Should Fast Food Workers Make $15 an Hour?

There’s a debate that has sparked several staged protests among fast-food workers in the State of Michigan and elsewhere about the merits of low wages and the Federal minimum wage as a whole.  As it stands, the Federal minimum wage is currently set at $7.25 per hour.  In Michigan, the minimum wage is $7.40 per hour.

The conversation centers around the concept that minimum wage is not a ‘livable wage’, meaning that a person earning such a paycheck will have an extremely difficult time maintaining even the most modest standards of living.  The question most relevant is this: whose problem is this anyway?  More on this later.

There’s a conversation taking place right now on Mlive.com in the comments section of this article.  The comments read just like they do with any other controversial topic – with both sides of the argument being defended along with a healthy dose of trolling.  However, there are a couple points that people seem to be missing – intentionally or otherwise.

Source: FreeDigitalPhotos.net

Source: FreeDigitalPhotos.net

Wages in a fair market economy are determined by the same laws of supply and demand that govern all other facets of capitalism.  Fast food work – the functions of the job itself can be performed by virtually any able bodied person.  If you can get yourself to the restaurant at the time you’re expected to be there and can be trained to use the machines, you qualify.  This minimum requirement for employment can be met by a LOT of people in the workforce.  Because of this, there is little reason for fast food restaurant operators to pay wages beyond the minimum.  There is of course something to be said for paying a better wage in order to attract better job candidates – ala the practices of Costco – but in this case, fast food restaurants really don’t stand to gain much by increasing wages.

The other element that people seem to be ignoring when debating this topic is what will happen to the economy if you increase the wages of fast food workers to $15 per hour, effectively doubling the wage.  It has been speculated that there would be a 10-20% in the cost of fast food items if the wages were doubled.  And while this is probably an acceptable tradeoff (especially for people such as myself who rarely eat fast food), this isn’t the only effect it would have.

If fast food work all of a sudden paid $15 per hour, this would become preferable to all the jobs in the economy that pay less than that.   Think of all the jobs such as bank tellers, construction workers, retail clerks, grocery store workers, gas station attendants, house cleaners, trash collectors, secretaries, administrative people… the list goes on and on.  All these employers who currently pay more than minimum wage yet less than $15 per hour are all of a sudden going to find themselves competing with the fast food industry for employees.  So what would happen is that they would have to raise their wages to well above $15 per hour in order to retain their help.

This would have two massive consequences for the economy.  For one, it would drive up the prices of goods and services in every affected industry.  Costs of groceries and gas and building materials and auto maintenance and essentially every consumable product would be greatly increased because of the inflated wages.  This would cause jumps in inflation the economy has likely never seen. Severe hardships for businesses would result – the drastically increased prices of goods and services would reduce consumer demand and the economy would shrink as a result. This is the very definition of a recession.

In a bit of irony, another unintended consequence of this would be the fact that current fast food workers would be largely displaced.  When fast food jobs become more attractive than occupations requiring a higher skill set, fast food restaurants will have a bigger talent pool to draw from.  Employers will always hire the most overqualified candidates they can.  When more talented, motivated, capable workers become available, the weakest fast food employees will immediately become expendable – but instead of simply going from working at McDonalds one day to working at Burger King the next, they will unfortunately have nowhere to go.

Think of it another way: if every job in the world paid the same wage, all the easiest jobs would get filled first… and the more difficult jobs would go unfilled.  Why would anyone work harder for the same pay?

So while it’s apparent that doubling the rate of fast food workers is a colossally bad idea, that still leaves the problem of people working for wages while not being able to make ends meet.  But the question remains: whose problem is this really?

It’s a tough but fair question.  A better question might be how much inflation is reasonable to impose on the economy in order to boost the living conditions of it’s lowest workers?  Is it’s society’s responsibility to provide a minimum standard of living?  I’m not necessarily sure that it is.  While as a society there’s a moral obligation to take care of the weak, the elderly, the sick and disabled, able bodied people have to be held to at least a minimum standard of accountability.  How does it make sense to boost the standard of living of people who aren’t willing to work to achieve it for themselves?

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