Labor Needs To Be Paid A Living Wage
My first job was assisting my father, a carpenter, on construction sites in the summer, starting around age 8 (1975). One summer I decided to assist a rock layer to earn more money but that was grueling labor. My first job, other than for my father or other trades, was working for the local Arby’s fast food chain at age 16 (1983). I lasted 4 days before I knew I wasn’t cut out for fast food work. I worked for my next employer, Toys “R” Us, for 5 years. When I left Toys “R” Us in 1988 the minimum wage in Oklahoma was $3.35/hour (source), but I was making $5.90/hour as a part-time head cashier. Many of my co-workers were also in school (high school or college) or had other full-time work, but for some it was their only job. They were young and not supporting a family though. Today face of the minimum wage worker is radically different from when I started at mimim wage 30 years ago. They’re older, more educated:
Government statistics and studies suggest that the common picture of the fast food worker is inaccurate. Not only are relatively few of them teenagers looking for some pocket money while attending school, but the number of adults working in low-paying part-time jobs against their wishes is rapidly growing. [snip] Meanwhile, these 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. (CBS News)
These adult workers “Can’t survive on $7.35.” They’re employed, working full time, yet not surviving.
You may dismiss their situation, thinking they should’ve gotten more education to land a better paying job. Again, these workers aren’t high school dropouts, nationally a third have some college education. Suppose they all found better jobs, most fast food establishments & retail stores would have to close because they’d have no employees. Even now far suburban places must pay more to lure workers to commute to the newly created jobs. The closer jobs often being created by developers seeking tax-increment financing (TIF) likely pay just minimum wage with no benefits. The other thing you might be thinking these people have made poor decisions in life, so they must deal with the consequences.
However, life is never that simple:
In a series of experiments run by researchers at Princeton, Harvard, and the University of Warwick, low-income people who were primed to think about financial problems performed poorly on a series of cognition tests, saddled with a mental load that was the equivalent of losing an entire night’s sleep. Put another way, the condition of poverty imposed a mental burden akin to losing 13 IQ points, or comparable to the cognitive difference that’s been observed between chronic alcoholics and normal adults. The finding further undercuts the theory that poor people, through inherent weakness, are responsible for their own poverty – or that they ought to be able to lift themselves out of it with enough effort. This research suggests that the reality of poverty actually makes it harder to execute fundamental life skills. Being poor means, as the authors write, “coping with not just a shortfall of money, but also with a concurrent shortfall of cognitive resources.” (How Poverty Taxes the Brain)
Poverty adds a burden that makes it difficult to make good decisions to escape poverty. Additionally,
Fast food is a billion dollar per year industry in St. Louis, and we believe that no one who works for a living in such a profitable business should be forced to rely on public assistance to provide for their family. One-quarter of St. Louis’s workforce works in the service economy, and in fast food the average annual salary is less than $19,000. When workers are paid a living wage, not only will it strengthen the economy but it will also reduce crime in our neighborhoods. (source)
Living wage?
The living wage shown is the hourly rate that an individual must earn to support their family, if they are the sole provider and are working full-time (2080 hours per year). The state minimum wage is the same for all individuals, regardless of how many dependents they may have. The poverty rate is typically quoted as gross annual income. We have converted it to an hourly wage for the sake of comparison. Wages that are less than the living wage are shown in red.
The minimum wage isn’t enough for an adult to support themselves. With such a huge part of our region, largely in the city, making minimum wage it is easy to see the region will not be able to prosper. Sure, there are business owners getting very wealthy off the backs of many.
A few benefit while the region is held back.
— Steve Patterson
Like many things in the economy, wages are based on supply and demand. Minimum-wage workers receive minimum wages because demand for their services is relatively low while supply is relatively high, period. It has nothing to do with respect or poverty, it has everything to do with how hard any employee is to recruit, retain and/or replace. CEO’s, in contrast, are paid boatloads of money because the ARE perceived to bring great value and are, in the view of their boards, essentially irreplaceable. The other half of the equation no one seems to want to talk about is inflation. If wages for front line employees go up by 100%, it’s not unreasonable to expect prices to go up a similar amount, maybe not 100%, but at least 50%. The law of unintended consequences will then kick in with a vengeance – if you’re making twice as much and your expenses have doubled, have you gained anything?!
Using your example of making $5.90 an hour in 1988, and going to the government’s inflation calculator, that $200 paycheck back then would need to be a $395 paycheck today to buy the same stuff / necessities: http://data.bls.gov/cgi-bin/cpicalc.pl . . The question then becomes what would a part time head cashier at Toys R Us be paid today? $11.75? I’m guessing that it would be closer to $9.50 or $10.00, but it will still be way more than $5.90.
