$15 dollar fast food wages

[Hamlet]

Actually, you can.

When I worked at McDonald's (over 20 years ago), we had a device that we could stick two quarter pound burgers under so that they would cook from both sides. They would then take about two minutes to cook instead of six or so. The only time we would make quarter-pounders in the normal way was at lunchtime when we needed to make a whole bunch.

I think people would be suprised at the productivity increases in fast food over the years. The automatic change dispensers, faster credit card payments, etc. The drink dispensers that they use these days are much more automated than they were when I was doing it. On busy days, the one by me has a person taking orders in the drive thru line with some sort of tablet system.

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Originally Posted by ziggy29 Well, true. I was speaking more of the general case. It's not like you can force a burger to cook in 3 minutes instead of 8 minutes.

[Midpack]

The government, states, cities, counties can set minimum wages as some have since the 1940's. That seems unlikely to change after 70 some years, but that doesn't seem to slow the "free market" debate.

Consumers have absorbed price increases on products and services for generations, and will always have to confront those choices. Consumers usually don't know or care why prices increase, materials, labor, other, all - (minimum) wages aren't unique or special for the consumer. The market will respond to price increases and find a new supply & demand equilibrium - the government can't and doesn't "dictate" prices and guarantee a living wage because they can't guarantee consumers will buy (higher priced products).

States, cities and counties who legislate for higher minimum wages will experience a market response just as they did after the countless past cost increases. It may be trivial, it may be substantial, we'll have insights after Seattle and others.

It may be technically possible, but I doubt anyone here can predict what a $15/hr minimum wage would actually do to any given industry/sector. Might be trivial, might not - though if labor is 7% of burger costs as an earlier post stated, might be more trivial.

[timo2]

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Originally Posted by pb4uski I think that the minimum wage should be higher but I concede that $15/hour is probably too much. My view is that the minimum wage should at the least be set at a level where someone is working full-time doesn't have to live in poverty and where a family of four with two full-time workers don't have to live in poverty. Assuming a 2,000 hour work year, a $7.25/hour minimum wage single would gross 124% of the poverty level and after SS and FIT that would drop to about 113%. A working couple with two-kids would gross 122% of the poverty level and after SS and FIT that would drop to about 110%. If they live in a state with state income taxes, they would be even closer to living in poverty at minimum wage. ... If an increase was implemented gradually (say, over 3-5 years) it should not be too harmful to the economy.

Currently SNAP eligibility is limited to households with gross income of no more than 130% of the federal poverty guideline. I'd like to see the minimum wage coordinated with the SNAP limits, so that a full time person would not need food assistance from a program designed to keep people from starving. Because of the prevalence of part time work, rogue employers would still be able to game the system and use taxpayers to subsidize their workforce, but this would reduce it some.

[Andre1969]

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Originally Posted by scrabbler1 I agree with this. $10 an hour is about what the minimum wage would be had it been indexed to inflation since the late 1960s or early 1970s, a common benchmark I see for comparison.

The reason they like to pick that benchmark tis that it represents the point in time where minimum wage was at its highest in history, when adjusted for inflation. Minimum wage went to $1.60 per hour in 1968. Adjusting for inflation, that's $10.95 per hour today. However, when it was first enacted, in 1938, it was only 25 cents per hour. That's only $4.22 per hour, by today's standards!

I started working in 1983, at the age of 13, doing house cleaning and yard work for an old lady in my neighborhood. I made $3.50 per hour, and minimum wage at that time was $3.35/hr. Adjusting for inflation, that's $8.01 per hour today.

I wish they would just pick a decent number for minimum wage, right now, start off of there, and simply index it to inflation.

The $3.35/hr minimum wage started in 1981, and lasted through 1990, when it was boosted to $3.80. In today's dollars, that would be $8.78 and $6.11, respectively.

Another problem is that jobs that once paid above minimum wage have been reduced to minimum wage or, worse, waiter pay. For instance, in 1991, while still in college, I got a part time job in a department store. I made $6.50 per hour, and time and a half on Sundays. In 1992, they cut out the time and a half, but gave everyone a raise based on how much OT they worked in the past. In my case, it put me to $7.03.

In 1991, minimum wage went to $4.25. So, this job paid me about 53% over minimum wage. But, fast forward to just a few years ago...one of my friends got a second job, in the same company, doing the same thing, but by this time it was just paying minimum wage, which was $7.25 by that time.

