a reply to: Puppylove
Ok here we go again, this is beginning to look circular because you seem convinced that by paying people more money it fixes everything so . . .
Economics 102 (the more advanced class, do try to keep up):
People start businesses to make money, not lose it. And they also do not do so in order to be a charity for all the people who do not have a skill
Minimum wage is a starting wage, not a living wage. You are not expected to make a living or raise a family on minimum wage. It is meant as a
starting point. It is for kids in high school who want to make some spending money (or that have to help out the family), college students who need a
little extra assistance, and as a last resort for people who have fallen on hard times and for one reason or another have to start back at minimum
wage. If this last group is trying to live off their income or raise a family on it, then they will need multiple jobs (this is not unheard of and
has happened throughout history).
In the past, people could get their bosses to give them more hours so that they could make more money with less jobs (and thus without juggling
schedules). Alas, with new laws their bosses cannot afford to give them extra hours, indeed they are forced to give them less hours now than in the
past (i.e. 29 instead of 39). This goes back to the basic fact that businesses are there to make a profit while providing a service.
You used the example of a burger joint where because an employee is now making double their old salary they are now buying double the burgers (or more
people are buying burgers). Quite the opposite is true. These fast food burgers are the only thing many of them can afford. In fact it is cheaper
and quicker/easier for someone to buy these cheap burgers than to eat healthy, so that is what most of the people who are trying to live off of
minimum wage job(s) do. So if they got an increase in pay, they would eat less cheap food rather than more (and this is by your own reasoning).
So, now you have less people buying the 'cheap' food and costs at double what they were. (Remember the thing about profit?) So now the owner has to
save money by streamlining his/her costs. In a fast food franchise system, the two biggest places where money is spent is payroll and food costs.
Since they cannot cut costs on food (contracts with franchisors), they must cut costs on payrolls and since they can only cut those so much, prices go
The most valuable asset to a business owner is skilled employee, but these are also the most expensive. So inevitably in the situation of forced wage
hikes, here is the common result:
Reorganization of the business . . .
Starting employees (example - I have no idea what they actually make since I do not have a franchise):
1) 1 GM $24hr (40 hrs week)
2) 2 Shift Mgrs $18hr (36 hrs week)
3) 4 Assistant Mgrs $14hr (26 hrs week)
4) 8 Team Leads $12hr (24 hrs week)
5) 32 Line Employees $8hr (30 hrs week)
Payroll = $14,216 per week
1) 1 GM $22hr - Top management (often GMs) are offered a choice of either leaving (voluntarily so as to not look bad on resume) or to stay for less
pay in a new position which is essentially the same but with different title. Their pay will drop, and responsibilities stay. (40 hrs week)
2) 0 Shift Mgrs - If lucky and the GM left, one of the two will be promoted to GM. The other (both if GM stayed) will be given same offer as GM,
which is to stay for less money and more responsibility.
3) 8 Assistant Mgrs $16-17hr - This is now the only middle mgmt job to move up to now (just above minimum wage). (26 hrs week)
4) 24 Line Employees $15hr - Less employees means more work. Note that while making more money they are still at minimum wage. (29hrs week)
Payroll = $14,648 per week
That's right, they went from 47 people with jobs to 33 people with jobs (but that's ok right, because the people who kept their job got a raise). And
the people who lost their job are staying unemployed because everyone else had cutbacks to. There is just no market for overpaid unskilled
Not to mention payroll went up (costs went up), so they still have to increase prices.
Remember that owners are in business to maximize their profit.
So the net thing they look for is automation. Mechanical kiosks for making orders is a large cost upfront but in the long run saves massive amounts
on payroll. By this point customers are used to the price increase so it stays. In fact there was another initial price increase to help pay for the
Now there are only 16 line workers. Anther 8 people lost their jobs to minimum wage increase.
Is that real enough for you on the whole franchise thing?
Now if you want something that will actually make a difference to all these people working in franchises, pass a law that reduces franchise fees to a
smaller percentage of profits without guarantees. That will save franchisees a good bit of overhead allowing for more profit. And history has shown
that a business owner that makes more profit typically likes to keep the employees that got them there happy and rewards them with raises as well (at
least the ones pulling their weight).
Everyone seems to be worried about the top 1%. Well raising the minimum wage has nothing to do with them, because they are the CEOs etc of all these
large corporations and lawyers and politicians and doctors. And none of them are going away any time soon. The only thing raising the minimum wage
truly accomplishes is a higher cost of living for everyone and less jobs to go around. Not to mention now you have to be a skilled worker for an