The final part of any argument is what is included in the definition of a “living wage”. Back in 1988, you didn’t have a cellphone and probably didn’t have a computer, internet access or cable TV. My wife and I are spending something like $120 a month for those “necessities”, while back then all I was paying maybe $20 for was a land line. People today also eat out more than they did 25 years ago – “poor” people are regular customers at places like Rally’s and Church’s, and they’re more expensive and less healthy than something one prepares at home.
What most supply siders forget is raising the wages paid aso shifts the demand for goods & services. Please see http://www.raisetheminimumwage.com/pages/job-loss for more on the economics
Economist Paul Krugman makes a good argument for supporting Obama’s proposal raising the minimum wage to $9:hour. http://www.nytimes.com/2013/02/18/opinion/krugman-raise-that-wage.html
Has anyone stepped back to realized we’re talking about fast food chains here? These are the places that serve us slime in the form of chicken, only offer products that are laced with HFCS and any chemical available to make it as cheap and last as long as possible. No sector of our society has a larger role (along with soft drink manufacturers) in assisting the obesity problem in our country. I know that’s not the purpose of this article, but it is the reality of the situation. Nothing they do is for the betterment of society, but to squeeze one extra penny out of each restaurant. What makes this on topic is this. While the CEO’s might be driving the bus, it’s not the corporation that is giving the directions, but the stock holders who want the company to hit it’s profit goals for the year so the stock price goes up. Want higher wages, look for a company that isn’t in the stock market. This is oversimplified, but very true.
So an individual owner is less interested in maximizing their profits than individual stock holders are?! I seriously doubt it. Anyone willing to work 70 or 80 hours a week isn’t doing so out of the goodness of their heart, they’re chasing their dream, which includes being appropriately rewarded for all that hard work.
But back to your basic point, that fast food is slime – fast food exists because people buy it! It’s cheap, it’s tasty and it’s filling, even if it isn’t very good for you. One reason it’s cheap is because the workers aren’t paid well (and they don’t get get tips). The only way this will change is if you, I and everyone else patronizes those businesses that do pay their employees living wages, voluntarily, and serve only healthy food that is good for us. You can’t fix stupid, but you can certainly reward good behavior!
Without getting into specifics, I am personally aware of one chain that because the company didn’t meet their stock forecast for the year, they have cut back the allotment of hours for each restaurant (and froze pay increases). This directly affects the franchisees ability to service customers in their individual store and also the employees morale in that store. (I personally think that’s not a smart business move, but they don’t ask me). It illustrates how little control franchisees have over the operations in this example.
If I could rid the St. Louis of fast food and Walmart, it would be a much better place to live. However, when the same people who bitch about how bad the labor practices are at those establishments frequent them more than others, it’s a vicious cycle that’s next to impossible to break.
Back to my initial point. Take any good local company… say Pi Pizza, put them on the stock market and watch that company change in a period of 3-5 years to something completely different. When “the bottom line” is the determining factor for everything the company does, you can be sure that from the top down all they do is look at numbers and use them as a basis for trimming more and more. It’s really sad.
Very true. One needs only to look at Walmart. At one time Sam Walton took pride in selling only or as much as possible Made in America goods. What happened? They went public. (in a nutshell) I’m always amazed at the people that complain there are no jobs yet have no problem shopping for the cheapest which means overseas.
A good CEO will drive profits, a bad CEO gets paid handsomely while driving the company into the ground.
If fast food workers are paid $15.00 per hour, I’m wondering how much sit-down restaurant workers will demand next year. Will “going out to eat” in a sit-down restaurant become a luxury that only fast-food workers can afford? I’m not certain that sit-down restaurant owners across the table make a profit margin that could support such an increase. McDonalds is obviously financially healthier than Frieda’s Fried Chicken! And, sorry, but I am one who believes that we destroy personal initiative when we arbitrarily grant pay increases to all individuals within any group just because they might belong to a group. This would be one step closer to “unionizing” fast food workers. And while I think the unions have successfully raised the bar in the construction industry, offering training that has improved the end product, I can’t see that membership in an fast-food union will accomplish anything other than continue to raise the prepared-fast-food prices. There’s only one way to fry onions, hamburgers and french fries–and that would be the way the restaurant owner wants them fried! And another thing…. if the base pay is $15.00 per hour, would an exceptional worker receive any further compensation in exchange for exceptional service? Or sadly, would he be overlooked just because the industry pay scale has already become 11 months pregnant and will explode with any more growth? If these individuals who identify as being fast-food workers want to continue working in the food industry in general, maybe they should use the experience they’ve gained in the fast-food industry to land a job in the sit-down food industry, where they’ll likely make more money? Otherwise, our society is rewarding mediocrity–giving a trophy to every ball player who successfully completes a season on a team,etc.
