So, yesterday, while cruising Instapundit in the five minutes between penguins (I use a penguin timer instead of a tomato for the Pomodoro Technique. Deal.) I came across a thing where fast food workers were threatening to strike.
So I sashayed over to the link. (Part of the reason I need the discipline of Pomodoro is that I’m really, really (REALLY) bad at not getting distracted by news articles.)
Someone here – I think it was Rick – had asked me to write about the controversy over a living wage. I’ve avoided it because every time I state economic facts (remember, there’s a reason they call economics the dismal science) some lefty blogger links me saying I want poor people to die or some similar excreta. For instance, the post called “If you don’t work you die” – which applies to society as a whole, i.e. a society that doesn’t produce enough to support itself will die out – got some left chickie (might have been male, I didn’t check. Was still a chickie.) ranting how I should have been a Nazi prison guard.
But this article finally got me to tackling the whole “living wage” controversy, because the article itself and the interviews with the people are so full of unmitigated fail that… well…
Let’s start by stating my goal: I would like everyone to make a living wage working at whatever they want to or are best at. I’d like it to start with me, frankly, because thought I’m doing all right, if you parse out my hours weekends and evenings and all I’m making far less than that. But of course, I have a hope of escape, or at least a hope of supporting myself from all this hard work in my old age, when work slows down. (I have no illusions I’ll ever be able to retire.) And I do realize fast-food and low level retail workers can’t. And I wish they could from the bottom of my heart. But—
But economics is a science, which means it’s something that studies nature to discover its laws. This means our laws cannot change nature. You can’t legislate economics, any more than you can legislate the weather. For instance, I would love it for it to rain only at night because then when we go anywhere during the day it would always be sunny. Also, could we get snow to melt after a few hours of looking scenic? I hate walking in subzero weather. And so many elderly die from extremes in weather. We should make the temperature 62 degrees year around. Think how much we’d save on fuel, too. Why wouldn’t you do that? What do you have against the elderly and the poor.
Because it doesn’t work. Because the government in DC can pass all the laws it wants, but the weather still will do exactly what it will do.
Now imagine that the government could affect the weather in a limited way. Say, shave off the hardest cold and the worst heat. Wouldn’t that be great?
No. Pray they never do. Why? Because while it might produce the “desired” result in a limited way, in a limited area, over time it will cause much more damage in other places. Because the weather system is interconnected, dependent on myriad factors some of which we don’t know yet, and if you push one way to make it the way you want, you’re going to cause disaster elsewhere. And if you’re callous enough not to care what happens elsewhere, yet the disaster will eventually come around to you, too.
And that’s sort of what the living wage is like. The article plays fast and lose with statististics, when it says most of these people are neither teenagers nor part timers. To quote what a friend told me “I love the abuse of statistics. “The EPI says that roughly eight out of 10 workers in the country earning minimum wage are 20 or older and that half of them work 40 hours a week” followed by “It is clear that the bulk of minimum-wage workers are mid- or full-time adult employees, not teenagers or part-timers”. Well if 8/10 are 20 or older and half do NOT work 40 hours, AT LEAST 4/10 or 40% are, in fact, “part-timers”. Since the other 2/10 are under 20, that means that 60% are teenagers or part-timers. Um, that IS the “bulk”. (These calculations are not mine, but from a friend, but they seem accurate to me.
But let’s leave that aside – there are reasons teenagers might be paid a living wage – reasons teenagers might need a living wage. My mom got married at eighteen and was technically a teenager. Only a crazy society considers “teen pregnancy” a problem, when it’s been the norm throughout history. And if teens can be parents, they “should” have a living wage, right? Besides, a lot of the part timers probably want to be full timers.
The problem here, the problem with this article, the problem with the whole controversy over a living wage is that it mixes ethics and science. The two never mix. You can’t question the morality of the formula H2O. You can’t ask if it would be a more balanced world if it were H2O2. You can’t really say “Should humans have tails?” (Well, you could, but then you’d be my older child.) Or “Is it fair that humans have opposable thumbs when most species don’t?” – it is what it is.