Adjusting for inflation, my $6.50/hr would be $11.37. I forget what year it was my friend did that second job, but $7.25 has been in effect since 2009. So, at the most, it would be about $8.05 today.

Back in 1988-90, I worked part time at Denny's. I started off as a dishwasher making $5.25 per hour, but soon became a dishwasher trainer and then a host, making $6.00 per hour. As a waiter, I made $2.14 plus tips. $6/hr in 1990 would be like $10.94 today.

However, today, I have a friend who works at Ruby Tuesdays, and he says that it's common to just give the hosts waiter pay, which in Maryland is around $3.XX per hour. The waiters all have to cough up 3% of their sales for the night, which goes into "Tip Share", and that money gets disbursed to the hosts and bartender. Possibly busboys and dishwashers as well, can't remember for sure.

[Chuckanut]

FWIW, at one city that has a minimum wage of $15 an hour currently in place, I notice that parking lot operators have a "living wage surcharge" of 99¢ per day for something like parking one's car at an airport lot.

[scrabbler1]

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Originally Posted by Andre1969 The reason they like to pick that benchmark tis that it represents the point in time where minimum wage was at its highest in history, when adjusted for inflation. Minimum wage went to $1.60 per hour in 1968. Adjusting for inflation, that's $10.95 per hour today. However, when it was first enacted, in 1938, it was only 25 cents per hour. That's only $4.22 per hour, by today's standards! I started working in 1983, at the age of 13, doing house cleaning and yard work for an old lady in my neighborhood. I made $3.50 per hour, and minimum wage at that time was $3.35/hr. Adjusting for inflation, that's $8.01 per hour today. I wish they would just pick a decent number for minimum wage, right now, start off of there, and simply index it to inflation. The $3.35/hr minimum wage started in 1981, and lasted through 1990, when it was boosted to $3.80. In today's dollars, that would be $8.78 and $6.11, respectively. Another problem is that jobs that once paid above minimum wage have been reduced to minimum wage or, worse, waiter pay. For instance, in 1991, while still in college, I got a part time job in a department store. I made $6.50 per hour, and time and a half on Sundays. In 1992, they cut out the time and a half, but gave everyone a raise based on how much OT they worked in the past. In my case, it put me to $7.03. In 1991, minimum wage went to $4.25. So, this job paid me about 53% over minimum wage. But, fast forward to just a few years ago...one of my friends got a second job, in the same company, doing the same thing, but by this time it was just paying minimum wage, which was $7.25 by that time. Adjusting for inflation, my $6.50/hr would be $11.37. I forget what year it was my friend did that second job, but $7.25 has been in effect since 2009. So, at the most, it would be about $8.05 today. Back in 1988-90, I worked part time at Denny's. I started off as a dishwasher making $5.25 per hour, but soon became a dishwasher trainer and then a host, making $6.00 per hour. As a waiter, I made $2.14 plus tips. $6/hr in 1990 would be like $10.94 today. However, today, I have a friend who works at Ruby Tuesdays, and he says that it's common to just give the hosts waiter pay, which in Maryland is around $3.XX per hour. The waiters all have to cough up 3% of their sales for the night, which goes into "Tip Share", and that money gets disbursed to the hosts and bartender. Possibly busboys and dishwashers as well, can't remember for sure.

I was looking up the MW history and I see what you mean about the high point.

http://www.dol.gov/whd/minwage/chart.htm

In 1968, the MW was raised from $1.40 to $1.60 per hour after only 1 year at $1.40. That's just under a 15% increase for only 1 year, a pretty big increase.
Back then, and up until 1977, there were multiple minimum wages, a lower one which was applicable to some jobs. The chart shows the history of those sets of minimum wages until the MW was consolidated in 1977.

When I was in high school and college and worked at jobs between 1979 and 1985, some of them were below the MW, too. I was not always in jobs which guaranteed the MW either because they were local govt jobs with employees not covered by the MW or they included tips. I do remember one of them at a local public library in 1979-81 with my starting hourly pay below the MW but after 2 years with some COLA raises and longevity raises (working x number of total hours got a raise), by the time I left that job I had finally gotten up to $3.35 an hour, the minimum wage in 1981 (as you pointed out).

I remember in 1984 I had a summer job as a messenger which paid a whopping $4.50 an hour. I earned more that summer than I did in the previous summers combined!

