Beaver County Reds – 10/27/13

You can learn more about this issue in my paper entitled “Minimum Wage.”

As is usual, this piece focuses on emotion because the facts are inconvenient.  That’s why the story centers on an alleged single mother of two and McDonald’s profitability.  Neither of these points, however, have anything to do with the economic value of a job to an employer.

A job’s pay is not a measure of the employee’s personal worth.  A job’s pay reflects the economic value of the job to a given employer, nothing more.  A job’s economic value determines the wage, not the potential economic and/or non-economic value of the employee.  For example, if a job’s economic value is $5/hour, a business can’t pay someone more even if the person is a rocket scientist.

The subject article said, “Salgado is one of many fast-food workers who have walked off the job in recent months to protest the industry’s low wages, part of a nationwide movement aiming to raise pay to $15 an hour.  She has worked at McDonald’s for 10 years, and earns $8.25 an hour in her current job as a cashier.  Earlier this month, Salgado was detained after pressing McDonald’s President Jeff Stratton for higher wages.  ‘Do you think this is fair that I have to be making $8.25 when I’ve been working at McDonald’s for 10 years?’ Salgado said during the confrontation.”

A cashier job is an entry-level position requiring little skill.  I’m not bashing the job, just stating a fact.  Heck, I’ve washed dishes and mopped floors in a cafeteria and a summer-camp mess hall, was a locker room janitor, a stock boy, and so on.  Those were all opportunities from which I learned.  One of the problems with many low-skill jobs is they are vulnerable to extinction if the cost of labor gets too high.

Ultimately, forcing higher-than-market wages on an employer hurts the very people we’re told the mandate will help.  Depending on the given employer, eventually the minimum wage and its ripple effects make it too expensive to hire and keep employees, especially those susceptible to replacement by automation, such as toll collectors, checkout cashiers, et cetera.  In at least three cases, the cost of an employee got high enough that customers actually replaced the employee.  One example is the automated checkout line at your supermarket where you – instead of a cashier – get to scan your purchases and pack your grocery bags.  Remember when someone taking your groceries and loading them into your car was standard practice instead of an incredibly rare event?  When was the last time you pulled into a gas station and an attendant pumped your gas, checked fluid levels under the hood, cleaned your windshield, and so on?  At one time, McDonald’s experimented with using a call center to take drive-thru orders, reducing store-based jobs.

Let’s look at the “Do you think this is fair …?” question.  After the first few weeks I held the jobs I noted above, additional time in the job would not make me or anyone else more productive or valuable in the job.  That’s just the way most low-skill jobs are.  Given that situation, why should an employer pay a person more simply because he’s held the job for x number of years?  That someone would be in an entry-level, low-skill job for 10 years suggests there’s more to this story.

Let’s look at Ms. Salgado for a minute.  About all I found is Ms. Salgado has worked at McDonald’s for 10 years since she was 16 or 17 years old, is single, and has two children (two and seven years old).  I found nothing to indicate Ms. Salgado was ever married to the father(s) of her children.  I found nothing to indicate Ms. Salgado has an education beyond high school.  In fact, I don’t know if Ms. Salgado is even a high-school graduate.  Ms. Salgado worked at McDonald’s for three and eight years before having her two children.  Ms. Salgado likely could not support only herself on her entry-level-job pay.  Despite that knowledge, Ms. Salgado had the children anyway.  Somehow, though, we’re supposed to accept McDonald’s is responsible for Ms. Salgado’s situation, not Ms. Salgado herself.

If a fast-food employee believes he is underpaid, what’s stopping him from applying for a higher-paying job with his current employer or getting a higher-paying job elsewhere?

The story claimed “McDonald’s low wages cost taxpayers about $1.2 billion annually.”  The story failed to mention for the year ending 12/31/12, McDonald’s 10K reported the business paid more than $2.6 billion in income taxes (about half is U.S. federal and state).  That’s on top of taxes paid by franchisees and shareholders.

There’s an interesting opinion piece on this story in the New Pittsburgh Courier (A Misguided Big Mac Attack).

In Peace, Friendship, Community, Cooperation, and Solidarity. <g>