The “Fight Against 15” Has Only Just Begun
By: Allison Andes
Think of the last time you went into a fast-food restaurant like McDonald’s. Think of the service you were given and the quality of the food you received. How was the service? How was the food? Now that worker was probably making minimum wage or something close to it. Now imagine if that worker got paid a wage of $15 an hour. What “special” service did they give you to have them get paid $15 an hour? Now think about your food. Would your $3.50 hamburger be worth $7.00? In this scenario, labor costs have doubled, but nothing else has changed. The service is the same and food is the same. To cover the increase in this labor cost, you, as the customer, must now pay more money for the same result. Your $6.00 lunch now costs you $12.00. Would you still eat at McDonalds at this price? So what if there was a petition to raise the minimum wage to $15 an hour? Would this have a negative or positive impact on the hamburger business? Would it help make our economy better or worse? Would it help workers save money for long-term investments like retirement? I contend that if the minimum wage increases to $15 an hour, businesses, such as McDonald’s, and America’s full employment would be negatively impacted.
Wouldn’t one think that each worker getting paid $15 an hour would be a huge success? On the contrary, it would mean the end full employment as we know it. The marginal cost of raising the minimum wage to $15 an hour significantly outweighs the marginal benefit. The marginal benefit only benefits the worker while the marginal cost negatively impacts the business and the consumer - the consumer because the price of the product is increased to cover the increase in labor costs.
The people that are demanding an increase in the minimum wage are the people that are trying to make a living at McDonald’s. McDonald’s is not a job to make money to support a family. Firstly, minimum wage jobs are mostly part-time. Like McDonald’s, it exists mainly for young people to start making money, get working experience, and a feel for what a wage-earning job is. And this is what sparks the controversy in America--so is raising the minimum wage to $15 a good idea? Ed Rensi, former president and chief executive officer of McDonald’s, USA, states that, “a $15-an-hour national minimum wage would put us in uncharted waters, and risk undesirable and unintended consequences."
A congressional meeting was held about this touchy subject, where the Republicans disagreed in raising the minimum wage since the direct cost would be far too excessive. That is almost doubling the labor cost, which could result in businesses being unable to meet the demands of the cost increase, and therefore, forced to shut down. The Democrats on the other hand voted to raise the minimum wage because they believe that it will bring Americans above the poverty line. For example, Democratic Senator Bernie Sanders “introduced a bill for gradually raising the minimum wage to $15 an hour by 2020, saying: "In the year 2015, a job must lift workers out of poverty, not keep them in it. The current federal minimum wage of $7.25 an hour is a starvation wage and must be raised to a living wage,’” according to Bud Meyers of the Economic Populist. Unfortunately, Senator Sanders’ statement bodes a huge issue: raising the minimum wage to $15 means that more money is needed to pay workers, therefore causing bosses and managers to potentially fire a significant number of employees so certain employees can receive that raise in the minimum wage. Additionally, Sanders doesn’t know what happens backstage with raising the minimum wage: when the minimum wage increases, so does everything else--prices of goods, taxes and even health care--this makes the opportunity cost too great. So Bernie Sanders’ statement is false because somebody must pay for the increase in labor. Again, it’s either the consumer or the business - for most businesses, the cost increase will force the business to increase the prices to the consumer.
In addition, if the minimum wage is increased to $15 an hour, companies should investigate the option to either pay their workers a high $15 an hour wage or perhaps to reduce their costs, replace their workers with robots. Unfortunately, if companies chose to replace their workers, the unemployment rate will likely skyrocket. Since consumers love technology, having kiosks and machines wouldn’t be that bad: the high demand for technology could make consumers happy since technology is fast and easy. However, what happens when the machines break? Who is going to fix them and how much will the maintenance fee cost? With workers gone, what will happen when these machines suddenly don’t work anymore? According to Ed Rensi, he states that, “McDonald’s now has self-service kiosks in about 600 U.S. locations and that number is expected to increase to roughly 1,000 by the end of 2016.” That was the trade-off certain McDonald’s restaurants made--they gave up their workers and replaced them with kiosks.
But, although there are definite downsides to raising the minimum wage, there seems to be at least a positive to increasing the minimum wage and that is it could reduce government welfare spending. According to the Center for American Progress, their most recent study in 2014 stated that, “more than 1.7 million Americans would no longer be dependent on government assistance programs. They report the increase would shave $7.6 billion off annual government spending on income-support programs.” But remember, as stated previously, the workers are potentially being replaced by machines - so that means the worker is out of a job and will be collecting welfare.
So while it’s safe to conclude there is at least one positive to raising the minimum wage, there are too many negatives that outweigh the positives. But these are the topics that we, as Americans, talk about to see if these new ideas can improve our lives. In this case, McDonald’s being forced to raise the minimum wage is a topic that can destroy the business and eventually, America’s economy. So the “Fight Against 15” has only just begun.