Economics is what it is. We can discuss the ethics of it, of course. Older son, in his bio major, studied ethics. But he studied them as a separate discipline, NOT AS BIOLOGY.
Meanwhile, younger son, whose engineering major requires a hefty dose of Business classes had to take an economics course where the professor seemed to think he was teaching Sunday school. It was all about what is more moral, and what is better for the community. Oh, please! Do have Ethics of Business Practices (not getting in bed with government to create a virtual monopoly would be something to teach the kids – because it’s bad for the economy and the community. Curiously, this was not something ever discussed in this very confused class. Go figure.) BUT don’t call them “basic economics.” Basic economics are matters of investment and profit, of marketing and selling.
This is because people get confused. You find some of the confusion in the article. They interview a Ms. Dukes who makes 8.65 and rarely is given forty hours a week, and she says she’s striking for a living wage and full time, because there are no other jobs, and she can’t live from this.
Sigh.
I’m fully willing to believe she can’t live from that. It takes one heck of a juggling act. (I know. We’ve gone through periods of doing just that.) However, if she is supporting children on that, she qualifies for several government subsidies, ranging from earned income credit, to children support subsidies. (We didn’t because our situation was temporary.) So, her income will be more than that.
But let’s say she’d prefer to get off the dole and support herself, a noble and worthy goal. I sympathize with her. I understand her issues. But striking will not achieve her goal. Not only if it’s massive and widespread.
It’s more likely to get her replaced with a robot.
This is not because as her colleague Mr. Wise puts it upward on the article, “Executives make millions of dollars,” and aren’t sharing – or something – his point is confused beyond being upset at the idea that people – other people – make a great deal of money and he’s barely surviving.
It’s easy to go on about the obscene profits of executives. In fact, I think they perhaps should show some common decorum and not flaunt it – but the top of any profession pays like that, and the top of entertainment and sports often pays better.
I resent obscenely paid executives, who make enough to buy a Paraguay or two (ah!) only when they do so by getting in bed with the government and making life harder for the rest of us, including preventing competitors from rising up. BUT even I confess that sometimes getting in bed with the government is necessary to allow your business to survive.
If people insist on electing economic fascists, then you have to work with economic fascists.
And as for ostentatiousness, a) we’re Americans. Our top of the heap is SUPPOSED to be loud, ostentatious and vulgar. At least according to Europeans. And that’s just our GOOD side. B) There are people who crave that sort of thing. The wisdom of capitalism (if such thing can be spoken of, since it’s not in any way a planned system, at least not when it works right) is to allow them to satisfy it cleanly in business and not by force in politics. And, in a system that’s working well, their thirst for much more than they can consume redounds to the benefit of others by growing businesses and industries.
Which bring us to Ms. Dukes and Mr. Wise and their horrible situation. I’m the first to admit their situation is horrible. I’ve been stuck making far less than minimum wage but unable to quit for over ten years, and let me tell you, it does eat your soul. Even if what you’re working at – as I am – is something you love to begin with. Now I feel better because Indie provides hope of reward commensurate to my effort. (Only hope for now.) BUT to be stuck working less than minimum wage at a job you dislike but can’t quit? Year after year after year? Sweet Lord, it would eat you from the inside out.
And I do realize neither of them is probably a graduate of economics. Mind, I’m not putting them down. They’re right when they say people can’t find other jobs. It’s that bad out there. We know someone who used to work in IT who was last seen as a fry cook at Dennys. Assuming that everyone stuck at a low-level job is a dummy or uneducated is one of the things I hate about liberals. A lot of Mensans work minimum wage jobs. It’s the lack of social skills.
But even if either of them took economics in college, it was likely to have been the chimera of ethoeconomics and not science.
What they could figure out, with pencil and paper, and even if they’re as digit dyslexic as I am, is that let’s say the top executives of MacDonalds make ten million a piece and there are three of them.
I don’t know how many MacDonalds there throughout the land – but I’m going to estimate a million for ease of handling. Our little town has at least ten, and the little mountain village I used to live in boasted one, so I suspect if anything I’m underestimating.
Let’s say that all of the MacDonald’s top execs DONATED their entire wages. They’re all probably rich toffs, right, and don’t need to get any more money, right? So they donated all thirty million. Which, distributed through all the franchises would give each… $30 That allows them to give three and a half extra hours to ONE of their workers at the current pay.
