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Flip the Economy, Not More Burgers

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Thursday, 05 Sep 2013 07:37 AM Current | Bio | Archive

There are thousands of employees that work for fast food restaurants. They work hard and get paid very little. But how many dreamed of going to school, graduating with a degree and setting out to spend their life flipping hamburgers? Very few, I bet.

Unfortunately, in the Obama economy, too many college graduates have found themselves in this position. And worse, many American workers now consider fast food jobs a destination, not a temporary stop off until a better paying job comes along.

CBS reported that fast food jobs "are no longer introductions to the world of work. The age of the average worker is 28, with 70 percent 20 years old or older, according to statistics compiled by AOL Jobs. One out of four has at least one child, a third has at least some college education and, according to the National Employment Law Project, there is 'limited occupational mobility,' so the positions don't lead to higher-paying positions let alone opportunities to own franchises."

Fast food workers deserve to make an honest living, but they also need to realize that fast food jobs were never intended to pay the money required to raise a family.

According to this same CBS report, "The average hourly wage last year for the nation's roughly 505,000 fast food cooks was $9.03 an hour. The 2.9 million food preparation and serving workers had an average hourly wage of $9. Furthermore, the wages have been dropping over the last few years when compared in 1982-1984 dollars (an analysis that can account for inflation)."

The numbers suggest that the average fast food worker, assuming working 52 weeks without vacation, makes about $12,355. The federal poverty guideline for a single person is $11,490.

So is the answer to agree to the demands of fast food workers prodded by The Service Employees International Union to raise hourly wages to $15.00 an hour? Not so fast.

As reported by Yahoo, "The restaurant industry overall is a low-margin business that doesn't have much spare cash in the till. The average profit margin for the whole industry is just 2.4 percent, according to Capital IQ, and that's down from 3.2 percent in 2009, which is when the recession ended."

Can we really expect an industry with a paltry profit margin of 2.4 percent to increase their cost of labor 60 percent to $31,000 a year?

The Associated Press revealed that franchisees say their profit margins are thin — "they make 4 cents to 6 cents on average for every dollar they take in — and that they can't afford to hike pay, particularly at a time when companies are trumpeting value menus amid heightened competition."
That might explain why ice cream shops and fast food restaurants have the highest rates of failure of their federally guaranteed loans used to buy franchises, according to data from the U.S. Small Business Administration.

So what the country faces is an age old battle: balancing the cost of doing business and keeping the doors open. Wages tend to be the biggest draw on profitability, so the break out of protests over wages ignores the fact that when costs exceed revenue, businesses fail.

AP also notes that "although many Americans say they support higher wages for workers, the reality is that people flock to the cheapest meals, which cut into profits. It's why fast food chains have been stepping up deals and promotions in the weak economy."

So if fast food restaurants hike wages, they'll be forced to hike prices, driving out the very customers who come to fast food for cheaper food prices.

The answer for the fast food industry is not to raise the hourly rate of its workers — it's for the Obama administration to create a work environment where there are millions of good paying full-time jobs. That way, fast food jobs can return to their origins: a way for young people to gain business experience before moving into a career that pays a living wage.

Flipping burgers should be the first stop in a career, not the last.

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NealAsbury
There are thousands of employees that work for fast food restaurants. They work hard and get paid very little. But how many dreamed of going to school, graduating with a degree and setting out to spend their life flipping hamburgers? Very few, I bet.
fast food,workers,minimum,wage
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2013-37-05
Thursday, 05 Sep 2013 07:37 AM
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