More Economics

Apparently McDonald’s is under attack.

Almost literally.  People are protesting outside their headquarters demanding a raise in the minimum wage.  Actually, not a raise.  A raise is a modest and relatively justifiable increase that ought to help take into account fluctuations in inflation.  That is my definition, and I’m not an economist.  Obviously.
What is being demanded by McDonald’s is that they jump the minimum wage to $15.00/hour.  In some areas, that’s more than a 50% increase.  The goal is to pay a livable wage, whatever that means.  I’ve touched on this topic previously, but this time I read a few additional articles on the topic.
This first article is ironic.  The author supports a higher minimum wage, but not for the same reasons the McDonald’s protesters do.  Rather, the author thinks a higher minimum wage will spur innovation.  Technologies and products that offer cost savings, but not when human labor is comparatively cheap will benefit from higher labor costs.  Of course this means that short-term there will be a benefit to employees in a larger paycheck.  But long term, it will mean fewer of these types of jobs, and more jobs requiring more education or advanced skills.  Which does not describe the situation of most minimum wage workers.
The next article argues against a higher minimum wage because it will result in lower per hour earnings for workers who earn tips, such as bartenders, waiters/waitresses, etc.  Higher labor costs get passed on to consumers in terms of higher costs for goods/services provided.  Consumers may balk at these higher costs, which the vendor can soften by discouraging or eliminating tipping.  The overarching idea is that this particular class of employees will find their net earnings  decreasing rather than increasing.
The final article sounds like it’s going to laud how a city came together to create a $15/hour minimum wage spontaneously.   Instead, it basically describes political blackmail to force labor and business interests to work together to craft a plan for raising the minimum wage to $15/hour or else the mayor would unilaterally decree it.  Hardly an encouraging story, from my perspective.  
By my calculations, $15/hour for a full-time (40 hours a week) employee turns out to be over $30,000 a year.  In some areas of the country that’s certainly a living wage.  In others, it isn’t.  What about those people in areas of the country where this won’t provide a living wage?  How far up do we jack the minimum wage?  Are we stating as a nation that more and more people aren’t getting better jobs, so we need to help feed the growing percentage of minimum wage earners better?  I’m still confused.  Maybe more so.  
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s