Tags: Minimum | Wage | Fast-Food | Jobs

Minimum Wage Hike Will Kill Fast-Food Jobs

By Friday, 12 September 2014 09:28 AM Current | Bio | Archive

KFI AM radio in Los Angeles recently reported on a strike by fast-food workers for a minimum wage of $15 an hour. This is more than double the current U.S. minimum and a $6 increase in the current California minimum of $9, which was raised just last July.
Mouthpieces for the strikers — usually union representatives who hope to unionize workers in the future and siphon off some of the wage increase in the form of dues — complain that a single adult with a child really needs to make $29.34 an hour “just to afford basics and make ends meet.”
So why are they demanding just half a sesame seed bun instead of the whole loaf?
There are two basic problems with these fast-food fundamentalists and their demand for higher wages. First, unlike neurosurgery or the law, flipping burgers is not a career in and of itself. These are entry-level jobs with entry-level wages.
Employees behind the counter are usually young people trying to establish a work record or older individuals who have a record. The goals for both should be paying their dues in a work setting and moving up to a better-paying job in the future.
Second, the wages fast-food workers make don’t come from Uncle Scrooge’s bathtub or a money tree behind MacDonald’s headquarters. Wages are just another cost and when wages increase the restaurant has a limited number of choices.
It can cut costs by reducing the quality of the ingredients. It can cut costs by firing workers and adding automation. Or it can raise the price of the products on the menu.
James Sherk, an analyst at the Heritage Foundation, ran the numbers on a $15 fast-food minimum wage and estimates that an increase that size would cause prices to surge 38 percent.
MacDonald’s Big Mac Meal would jump from $5.69 to $7.82.
Wendy’s Son of a Baconator Combo would increase from $6.49 to $8.92.
And a Subway Turkey Breast Footlong would expand from $6.50 to $8.94.
Sherk also estimates price increases on this scale would drive almost one-third of the customers away. This is a recipe for a fast-food death spiral: Costs go up 38 percent, revenue declines 33 percent. Soon the former restaurant owner is looking for a new job.
We currently have a fairly efficient method of setting wages and prices called the market. Government interference — to appease noisy union representatives that contribute campaign money to Democrats — will only serve to penalize consumers in the short run and workers in the long run.
Michael Reagan is the son of President Ronald Reagan. He is president of The Reagan Legacy Foundation and chairman of the League of American Voters. Mike is an in-demand speaker with Premiere. Read more reports from Michael Reagan — Go Here Now.

© Mike Reagan

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There are two basic problems with these fast-food fundamentalists and their demand for higher wages.
Minimum, Wage, Fast-Food, Jobs
Friday, 12 September 2014 09:28 AM
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