You might have missed this, if you didn’t happen to hit the right fast-food drive-through on the right day in July, but your neighbourhood burger-flippers and assorted labour activists staged one-day strikes in cities across the United States. They called for the right to unionize and for a raise in the minimum wage — to $15 an hour.
That’s right; they want to double the federal minimum wage. (Hey, why not swing for the fences?) But before you sputter at the chutzpah of this demand, consider the point made by venture capitalist Nick Hanauer in a provocative op-ed for Bloomberg: "If the minimum wage had simply tracked U.S. productivity gains since 1968, it would be $21.72 an hour — three times what it is now."
Hanauer, who also supports a $15 wage floor, is clearly mixed up. We are not supposed to look at this issue from the point of view of the worker. We’re consumers first and foremost, right?
What’s supposed to matter is how much doubling the wage would add to the price of your Big Mac or Whopper. And, yes, prices would rise, but by how much is currently something of an Internet parlor game. The Huffington Post touted and subsequently disowned an estimate that McDonald’s would have to hike prices by 17 per cent to maintain current levels of profitability. An editor for the Columbia Journalism Review picked this apart and instead surmised the price hikes would have to be more in the range of 25 per cent, while an industry think tank pegged them at up to 35 per cent.
So maybe you don’t care if the Dollar Menu becomes the Dollar-Thirty-Five Menu. Have you paused to consider that by raising the wage you would throw thousands of fry cooks out of work? That McDonald’s and its franchisees would close stores or introduce more automation to bolster profits. This could raise the unemployment rate.
Could it? Because if you consult actual research, there’s no clear consensus on what raising the minimum wage does to employment. Some economists argue that the effect is usually positive, while others say it has no effect or a slightly negative one. There’s good reason to believe that raising the minimum wage during a period of high unemployment, like our own, would stimulate the economy. And that’s exactly what we need now.
Moreover, raising the pay of low-wage earners will get them off of the public assistance rolls. (Restaurant servers rely on food stamps at nearly double the rate of the general population and are at three times the poverty rate of the general population.)
America’s real job creators are its consumers, and their wealth was decimated when the real estate bubble collapsed. Middle-class jobs are increasingly being replaced by low-wage ones. Putting more cash into average workers’ hands allows them to spend more, which puts others back to work.
As the low-wage sector goes, so goes the nation. A major challenge fin the coming decades — perhaps the central challenge — will be ensuring that the vast majority of citizens have access to work that affords a decent standard of living.
Fifteen bucks an hour too pie-in-the-sky for you? OK, try $11. Economists consider that hourly wage the cutoff for poverty level for a family of four. So you get why people are protesting. And you get why the fast-food industry has an incredibly high turnover rate, 75 per cent rate annually. The pay stinks. You can’t live a decent life on it. The national median pay for cashiers, cooks and the crew in the industry is $8.94.
The people bagging the burritos and taking those frozen patties from the walk-in are not out of line to insist on higher pay. This is one of the fastest growing sectors of employment. And increasingly, its workers are adults, many with families.
The Colonel and Ronald McDonald are not the only villains in this piece, not even the major ones. For three decades, U.S. economic policy has consistently undercut the interest of wage-earners in favour of corporate managers and Wall Street. As this worthy class off-shored jobs, raided pension funds, and reserved profits for themselves alone, the courts, Congress, state legislators and the mainstream press could be counted on to endorse their actions as the natural workings of the free market. Labour unions, meanwhile, were variously dismissed as misguided or outmoded or downright pernicious enemies of the market.
Well, now the middle class finds itself in the crosshairs, too. Many who once thought their college degrees and white-collar resumes were a meal ticket for life are discovering what life is like for the economically precarious.
Is $15 an hour absurd? Would raising the wage floor to that level do more good than harm to the low-wage half of the population? I can’t say with any certainty, and I don’t know that anybody can. All I know for sure is that working people need a raise, and there’s damn little chance they’ll get it without a fight.
Mary Sanchez is an opinion-page columnist for The Kansas City Star.
—McClatchy Tribune Services