But let’s raise that hypothetical executive pay to 300 million (not unusual these days) and let’s say they donated it whole. Each MacDonald’s gets… $300. So one of the half time employees can now become full time… for a week. Even if MacDonald’s has 100 executives at that obscene pay level… one might be able to become full time for a year — ONE employee per franchise.
But let’s go further. I’m sure MacDonald’s has a ton of investors, and let’s say that these investors profits are all donated back, instead of being disbursed. They MIGHT – might, although there’s other considerations such as health care being mandated after 40 hours – be able to take their entire force full time. Maybe. Or give them each a $2 raise per hour. (But probably not both.)
However, then the investors with withhold investment and run away. The company would go into bankruptcy and, like Twinkies, go out of business. After a glorious month or so, there would be fewer jobs and Mr. Wise and Ms Dukes would be out on the street.
But wait, there’s more – because the above still confuses economics and ethics. WHY should the executives/investors give all their profits to the employees?
Because, of course, the employees need it. They have families to support.
Yes, but…
Why are the employees HIRED in the first place? What is the work they do called? No, not wage slavery. It’s called “a job.” They’re hired because there’s a job to do.
Let’s say that tomorrow there was enough money from investments or donations or government support to take all of them full time. WHAT WOULD THEY BE DOING?
These are NOT salaried workers. I know tons of people who are doing two or three jobs in addition to their own and not paid for them because they’re salaried. (Pretty much everyone who still has a job is doing this these days.) BUT these are hourly workers.
If a store took half of its part-timers full time, it would run out of stuff for them to do. It would have to lay off some of the other part-timers or full timers. Who then would have no job at all. That’s just what it is.
And as for paying better per hour – yes, the executives make obscene salaries and bonuses – but that’s because there are economies of scale. When you add up millions of franchises, you end up with a lot at the top. It’s kind of like the whole “if you took a penny from everyone’s bank account you’d be rich beyond the dreams of avarice, but the theft wouldn’t be noticed.” Economies of scale. The same applies to investors who, btw, in America are not normally mustache twirling, top-hat wearing villains, but pension funds. If you take the profit off investment, a lot of grandmas will end up destitute.
But most fast foods are franchises and, from what I understand from people I’ve known who’ve owned these, they work on a razor thin margin. The only way to raise wages is to raise the price of food. And if you raise the price of food any number of people now using you in this pinched economy will not be able to. You’ll close or find a cheaper solution.
The same btw applies to most retail. I know of someone who runs a used bookstore as sort of a side thing to various SUCCESSFUL businesses, because he likes books (Or perhaps is running a numbers game out of the store. Who knows?)
Most people I know are either working insanely (which is good for fast food but bad for books) and/or underemployed/paid and sinking into more and more debt every month. What this means is that a lot of the things people buy in good times are being cut out: new clothes; luxury food; high class entertainment – anything non essential.
I’ve noticed in the last six to seven years that the restaurants closing are those in the middle price range. Why? Because people will flock to fast food for the “dollar menu” because it’s a quicky you can get when you just worked a sixteen hour day.
And the high price, high class restaurants go on because their people are those few at the top who are still making enough (or people like us who forego mid-restaurants and even fast food for convenience reasons and SAVE in order to go out somewhere NICE four times a year.)
In between is a vast desert. Raising the prices of fast food would put them in-between and take them out.
But then, of course, there’s robots. The robots that CAN operate most fast food chains exist. They’re not being bought because – like when I spent a summer in Germany ironing sheets, despite their having an ironing machine – humans are cheaper. Or at least they don’t require upfront investment.
Make it so humans are more expensive than machines and the machines will be bought. And there will be more people out of work.
Confusing ethics with economics leads to HIGHLY unethical economics and ruin.
Can the strikes force fast food establishments to pay more/give more hours. Probably. But as the auto-industry shows, there’s a vast difference between what is good for workers and what is good for the company. (Except when the company is forced to fold, it’s ALSO bad for workers.)
