Another major corporation has joined Wal-Mart, Target and others in hiking its wages. Effective July 1, employees at non-franchised McDonald’s will receive hourly wages at least $1 above the local minimum wage. While this increase will only effect those not already earning $1 more than the minimum and it only affects those at company-owned stores—about 10% of all stores—it reflects a rising sentiment that increasing wages can be a good business decision. Of course, it’s not surprising that critics are continuing to clamor for more:
http://money.cnn.com/2015/04/02/news/companies/mcdonalds-workers-pay/index.html
The unprecedented changes we’re seeing in companies like Wal-Mart and McDonald’s is evidence that markets are capable to driving wages up. With Republican majorities in the House and Senate, there is little threat of a higher minimum wage at the national level. Yet, companies are evaluating shifts in the labor market and making their own decisions to pay more. Government action was not required, which brings me to deeper point.
Leftists argue that when left alone, companies will always drive wages down to the lowest possible level. In fact, I heard one commentator argue, “corporate America needs to learn that hiring people at rock bottom wages isn’t the best way to run a business.” She assumes—like Marx—that workers are powerless and have no choice in the matter. Big companies set the wages and benefits, and the rest of us take it or leave it. This is demonstrably false; just consider the high turnover rates in fast-food. Moreover, with few exceptions, corporate America already understands employment realities quite well.
From a cost standpoint, hiring the cheapest workers you can find may not be the most economical way to run your business. Better workers—even in unskilled categories—are more likely to show up on time, are less likely to quit, and tend to make fewer mistakes on the job. Paying a few dollars per hour more for these workers is often worth the investment. Savvy employers try to find the sweet spot where they reward employees just enough to retain the good ones.
So why aren’t more fast-food restaurants paying more in order to get better cooks and cashiers? Some are, but the truth is that promising fast-food employees are either promoted or they eventually leave the industry for better job opportunities elsewhere. Most talented workers see burger flipping as a part-time or a temporary job while they build a track record or train for something better. In this way, companies like McDonald’s are providing sorely needed training to entry-level workers.
Companies like McDonald’s shouldn’t be castigated because they don’t offer middle class wages. They should be celebrated because they provide initial job training and experience.
Mickey D’s is starting to come around. This is no a business decision. Workers rise up and corporate fat cats see the writing on the wall.
In a few years, robots will be doing all of these jobs anyway, in fact, there already are in some fast food franchises. The non-skilled people will lose more and more jobs to machines and foreign workers and leach of those of us that have marketable and valuable talents.
“I have a GED and 4 kids…pay me more!”
These moves are great PR for these companies. However, they are not in business to give away money for nothing. They will manage overall payroll expense by cutting total hours, cutting benefits, automating and things like that. They will manage overall profitability by increasing prices and managing non-people expenses. In the end there is no free lunch and the folks who run these companies are not dumb.
I wonder weather these companies would have reached this epiphany without the clamor of “those in the left”?
Economics 101 by Jeff. Aliza and gibson should thank you for the lesson. “Epiphany” is the Greek work for a 10% price increase across the board. Raising the minimum wage DOES NOTHING to improve their quality of life, it just makes things more expensive for everyone else. These same people who bitch about poor wages at Target, Walmart and McDonald’s all spend their money there….why?? Because it’s cheap! Why is this so difficult to comprehend?