[pb4uski]

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Originally Posted by timo2 Currently SNAP eligibility is limited to households with gross income of no more than 130% of the federal poverty guideline. I'd like to see the minimum wage coordinated with the SNAP limits, so that a full time person would not need food assistance from a program designed to keep people from starving. Because of the prevalence of part time work, rogue employers would still be able to game the system and use taxpayers to subsidize their workforce, but this would reduce it some.

+1 It seems sensible to me to design the minimum wage so full time work without SNAP benefits is more attractive than part-time work with SNAP benefits (in both cases after SS and income taxes).

[jimnjana]

One thing is for certain, there will be less fast food jobs per customer in the future. Mobile apps for ordering and payment, robotic food prep, and order/pay kiosks etc all lead to less employees. Higher wages will follow as more will be expected from the employees that remain.

[Hamlet]

Labor is quite a bit more than 7% of a burger's cost. I think someone thru out that 7% number as McDonald's corporate labor cost. The typical McDonald's is actually owned by a franchisee, who is the one actually paying the individual store workers. I'm neglecting that some stores are actually owned by McDonald's itself, but they have become a pretty small portion of the total in recent years.

In general, I think labor is generally in the 25-30% range for a fast food franchise. So if you raised the minimum wage 25%, you'd be talking about about a ~7% increase in prices if the cost was simply passed on to the customer. So going from $7.25 to $9-$10 probably wouldn't have a dramatic effect. Going from $7.25 to $15 would translate to a 25%-30% increase in prices though (assuming it was all passed on), which probably would cause problems in the business model.

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Originally Posted by Midpack It may be technically possible, but I doubt anyone here can predict what a $15/hr minimum wage would actually do to any given industry/sector. Might be trivial, might not - though if labor is 7% of burger costs as an earlier post stated, might be more trivial.

[samclem]

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Originally Posted by timo2 . . . rogue employers would still be able to game the system and use taxpayers to subsidize their workforce, but this would reduce it some.

This perspective makes sense if we start with the assumption that the part-time employees are somehow wards of their employers, and so SNAP, Medicaid, etc are "subsidies" that help the employers meet their obligations to provide for the needs of these workers.

But if we instead view each party as liberated and qualified to make decisions for their own benefit (hire, fire, quit, get another job, etc), then viewing these govt payments as somehow "subsidizing" the employers makes zero sense. Would the Medicaid, SNAP, etc stop if the employee quit working? No. It's not in any way a subsidy that benefits the employer. Perhaps the EITC can be viewed as subsidizing wages, but since it doesn't go through the employer that's not very clear, either. Walmart gains no benefit (is not subsidized) to hire a single mom who gets EITC rather than a HS kid who doesn't. None of these govt payments that go to employees are subsidies to employers.

[timo2]

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Originally Posted by jimnjana Higher wages will follow as more will be expected from the employees that remain.

Based upon personal experience, I'm not so sure about that. In 1979 I was a mine engineer and primarily did mine surveys. I moved to another mine but came back in 1981 for a bit. When I came back technology had advanced enough that my former survey assistant was now doing the surveying. No change in pay for him, but the work was dumbed down quite a bit. All he did was plug in a cartridge with previously determined coordinates and push buttons. No additional education required, as the operator no longer needed to know mathematical principles.

[ziggy29]

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Originally Posted by timo2 Based upon personal experience, I'm not so sure about that. In 1979 I was a mine engineer and primarily did mine surveys. I moved to another mine but came back in 1981 for a bit. When I came back technology had advanced enough that my former survey assistant was now doing the surveying. No change in pay for him, but the work was dumbed down quite a bit. All he did was plug in a cartridge with previously determined coordinates and push buttons. No additional education required, as the operator no longer needed to know mathematical principles.

The difference between 1981 and 2014 is that in 2014 his job would have been offshored or automated out of existence entirely.

[HFWR]

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Originally Posted by samclem But if we instead view each party as liberated and qualified to make decisions for their own benefit (hire, fire, quit, get another job, etc)...

In many cases this is true, but in many it's not... Particularly in low-wage, more commodity-like jobs, the employer usually has most of the leverage.

[M Paquette]

Don't confuse production costs with the item pricing based on supply and demand. Things can flex in interesting ways. Sizes change. Some items are reformulated over time. (What? You thought those delicious fries were pure potato?)

