Friday, May 15, 2015

The Merits and Drawbacks of a $15 per Hour Minimum for Fast-Food Workers

If the New York Times, Washington Post, and Salon are to be believed, there is a groundswell of support for a federal $15 hourly minimum wage for those working in fast-food restaurants.  Would that be a good idea or a bad one?

Let’s start by looking at some facts. 

According to the Bureau of Labor Statistics, as of 2012 there were 2,969,300 people in the subcategory “combined food preparation and serving workers, including fast food.”  That includes employees in other types of restaurants, but, as we will see, most are in McDonalds and the like.  Also in 2012, those workers received an average of $8.84 per hour, which in another source, a Salon article by Martin Ford, came through as $8.69.  About half of such employees worked part-time in 2012. 

The above statistics are generally consistent and noncontroversial, but, when dealing with the composition of fast-food workers, the sources dramatically part company.  The head of government affairs at the National Restaurant Association claimed in 2013 that over half of them were teenagers.  In contrast, New York governor Andrew Cuomo recently said that 70% were over 20, and, amazingly, over 66% were both raising children and their family’s main breadwinners.  To go higher, Ford’s article claimed 90% aged 20 or older with an average of 35, the second echoed in a Robert Reich Salon column.  Unfortunately, the Bureau of Labor Statistics, which could clear up this confusion, has no number of its own.

In addition to their possibly correct view of fast-food workers being older and usually supporting families, the side wanting a higher minimum makes four main points.  The first is that the companies are generally very profitable.  According to The Huffington Post, the two largest fast-food employers, McDonalds and Yum! Brands, the latter including KFC, Taco Bell, and Pizza Hut, combined for $7 billion net income in an unspecified recent year.  Those two companies have 1.1 million of those 2.9 million American workers, and the next largest eight, Subway, Burger King, Wendy’s, Dunkin’ Donuts, Dairy Queen, Sonic, Dominos, and Little Caesars, employ another 1.1 million.  That makes an excellent argument, that fast-food workers, unlike, say, wait staff or short-order cooks, are retained by national companies we have heard of, instead of local places with less profitability. 

The second through fourth points are more debatable.  Reich started a recent column by saying that “a basic moral principle that most Americans agree on is no one who works full time should be in poverty, nor should their family,” phrased carefully but doubtful on further reflection.  He also said that increasing jobs raises demand, which in turn creates more positions:  true, but the end does not justify the means.  And, perhaps most controversially, other articles have claimed that such employers actually cost the federal government money, since some of their workers are eligible for public assistance;  that is demonstrably false, since they have no obligation, legal or otherwise, to provide jobs at all. 

Five ideas are significant to the other side.  First, demand for fast-food work is still strong, with Ford mentioning, in particular, that a 2011 McDonalds effort to hire 50,000 new employees in one day precipitated over 1,000,000 applications, “a ratio that made landing a McJob more of a statistical long shot than getting accepted at Harvard.”  Second, even Cuomo admitted that average pay for fast-food workers had increased after inflation, on average, since 2000.  Third, such positions typically come with free food, which is not counted in wages and can help anyone struggling financially.  Fourth, automation is on the way.  Ford gave an example of a company now developing machines producing hamburgers from beginning to end, cutting well into the $9 billion in annual American burger-making expenses.

Fifth, and maybe the strongest point of all, is this:  Why is $15 per hour going to be enough?  The arguments for that level have been couched in terms of assuring “a living wage.”  But how is $30,000 sufficient for someone, even with no dependents, to live in Manhattan or San Francisco?  If the effort gets what its organizers want, $15 will probably be only the beginning, with higher expectations cancelling much of any perception of improvement. 

So which side has more merit?  I have a strong bias against forcing businesses to do things that would hurt employment, which a forced $15 per hour minimum for almost three million American workers would do to some extent or another.  The same thing goes for two other things Reich also calls for in those columns:  universal child care and paid family and medical leave.  If employers want to provide much higher pay and these other benefits, they are not barred from doing so.  There is a large difference between helping individuals in crisis, by providing liberal food stamp and unemployment benefits to name just two ways, and attacking the interest of companies to provide work, which, during a permanent jobs crisis, is especially damaging.  When we get to the point where existing safety-net measures are not enough, we will need a guaranteed income or other permanent solution, which may be a gigantic upheaval.  It does not help us to impede business’s ability to delay that.  Until then – and it may be a long time until Americans are willing to seriously consider anything strong enough to solve the problem – we need to realize that companies are not our opponents but our partners.  

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