Works Cited
"Minimum Wage - ProCon.org." ProConorg Headlines. None, 2 Oct. 2016. Web. 02 Oct. 2016.
Minutes, By 60. "Is $15 a Hour Too Much? Is $7.25 Too Little?" The Economic Populist. Bud Meyers, 2 Oct. 2016. Web. 02 Oct. 2016.
Rensi, Ed. "Ex-mcdonald's Ceo: A $15 Minimum Wage Destroys Critical Career Opportunities." Fox News. FOX News Network, 01 Oct. 2016. Web. 02 Oct. 2016.
Rensi, Ed. "The Ugly Truth About A $15 Minimum Wage." Forbes. Forbes Magazine, 2 Oct. 2016. Web. 02 Oct. 2016.
Worstall, Tim. "Seattle's $15 Minimum Wage: Jobs Down, Unemployment Up. This Isn't Working, Is It?" Forbes. Forbes Magazine, 2 Oct. 2016. Web. 02 Oct. 2016.
While I agree with all the points stated I think that in general 15$ a hour for a minimum wage is way to high it should be much lower if they are going to raise it 15$ is a lot. For example a slight raise of maybe 8$ or maybe even 8.50$ would be a reasonable raise this wouldn't affect the full employment as much and this is only a 1.25$ difference making it much smaller than the suggested 7.75$ raise in minimum wage.
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ReplyDeleteI really liked how thought provoking this passage was. The multiple questions really made me think about the current situation with raising the minimum wage. I have read about raising the minimum wage before, and after reading this post, I still agree that the wage should not be raised. When thinking about raising the wage, people are only thinking of the benefit that it will result in, but not the consequences of what would happen if they were to actually raise the wage. As said the post, raising the wage for a McDonald's worker to $15 an hour would be a very unwise decision. First off, the people working at McDonald's are not working that hard that they need to have that high of a wage. The quality of their work is most likely not that great that they should get paid that much. Also, the majority of those working in fast food restaurants, or any minimum wage job for that matter, are teens like us trying to get work experience and to start saving money. Therefore, paying them that much would be unnecessary. On that matter, raising the wages would benefit some in the long run, but take a negative affect on the majority. In raising the wage, companies would have to fire employees to pay for the raise in other employees wages. This would only cause there to be a benefit for a small amount of people. Also mentioned in the post was the use of technology replacing workers. I do not think this would be a beneficial idea in the sense that there would be no way to get work experience as a young adult, and those who are troubled financially would not have a small job to lean back on. Although technology would be an efficient way to replace employees, it would not benefit people in the long run. Overall, this post was very eye opening and relateable to the real world.
ReplyDeleteI definitely don’t think the minimum wage should be increased to $15. Being a worker who only makes $7.25 an hour, $15 seems like a great idea, but when you really look at how it would affect the businesses and the economy as a whole, that feeling is shot down pretty quickly. People need to understand that minimum wage isn’t made to be able to live on; it’s purpose is to make sure people aren’t getting paid too less-- it’s a starting point so to say. As the post mentions, if the minimum wage were increased that significantly, prices would skyrocket, people wouldn’t buy their products, businesses would suffer, and would eventually end up laying a bunch of people off. That’s definitely not helping anyone. And personally, I’d rather get paid $7.25 than nothing at all.
ReplyDeleteI think you make a good argument for not increasing the minimum wage. The opportunity costs of doing so would eventually lead to a loss of jobs and business for many larger companies. While ideally it would help workers break the poverty line, more realistically these workers would get laid off by the businesses they work for. The other thing to keep in mind, as Allison stated, was that minimum wage jobs are not intended to support a person or a family. They are ideally for high school/college students or people of that age to save up money for a better education so that they can have a higher paying job. This is not realistic to what is actually occurring, as there are other people seeking to make a career in these jobs. There is obviously a problem here, and these people need to be paid more but the solution is not through raising the minimum wage.
ReplyDeleteA lot of businesses that pay minimum wage are huge corporations in industries like fast food and retail. I don't think that raising minimum wage for McDonalds workers, for example, will force businesses to immediately cut the bulk of their staff -- I do think that industries like McDonalds have the money available and the sales to compensate an increased wage (maybe not to the extreme $15/hr, but at least to some extent). McDonalds now has the motivation to be much pickier in their hiring process, though, which means less people are getting jobs than they were before. Also, you did mention that if you increase the purchasing power of consumers, the price of everything else will rise. At this point, I think it's important to also mention inflation. Consumers cannot afford as much with the minimum wage in 2016 as they did in previous years. I don't think that making a huge leap to $15 is the answer, but I do think minimum wage should be adjusted to maintain a consistent, consumer purchasing power.