If retail prices do bump up, the odds are that demand will drop off less than the rise in revenue. MCD operates at a pretty low point on the price axis of the supply and demand curves, per customer transaction. Even better, MCD's franchise revenue is a percentage of the GROSS from franchisees, plus a baseline amount.

[retirementguy1]

I figure you pay one way or the other. Most fast food workers are on food stamps which all of us pay then profits go to shareholders. The cost of a hamburger should reflect the real cost and should not be subsidized by the govt.

[sengsational]

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Originally Posted by Fermion If I can get $15 an hour at a min. wage job, then I am going to want more than $15 an hour starting out after graduating from a 2 year trade school.

But that won't happen because there's no "headline story" that will propel the hundreds of different skilled $15/hr jobs. So nobody will be motivated to go to trade school or do an apprenticeship because they can make the same money flipping burgers (unskilled). Why invest in education if you can walk in and make the same money?

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Originally Posted by jimnjana One thing is for certain, there will be less fast food jobs per customer in the future. Mobile apps for ordering and payment, robotic food prep, and order/pay kiosks etc all lead to less employees. Higher wages will follow as more will be expected from the employees that remain.

THIS is what will happen if McD is forced to pay above market rate for labor: even MORE automation (and fewer jobs).

[retirementguy1]

Quote:

Originally Posted by jimnjana One thing is for certain, there will be less fast food jobs per customer in the future. Mobile apps for ordering and payment, robotic food prep, and order/pay kiosks etc all lead to less employees. Higher wages will follow as more will be expected from the employees that remain.

I work at a full service restaurant and we use an ipad for the beverage menu. Often a guest asks, "do we order off the ipad?" I joke, "No, If I let you do that I will be out of a job soon." Truth is stranger than fiction. In another 20 years my job will be a dinosaur and that's why I save all the money I can.

[Texas Proud]

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Originally Posted by ERD50 OK, clearly people have different viewpoints (or this wouldn't be debated) but I do have trouble seeing how anyone can reasonably argue against letting supply/demand set prices (assuming there is no monopoly, and then I prefer the breakup of the monopoly over 'band-aid', micro-managed-from-afar fixes). If the price of a menial job can be fixed at $15, then why not any other arbitrary transaction? Should the govt set the price if I want to sell my car? Maybe a poor person needs it to get to work, so it could be 'justified' that I sell it to them at below market prices. It just seems totally inconsistent to me to price fix a select transaction. I keep hearing from some sides that anyone should be able to earn a 'living wage', even if there isn't enough demand for those skills to support those wages. So like my woodcarver example - shouldn't I be able to sell every woodcarving I make at a minimum wage rate, even if there isn't enough demand for my lousy woodcarvings, just because 'everybody should be able to make a living wage', regardless of demand? -ERD50

I think you are missing the point.... supply and demand will work.... it is just that the gvmt is stating there is a minimum wage... so demand for people will adjust to that rate... and other wages higher than that will also adjust....

The gvmt gets into a lot of things.... they say what car companies must do in safety and fuel mileage (on avg)... you cannot build and sell cars that are not crash tested nor that do not have seat belts.... but I bet there is a demand for them out there...


BTW, you wood carving example is not the same.... but even if it is, you have a minimum price... but since nobody (or very few) wants it at the price you just will not sell that many.... too bad for you.... and the gvmt does have a right to 'set' prices... remember back when Nixon was president And state gvmts set prices for insurance, electricity etc. etc... not a new concept....

[samclem]

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Originally Posted by HFWR In many cases this is true, but in many it's not... Particularly in low-wage, more commodity-like jobs, the employer usually has most of the leverage.

And the minimum wage hurts worker leverage. If the minimum wage were $20 per hour, there would be fewer jobs (obviously, some jobs just aren't worth that much). There would probably be 30 people wanting each available opening. You can bet the employers wouldn't have to be very accommodating to their employees in an environment like that.

That's what I'm eager to hear: If $10 is good and $15 is better, then why not $30? Surely the workers would be enjoying a better quality of life at $30/hour. And $50 would be better yet.

[Walt34]

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Originally Posted by samclem That's what I'm eager to hear: If $10 is good and $15 is better, then why not $30? Surely the workers would be enjoying a better quality of life at $30/hour. And $50 would be better yet.

And that gets to the bottom line. Some jobs just aren't worth that much because no one very few will pay $15 for a hamburger for lunch every day. They'll start brown-bagging instead. The business has to be viable and make a profit or it ceases to exist.