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Sunday, January 05, 2014

Government Policies Hurt Low-Wage Workers

Fast-food workers across the county have recently held a number of high profile protests to agitate for higher wages. These protests have been accompanied by efforts to increase the wages mandated by state and local minimum wage laws, as well as a renewed push in some states and localities to pass "living wage" laws. President Obama has proposed raising the federal minimum wage to ten dollars an hour. Raising minimum wages by government decree appeals to those who do not understand economics. This appeal is especially strong during times of stagnant wages and increased economic inequality. But raising the minimum wage actually harms those at the bottom of the income ladder. Basic economic theory teaches that when the price of a good increases, demand for that good decreases. 

Raising the minimum wage increases the price of labor, thus decreasing the demand for labor. So an increased minimum wage will lead to hiring freezes and layoffs. Unskilled and inexperienced workers are the ones most often deprived of employment opportunities by increases in the minimum wage.

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10 comments:

  1. How can you say not to increase the MW and then state in the next paragraph that it takes 23.70 to buy a $1 worth of goods and poverty is the Fed Reserves fault.

    So, just leave them wallowing in poverty while big business makes billions and we have to pay for their welfare thru higher taxes?

    This is a very poorly written convoluted article.

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  2. Have you ever looked in the back of a new McDonalds? There's an entire system back there to eek every bit of efficiency out of the production of their sandwiches. A higher minimum wage will make further mechanical enhancements even more cost effective. Think about it for a second. Reducing 1 fast food worker, at $10 per hour, 12 hours per day, 365 days per year, for 10 years saves $438,000 in wages, not including employment taxes. We're probably talking $600,000 in possible savings just on one store. There are about 14,000 stores in the US alone. We're talking $8.4 BILLION dollars in payroll savings. That's a lot of engineering time, folks.

    Sure, hiking minimum wage to $10/hr only represents a difference of an increase around 50%. But that's $4.2 BILLION dollars of payroll spread that didn't exist before. Once again, that's a ton of engineering time.

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  3. I think your numbers are a bit skewed. Most workers do not work 12 hours a day for 365 day.

    MW increases are made in stages not all at once.

    Also
    You cited 1 worker,
    making $8/hr, 20 hrs a week = 8320
    making $10/hr, 20 hrs a week = 10400
    That will cost MickeyD's 2080 a year for 1 store or 29 million for 14,000 store per your statement per year.

    But lets add this little tidbit.
    "Oct 21, 2013 - McDonald's announced Monday that it raked in $1.5 billion in profits in the third quarter, up 5 percent from last year."
    That is for 1 quarter of the year.

    So to tell me that MickeyD's can't afford to increase their MW is baloney. And lets add the fact that most workers are part time and get no healthcare, nor time off benefits.

    I understand what you are trying to say, but you are over reaching a bit.

    We are already paying for their welfare benefits.

    I would rather have a choice. Pay them fairly and take them off welfare and I can choose to shop at MickeyD's or not.

    Right now I have no choice since my taxes are subsidizing this "BILLIONSS" dollar corporation.

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  4. A $10/hr does not represent a 50% increase.
    It would be a 27% increase from the current $7.25

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  5. Actually, an increase from 7.25 to $10 is a 38% increase.

    And the poster was talking about removing an employee from each shift through productivity enhancements. Not affecting any one worker's hours.

    Consider the cashiers. Enough can't count money that they have change machines now. And enough can't read so they put pictures of the menu items on the pad.

    It would be really easy to make self-ordering kiosks. The technology is already here. Think about the ordering system at WaWa, crossed with the money changing system at a grocery store checkout. I'm afraid to say it, but you might very well receive better service with less mistakes by ordering your own meal at a computer than dealing with a cashier who can't count and read. The poster's argument seems to be very possible.

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  6. And 4 years of college will get you $10-$12 an hour in your professional field. You can use the extra $2 an hour to pay off your $60,000 in student loans.

    How fair.

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  7. 3:40
    Annie's point is that a company that makes 6 billion in profits a year could easily afford to pay their employees better instead of having the tax payer subsidize their income thru welfare.

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  8. 3:53
    Ironic that the argument is that if MW workers want better pay get a degree. They can't afford to survive, where are they getting tuition money? And hows that degree working out for you @ $10-12/hr?

    None of it is fair, on either side.

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  9. Wow, Annie! Right over your head and still going! Not very bright, are you?

    353

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  10. Nothing went over my head troll. You have added nothing ... speaks volumes of your lack of intelligence.

    ReplyDelete

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