And the same goes for the nation. Let alone that the idea of a national minimum wage is obscene when you consider the lifestyle cost in NYC is not even close to that in Hays, Kansas. 9.95 in NYC might get you a comfier sewer grating. In Hays, Kansas, it’s more than a living wage.
BUT beyond that, the idea is obscene because it will cause the closing of innumerable establishments and throw any number of people out of employment, which means many people will never get their first work experience, many children will grow up never seeing their parents work, etc.
But Sarah, you say, places like Australia have lavish minimum wage and their economy hasn’t collapsed. (A few years ago you’d have quoted Europe too!)
Well, no.
First of all there’s that scale thing – Australia – and most other countries, even those that are our area – are much smaller and less diverse in population. Second, lavish minimum wage sacrifices business startups and indie businesses. Why? Well, our distinguished commenter from Finland has explained this: Because it’s impossible to make the jump between being a sole/proprietor/employee and the kind of money that can pay for employees. So, businesses don’t start, which makes the economy top heavy with corporations and government boondoogles projects. This works for a while, but not forever.
Second, Australia might avoid the collapse that comes at the end of that longer than most because it has wilderness, a tradition of self-sufficiency AND is not stupid enough to give lavish benefits to the unemployed – their unemployment benefits are JUST enough to barely keep body and soul together. So, people go and get a job. Europe didn’t take that precaution. We all know where Europe is headed, or at least what it’s circling.
Well – who is going to cut benefits to those who can’t find jobs (at all) in the US. The aggregate of welfare benefits will keep someone in decent comfort, if not in luxury. Getting all the benefits you can is a full time job (which makes it a trap) and the more people we throw at that particular boondoogle government program, the fewer will EVER be able to work.
Then there’s third – we maintain a level of defense higher than ANY OTHER FREE COUNTRY, except perhaps Israel. I don’t think this is unnecessary. We’re large, we’re loud, and sometimes we elect incredible dumb*sses who practically hang signs on our forehead begging other people to attack us. We need the defense. We also defend most of our allies (though these days some people up top seem to have reversed the ally/enemy sign. I understand. That type of mistake is why I couldn’t go into engineering. But at least I never set fire to Egypt and armed the enemy. Never mind. Let it go.) This is money the government takes in taxes from individuals and from establishments throughout the land. (Something to consider about obscene compensation. When we were rich beyond the dreams of average (sic) – the three years Dan worked a stressful traveling job {think the special forces of programming. If no one else could fix it, you called them. They were ridiculously high paid, plus you paid hotel and travel. Even if someone worked half the year, the company that contracted them out still made an obscene profit}—we made twice as much as we’d been making for a year (after that they cut salaries. The economy, you know.) What was amazing was that after taxes and expenses we cleared about 10k more over when Dan was making half as much. Yes, there were other expenses which included things I had to pay for because he wasn’t home to do it. Like garden work. BUT still. Our tax bill was massive and ridiculous. I shudder to think what it is once you hit that dreaded 250k, which we didn’t come close to. And remember that in some parts of the country t250k JUST gets you by.)
What I mean is everything government does – and common defense is one of the legitimate functions – comes out of the economy. The government doesn’t CREATE wealth. This means that by being the world police, we can afford less of the goodies our allies take for granted. It also means that we have more innovation and more small businesses, but that’s just a side benefit.
Right now, of course, we’re trapped in a place where the government is doing its best to kill innovation and small business by regulation, while people fail to find work/struggle to survive on low pay.
I sympathize. I sympathize with the Mr. Wises and the Ms. Dukes of the world. They are trapped in a horrible place. I’ve had friends there. One of them went on to get her doctorate because “I had to have an escape plan” – but not everyone can be a doctor. And not everyone has some artistic talent to pursue which AT LEAST gives hope of escape. And not everyone is cut out to be an entrepreneur and start cleaning houses for a living, or something.
BUT demanding more money and more hours is confusing the economy for a machine that is supposed to give you what you want, or supposed to “morally” provide this or that.
It won’t.
It might be ethical to pour sugar into your gas tank, but all that will happen is that the engine will seize and stop. Same with the economy.
And then we can all be equally poor. And maybe, for some people, that is enough.