ReplyDeleteIf minimum wage is increased to $15, not only will extra workers be laid off, but the rate of new jobs by the business will decrease. This will lead to a hard job market will the prices of food increase greatly to compensate for lost revenue. Businesses are more willing to buy expensive kiosks instead of paying the $15, as the kiosks is less costly in the long run.
ReplyDeleteI agree the fact that increasing the minimum wage to $15 would totally affect the economy and various businesses. It is not only the McDonald's going to effect the economy when the wages are raised, there are many fast-food restaurants and stores who hire low wage workers will effect the society's economy as a whole. Every individual who works, will have a wish to get a raise in wage for several months(for example 6 months); it could be satisfying for that worker that his/her wage is increasing constantly but it would a troubling issue for other workers and businesses. Like as you said, increasing the minimum wage will make the businesses fall. Well this statement is not only true from the restaurants perspective, it is also true in IT jobs. If an IT worker confronts or requests his/her boss to increase his/her salary, there is a chance of 80% of the worker being laid of from the company. The only difference between a low wage worker and an IT worker is the no of people because if the low wage worker wants to quit the job to the reason of not raising his/her wage, he/she can't quit because they knew all restaurants and stores pay the same wage(minimum wage), on the other side, an IT worker can quit if he/she wants to because he/she knows there are lot many companies who will pay the salary of what he/she is expecting. In addition, increasing the minimum wage to $15 would significantly disturbs the equilibrium price and quantity leading to the decrease in demand and loss for the businesses.
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ReplyDeleteI agree that raising the minimum wage to $15 an hour would be a horrible decision. If minimum wage was increased to $15 lots workers be laid off. Not only that but since the minimum wage was increased by a lot it would also make it harder to get jobs. People think that raising the minimum wage is a good think, but they only see it that way because they just think about having more money in their pocket. They don't understand that raising the minimum wage also increases the costs on the goods in service making your "extra" money irrelevant.
ReplyDeleteWithout thinking about the consequences of raising the minimum wage, I have always been one for doing so. However, after taking into account all of the opportunity costs from doing this my opinion has completely flipped. It is true that minimum wage is not enough to live off of, especially for someone trying to support a family, but people need to remember that these are part-time jobs at fast food chains. While $15 is a fairly high minimum wage, I could definitely see raising the wage to at least $8.50. This way, large corporations, like McDonald's, would be capable of doing this without cutting jobs. In the end, it is better to have a poorly paying job than not having one at all. I found it interesting that you brought up the business that McDonald's would lose; I for one think that even if prices were slightly raised, people will still make the quick and convenient stop for a burger and a shake. Even making the prices a dollar or two higher is cheaper than stopping at Red Robin. I really think that minimum wage needs to be raised so that it is somewhat livable, but $15 is much too extreme.
ReplyDeleteRaising the minimum wage to $15 in the United States is a risky matter that may not be all that beneficial for companies and their consumers. Many minimum wage workers at places such as McDonald’s or Taco Bell have unified to raise awareness to what they deem an “unfair” minimum wage rate. However, I agree with Allison that raising the minimum wage would only benefit the workers themselves, but would negatively impact companies and their consumers. Raising minimum wage would only increase the prices of the products being sold, making consumers less likely to purchase those certain products. Like Allison mentioned, the marginal cost outweighs the marginal benefit way too much for this to be a logical decision. If this decision was made, someone, either the consumer or the business, would have to pay for the increase in labor costs. This has the potential to run companies out of business. Additionally, this decision has the potential to drastically increase unemployment rates in the U.S if companies choose to hire less workers. Then, the U.S’s economic status would significantly decrease, and a whole slew of other problems could be created, such as more need for welfare, increase in poverty, etc. In conclusion, raising the minimum wage is not a good decision for the U.S because it will end up doing more harm than good.
ReplyDeleteIncreasing minimum wage to $15 an hour is crazy. The only good thing that would come out of this is that it wouldn't be nearly as tempting to eat at fast food restaurants like McDonald's. People who are trying to make a living off of minimum wage need t realize if they want a better life, then they need to work for it. Work to get a raise instead of protesting to raise the minimum required hourly pay. It's selfish and lazy. People making minimum wage make it because they have minimum skill. They shouldn't get $15 an hour. Plus as Allison says, it'll increase the cost of the products. And people would need to be fired in order to increase pay this much. If I was a restaurant owner I would let go anyone making minimum wage at the time, because they have the least amount of skill. More pay is always good, but these people begging for more money to be handed to them is ridiculous. A lot more problems would arise in the minimum wage was changed to $15 an hour. Maybe we should raise it, but not that high.