Restaurant owners pay servers $3.675/hour in Missouri.
I know. But do they pay their cooks, dishwashers, cashiers $3.675 per hour? No. They’re paid more depending on their expertise. A dishwasher would likely make less than a pastry chef. A cashier might make more than a dishwasher. It all depends on what each employee is able to bring to the table. Supply and demand. How many fine pastry chefs would you find working as pastry chefs if they’re paid the same as the dishwasher?
But a waiter who serves his/her customers well will earn much more than $3.675 per hour, which is where personal initiative fits into the equation. A waiter who is asleep on the job doesn’t usually last too long on the job and probably doesn’t see much on his paycheck beyond the $3.675. If you destroy the challenges met by exercising personal initiative, you’ve destroyed the industry. Similar socialist initiatives will also soon destroy our health-care industry.
I’m obviously not a socialist. No one ever handed me anything just because I happened to be in line at the time.
Actually when I lived in Phoenix, we had pastry chefs from the local culinary school making just as much as the salad bar worker.
And many restaurants no longer allow wait staff to keep all their tips…they are pooled with the other wait staff. Sometimes …and that is only sometimes…they are pooled with the bus staff and dishwashers.
Wow! Shared rewards! Every waitress (the zealous and slovingly lazy alike) gets a trophy just for working until closing time! Socialism is invading every crevice of our lives, leaving in its wake the stains of laziness, lethargy and mediocrity. Society is just making too many illegal left turns, and an alert cop is bound to be forthcoming.
When I bussed tables at age 14 as a kid, I was paid $1.85 an hour by the house, and the wait staff gave us a voluntary tip based on our performance. I made less when I dragged my ass…and learning that gave me an upper hand.
What an excellent article Steve. More people should read this AND understand it. My first “job” was for my brother cleaning mortar off bricks in a very scary Laf. Square…for a penny a brick. My first legal paying job was as a dishwasher earning $2.75…2 cents above minimum wage. Times were different then. Now, decades later, as a contract food manager, I’ve had to walk into accounts where previous managers believed that employees shouldn’t receive raises so never gave performance reviews. I’ve walked into accounts and had to implement minimum wage hikes where 20 year employees were making $11.00 an hour and people walking in off the street made $7.25…or more. I could go on, but the point is that minimum wage is just that… MINIMUM. The cutesy quote that ‘minimum wage is the highest wage an employer would pay’ is very, very true. Not always mind you, but certainly enough. Especially in today’s ‘I’m getting mine, screw everyone else’ attitude. The sad fact is that too many employers would pay less if they could get away with it. And the attitude that some have that these workers ‘should try harder’, ‘get an education’, ‘get a second job’, etc proves it. But I can honestly say that these workers aren’t slackers and aren’t lazy. I’ve fired more managers for being lazy and slackers than minimum wage staff. Are there some slackers at minimum wage? Sure, but to classify all of them as lazy is wrong. Just plain wrong.
I think the biggest problem in the minimum wage field, at least in food service, is that they lack self-confidence. They’ve grown up in a difficult situation, their education was so so, they’ve had kids and felt trap….not by the job but the fear of failure, ‘what if I get a new job and it doesn’t work out, what if I can’t do it, what about my family, my bills?’ And yes, the fear of losing their ‘family’. I wish these people that say ‘get another job’ would realize that they, that everyone spends more time with their co-workers than they do with their own families. And while some of us can just pick up and leave our family behind…either moving across country, across town, or to a new job…..many cannot. So add to this managers like I’ve mentioned above and its no wonder there is so much contention.
Is $15.00 for a new employee too much? Sure. But not for a 10 year veteran. If they even make it to that. Most minimum wage jobs have raises that are not $1.00 or $2.00 an hour but more likely to be .15 cents or .20 cents. A whooping $400 a year!! (assuming full time) If That!
But I also believe that way too many people buy into the fear hyped by the 1%, the fox newsers, the Rushs of the airwaves that think ‘those’ people are less deserving, are lazy, are moochers, etc. And that is bull crap. More and more people need to realize that not everyone has the same motivation, the access to good education, access to reliable transportation, the blessing of good health. These people that buy into this fear are either consciously or sub-consciously very much afraid that they could be one of ‘those’ people. One bad fall, one bad boss, on bad divorce from living on the edge. And it scares the shit out of them and to make them feel better about themselves, they tell themselves and others that ‘those’ people aren’t like me. They are lazy, they are moochers, and they are pathetic. And you see this demonstrated by customers treating wait and counter staff like, well, like shit. I’ve had to kick customers out more than once for calling one of my workers the “n” word. I’ve had customers come in and trash a booth and then leave no tip.
