Archived Story

Expanding poverty for profit

Published 10:22am Friday, December 6, 2013

The average age of a fast food worker is 29.5 years.

In 2000 the average age of a fast food worker was 22.

America is changing, and for those without higher skill levels there are fewer and fewer jobs and more competition for low skill jobs. It is, in a sense, a lost generation of workers for those who have not adapted to newer skills.

In recent weeks fast food workers have targeted their employers with picketing and demands for base wages to rise from the current minimum wage to $15 per hour.

In response several employers have come forward noting that increasing the minimum wage will mean fewer entry level jobs and higher prices, with little effect on poverty. The employers are buttressed by several studies affirming these outcomes.

A vice president of White Castle restaurants made the ominous charge that if the minimum wage even approaches $15 half their stores would close and the remaining half would be “on life support.”

But are the employer’s right, or are there other mitigating or challenging facts that suggest a significantly different picture of the impact of raising the minimum wage?

First, the current federal minimum wage is $7.25 per hour and less for employees who derive income from tips. If the minimum wage was annually adjusted for cost-of-living changes it would be $10.74 today, or $15,080 annually.

Today 19 states have higher minimum wages than the federal wage level, with the city of San Francisco having the highest minimum wage at $10.55 per hour.

Public opinion on the minimum wage consistently supports a minimum wage increase to approximately $10. One of the most recent studies found support at 67 percent, a typical response.

And recent studies have argued that there is not much impact on jobs by increasing the minimum wage to an inflation adjusted level. A 2009 meta-analysis of 64 work studies concluded that there was “no evidence of meaningful adverse employment effect”.

If then there would be no significant reduction of jobs, meaning most employers are not now employing people they do not need on the job, a reasonable assumption, then are the other factors noted meaningful?

Would fast food prices rise? Would McDonald’s be forced out of business? Would the change have no effect on poverty?

In terms of pricing there are two answers to the question. First, yes, consumers should anticipate some increase in pricing if wages increase. But, second, not always, since highly profitable chains like McDonald’s could cut profit margins to pay the additional costs if necessary.

Will fast food companies be forced to close? Keep in mind that a rise in minimum wage would affect all of their competition equally, so their competitive costs would rise identically, mitigating business loss.

Finally, to the argument that increasing the minimum wage would not end poverty. Of course it would not, for many of these workers already work two or three jobs to survive. But would it make lives a small bit easier for many working very hard? Absolutely.

Keep in mind that these same companies manage to keep many workers under full time employment, meaning workers working at 2-3 jobs may have no benefits at any of those jobs and, consequently, no health care. And many workers’ salaries are being subsidized by taxpayers because they qualify for other support programs like the food stamp program.

These forces are all pushing workers deeper and deeper into poverty no matter how hard they work, how many jobs they hold.

It is only fair to tie the minimum wage to inflation and end the battle against workers.

 

Jim Crawford is a retired educator and political enthusiast living here in the Tri-State.

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