ReplyDeleteIncreasing minimum wage to $15 an hour is crazy. The only good thing that would come out of this is that it wouldn't be nearly as tempting to eat at fast food restaurants like McDonald's. People who are trying to make a living off of minimum wage need t realize if they want a better life, then they need to work for it. Work to get a raise instead of protesting to raise the minimum required hourly pay. It's selfish and lazy. People making minimum wage make it because they have minimum skill. They shouldn't get $15 an hour. Plus as Allison says, it'll increase the cost of the products. And people would need to be fired in order to increase pay this much. If I was a restaurant owner I would let go anyone making minimum wage at the time, because they have the least amount of skill. More pay is always good, but these people begging for more money to be handed to them is ridiculous. A lot more problems would arise in the minimum wage was changed to $15 an hour. Maybe we should raise it, but not that high.
ReplyDeleteI agree that increasing the minimum wage would be semi-detrimental to the economy. I can understand why people might believe they deserve an increase in pay because it is difficult to pay for something like a college education and only be earning $7.25+ per hour. If the ultimate goal was to keep minimum wage down, it would then make more sense to decrease the cost of other things to make it more affordable with a job that only pays a small amount per hour. By increasing minimum wage, it would only inflate the prices of goods because everyone is making more. It might help to raise the wage slightly, but not to $15.
ReplyDeleteI would be interested to know more about how the minimum wage could also affect places in the country where the cost of living is much higher or lower. Because raising the national minimum wage to $15 would likely mean places like California and New York would raise their minimum wage to $20 an hour. I like how you pointed out the obvious problems with it because most times those are ignored and youth all like the notion that they could be making $15 from the $8.50 they make now. But the problems with raising the wage would contribute to prices and many other things having to raise as well.
ReplyDeleteI completely agree with you. Raising minimum wage to $15 would make businesses lose employees. Instead of raising it to $15 maybe raise it to $8 or $9 at first and then maybe eventually raise it or maybe it someone gets a bonus raise it to $12. Since most people making minimum wage work part-time they could either get another job or try to work more hours if possible. Yes it would be nice to get paid $15 an hour but it’s not realistic right now so I would say that I would rather get paid $7.25 than nothing at all.
ReplyDeleteIt is a terrible idea to raise minimum wage, the only pro to it would be the workers who no longer require government welfare and that the government would shave off about $8 billion in spending on income-support programs. I feel that this would end up causing inflation, which is not something that we want to experience. Additionally, I echo the sentiments that minimum-wage jobs, such as working at McDonald’s, are only for experience and the wages earned at that job should not be relied on for an entire family as they are clearly insufficient. Since there is the risk of unemployment rates skyrocketing if it is or is not raised, some people may quit in protest of their wage not being raised, it is not a cut and dry solution, there are many factors tied into this issue.
ReplyDeletePersonally, I don't think raising the minimum wage is a bad idea. Although $15 is a bit of a leap, there could still be an increase of a few dollars. By raising the minimum wage, yes the cost of living would go up, but not dramatically. This will cause for more people wanting work, so the employment rate can increase, helping to grow the economy. Although Senator Sanders did propose that the wage increase should be raised to $15, I think his logic was that there would be a compromise in how much the wage would be increased (if it got to that point, that is). So it would actually turn out to be around $10. This wouldn’t cause a major shift in the US with many layoffs and such. People who work minimum wage jobs would simply live up to the current standard of living. It was also stated that these jobs are meant for teenagers, but actually many of those who do work minimum wage are above the age of 20. Many of these people have to support their families or themselves through this pay. So, these people would be the ones benefiting from the raise, along with teenagers who work part time. I do understand the concerns of raising the wage too high. However, in my humble opinion, I think the minimum wage should increase and Bernie Sanders took the right approach to facing this problem.
ReplyDeleteWhile it is true that businesses would have to lay off workers or automate if the money that they payed to their workers disappeared, it doesn't though. This article make no mention of the fact that a vast plurality perhaps even a majority of minimum wage workers would spend the majority of their paycheck. In fact raising the minimum wage to $15/h would double spending power. Workers will be able to buy more goods and services if the wage is raised. This is more money is business's pockets. In addition people could start saving for retirement early, save for college, invest in themselves, and provide a better life for their children. Our economy is based on the ability for consumers to buy products and services and if they don't have the money they won't be able to buy. This is also a form of corporate welfare in which companies force the government to pay their employees what these companies refuse to. Those who argue that minimum wage jobs are meant for teens and not meant for adults are wrong. In the words of the man who sighed the minimum wage into law, “No business which depends for existence on paying less than living wages to its workers has any right to continue in this country.”- FDR. In addition he also states, “By living wages, I mean more than a bare subsistence level — I mean the wages of a decent living.” (1933, Statement on National Industrial Recovery Act).
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