So next time one of your readers goes into an establishment…whether it be a McD’s, a Walmart, or anyplace else….treat them with respect. A thank you, a smile….for remember, you are one of the lucky ones.
Nice post Moe
Sanity, reality, and humanity. Good on ya’, Moe!
Once in a while I have a moment. Thanks!
Work harder and don’t have kids until you can afford to do so… period!
Tell that to the pro-life group who believes contraceptives are wrong, sex ed is wrong, a woman’s place is in the kitchen barefooted and pregnant. Curious…were you planned or an accident?
The problem with making the minimum wage a “living wage” is that everyone doesn’t need or deserve to be paid $10-15/hr. Does a high school kid who’s sole expenses are gas, car insurance, and a phone bill need to make $15/hr? How about the stupid? Does the village idiot/retard who is employed out of the kindness of the owner’s heart to do menial jobs need to be paid $15/hr? Minimum wage is just that, the minimum. If you don’t like your job or want to make more, go to school, or learn a trade. I’m talking bricklayer trade, not Big Mac builder trade. If the minimum wage is artificially pushed up, the fringe of our society will fall deeper in the hole. Less jobs for teens, and people who don’t deserve more than the minimum.
Doesn’t deserve? Doesn’t need? According to who? Did it ever occur that your “retard” (nice adjective there btw) may ‘need’ to support a family or that they work 10x harder than any other worker? Go to school? Learn a trade? Oh sorry, if all people don’t meet up to your standards or work output.
I’m not going any further….read my comment above.
If the work output of someone is not worth $10-15/hr, should a business owner be forced to pay that worker more? What about high schoolers than need gas, insurance, cell phone bills paid only and don’t support themselves. Do they deserve to get paid $10-15/hr? I worked “fast-food” while in high school and college. Minimum wage was $4.25 and the time. I worked my way up to $5.00/hr, the most anyone besides managers and the one “lifer” that was there for over 15 years. I made enough to pay my car payment, insurance, gas, and what ever I needed.
Just because you have a family to support doesn’t mean that you should be entitled to $10-15/hr just for saying: “Would like fries with that?”
Just keep this in mind as the cost of everything you buy continues to go up. The additional payroll expense is going to come from somewhere, you!
If raising the minimum wage salary causes prices to go up, isn’t it also true that
raising the CEO’s salary would also cause prices to go up.? Why don’t we put
a cap on CEO salary?. Back in the good old days, when we had a thriving
middle class, in effect we had such a cap with the high marginal tax rates for
high-paid people.
While I agree, in theory, in reality, most people who make a lot of money are pretty adept at justifying why they should be paid so much by becoming much more “irreplaceable” than your typical minimum wage or middle-class, salaried worker. It doesn’t matter if you’re a CEO, a college football or basketball coach, a professional athlete, a union firefighter in a suburban fire department or a museum director, your “unique” skill set in a narrowly-defined industry can be parlayed into an obscene compensation package just by threatening to take your skills somewhere else. Combine that with successfully arguing that your “contemporaries” are being better-compensated than you are, and that you need a raise to “parity” or you’ll have to look elsewhere, and the compensation arms race continues unabated. If anything, we don’t need a salary cap on individuals, we need to have more consequences for boards that grant these huge compensation packages – “Just say no” rarely seems to be a part of the discussions . . . .
For the longest time board rooms are nothing but good old boys clubs. No woman, token minorities, and patting each other on the back with generous compensation packages…regardless if your company made a million or lost 10 million.
reimposing a high marginal tax rate for incomes over a certain amount
would not end the compensation arms race among top executives, but
would certainly slow it down. It is the only practical way to deal with the
problem; in effect, it takes a chunk of excessive compensation and
spreads it among the rest of us in the form of government services, such
as higher education and health care. And anyone who has worked in a
large corporation knows that the work of the CEO is to a large extent
dependent on his advisors and the work of his advisors is largely de-
pendent on those further down the line and so on As for athletes, the
income averaging provision dropped in the 1986 tax code should be
reestablished. Finally, I would not lump firefighters with CEOs as being
overpaid–at least fire fighters actually do somehing!
Interesting article – Missouri is second to only Michigan in the DECLINE in union membership in the state over the past decade – http://www.governing.com/topics/mgmt/gov-union-membership-declines-in-many-states-labor-department-reports.html . . – probably has a lot to do with the decline in manufacturing, particularly in the auto industry, in Missouri.