Paying $15 an hour not worth it
L ast week, in a global – yes, global – protest, fast food workers walked off of their jobs, flash mobs shut down fast food restaurants and non-violent rallies took place. The reason? Fast food workers are calling for a pay increase to $15 per hour. McDonald’s, Burger King, KFC and Wendy’s were all places of protest. And, since it wasn’t the first time workers in the fast food industry have demanded higher wages, we fear the trend is far from over.
Protestors have said that their wages are so low that they rely on second and even third jobs or some sort of government aid to get by. While we certainly sympathize with people doing what they need to do to support their families, and applaud them for being productive members of society, the problem is that raising the minimum wage isn’t going to solve the problem.
Yes, it’s disgusting that the CEOs of these companies make a reported 1,000 times as much money as the people manning the grills, taking orders, prepping food and attending drive-thrus.
But, lets take a trip back to Economics 101.
Say McDonald’s decides to pay its employees that $15 an hour, which is more than double the minimum wage. Sure, their higher ups and shareholders are rolling in the dough. But, they won’t raise pay without passing the proverbial buck – to their customers. Prices will absolutely rise. That dollar menu we know and love? Forget about it.
Other prices will be driven up as a result. When the cycle of inflation completes, $15 an hour won’t be enough, and the workers will be demanding $30.
Let us not forget that the franchise owners of these companies, who are already paying an arm and a leg to be in business, could very well be put out of business. Not only do they have to pay rent, they must pay royalties to the parent company to use the name and brand, and they also have to pay their workers and purchase necessary supplies. According to the Associated Press, franchise owners only make about 4 to 6 cents on the dollar.
Last year, McDonald’s sales were $27.6 billion. The company’s profit? A cool $5.5 billion. It is estimated that 1.7 million people are employed by the company. Simple math tells you that financially, doubling the pay of that many people will quickly eat up that $5.5 billion profit, eventually putting the company out of business. And then what do those 1.7 million people make? Nothing.
Could these companies do more to show their workers that they appreciate them and value the jobs that they do? Of course. Health benefits, retirement packages, and supporting and encouraging growth within the company are all good places to start.
But super sizing employee wages? That’s a recipe for failure.