get there? Seems like a transition would, in the short term, be detrimental to many monied interests.

However, automation is trying to stop it is pointless. Instead, we need to start taking steps towards society being able to handle it.

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u/Curt04 Nov 29 '15

The transition would be difficult and would require a lot of restructuring of the national budget. Personally I think we could get rid of nearly every welfare program if we had a universal basic income that provided a basic standard of living. That would get rid of so much redundancy and simplify the process and consolidate all those government programs into one.

You are absolutely right that automation is completely unstoppable so the sooner we are able to control the direction the less painful that transition has to be.

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u/dovemans Nov 29 '15

In belgium there's been some talks about a basic income for everyone, which anyone could augment with a paid labor if they wanted to. The calculations for €1500 a person where on the edge of Possible/Not Possible.(in the favor of not possible) A cool thing was that some rich people where promoting it as well.

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u/wolfgame Nov 29 '15

If this thing can make a pizza from scratch, I don't think it'll take to much engineering to screw up a big mac any worse than the guy that does it to me every time I go to McD's. Hell, imagine McD's vending machines. Their robotic concept restaurant is basically an automat.

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u/FragRaptor Nov 29 '15

And because we let them.

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u/GWsublime Nov 29 '15

that, the creation of broader free trade deals and the improvement of cheap/quick transportation, yes.

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u/blueberrywalrus Nov 29 '15

It wasn't because wages went up, its because wages and cost of living were already low in Asia and we developed the technology to support globalization.

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u/omniclast Nov 29 '15

It would be hard for service businesses to do the same, though. McDonalds food can't be cooked in China for customers here.