Minimum Wage Rage
September 8, 2014
Have you been watching the news? Thousands of fast food workers in 150 cities have been demonstrating and striking for two things: $15 per hour and a Union.
One thing in particular that I found interesting in watching the various videos is the huge amount of money that is being spent to organize and equip these demonstrations. I thought these were poor people demonstrating.
Many of the demonstrators carry expensive, professionally printed signs. The banner in the photo that accompanies this article costs at least $300. Some of the marchers carry professional marching bass drums. These cost between $300 and $900 each. But the biggest expense is the organization.
Is anyone foolish enough to believe that minimum wage workers have organized simultaneous demonstrations and strikes in 150 cities; paid for the drums, signs, and banners; printed the matching T-shirts and all the various necessary sizes; and coordinated the buses to get the demonstrators to the right place at the right time?
As I will make clear, these demonstrations have nothing to do with raising the minimum wage to $15. These professionally produced and orchestrated demonstrations are all about increasing union membership and getting Democrats elected.
Over the last decade union membership has been declining rapidly. The unions are desperate for members. The Democrats are desperate to see strong unions - not because they care about workers - but because unions are a huge part of their voting base. The biggest union pushing these demonstrations is the notoriously corrupt AFL-CIO, known for its mob connections.
Another is the Service Employees International Union (SEIU) known for its close connections to Barack Obama. This union spent more than any organization in the US to elect Obama in 2008 - $28 Million. As a result, its leaders have enjoyed an “open door” policy at the Obama White House. They have more influence over this administration than any union has had over any US president in history.
The union's biggest losses have been among high-tech and white-collar workers - in other words, the more educated union members. These people have been smart enough to recognize that the union bosses care far more about their bloated salaries and their political influence than they care about the workers.
So the unions are making a concerted effort to prey on less educated, less informed workers. They calculated that if they gave fast food workers free T-shirts and promised to double their salary, they would get thousands of them marching in the streets demanding a union. And they were right.
Likewise, the Democrats are desperate because the polls show that they're losing seats in both the House and the Senate next November. "How can we get tens of thousands of uninformed voters to turn out in November and vote for Democrats? Let's give them signs and banners and promise that we'll double their wage!”
The cruel irony is that the Democrats and the unions know that it is utterly impossible to deliver on their cynical promise. There may be a small minimum wage increase, but it will definitely not go to $15.
I studied the history of the last ten minimum wage increases since 1978 (See LINK below.) The average increase in the minimum wage has been 51 cents; the average percentage increase has been 11.86%. The Democrats and the unions are asking for a $7.75 increase, which is an increase of 107%! That's an increase of nine times as much as the average percentage increase, and more than 10 times the largest dollar increase ever.
They know this is an absolute impossibility, and yet they cruelly exploit and encourage these low-wage workers to demonstrate and strike for something that will never happen. These workers are losing money that they badly need in order to participate in these demonstrations and strike. Will the unions and the liberals make up these lost wages? We all know the answer to that question.
Let’s say the impossible happened. If the federal minimum wage were more than doubled, would it help or hurt the minimum wage workers? Well, if we “SuperSize” the minimum wage, we would most certainly maximize the unemployment rate.
Research by the Heritage Foundation predicts that with a $15 minimum wage, fast food prices would rise by 38%, and profits would drop 77%. To use just one example, the average Burger King restaurant spends 88 cents of every dollar on real costs. That means that their gross profit before paying taxes is 12%. If their profits drop by 77% as projected, they will be left with 2.8% profit before taxes. In other words, they will have nothing. All but the biggest stores will close, and the demonstrators will be out of work.
Those who still have jobs will not realize the huge gains they imagine. A Whopper will cost $10. A slice of pizza will be $5. Low wage earners are by far the biggest consumers of fast foods. So they will create inflation in their own industry. They will have more money, but their food will cost them more.
After some small gains, the job market is weakening again. In April 304,000 new jobs were added. In August that dropped by more than half to 142,000. A sluggish job market is not the time to be striking.
These communist-inspired unions scream and yell about the evil businesses. First of all, they are too ignorant to understand that McDonald’s, Burger King and the others are not huge national businesses. Most of the restaurants are owned by local franchisees – small business people that support their local economies. When they go under, not only will the foolish workers lose their jobs, but the ripple effect will hurt their entire communities. As the fast food workers lose their jobs, other businesses that they used to support with their wages will go under as well.
If you want a perfect example of a city that unions destroyed, look at Detroit. It is the largest US city ever to claim bankruptcy – but it certainly won’t be the last.
Let’s say that the Socialist/Liberal/Democrats are right. Let’s say that the evil businesses only care about profits. Do you think a higher federal minimum wage will change that? Of course not. Several things will happen:
1) Full-time jobs will disappear, and be replaced by part-time jobs that don’t require Obamacare health insurance coverage. So workers will be hurt.
2) Prices will go up. No business can sell for less than their cost, so all of us will pay more, and the restaurants in the poorer areas will close.
3) More of the labor will be replaced with automation.
Look at the difference in how cars are made today. As unions forced the average auto worker’s pay and benefits to $73 an hour, robotics took over more and more of the jobs. Much of the welding and assembly is done by robots today. So the effect of insane wage increases was that a few workers made a whole lot more while millions lost their jobs. And Detroit is a dead city today.
“Oh, but you can’t automate fast food jobs!” Really? If labor gets too expensive, automation that is not feasible today will suddenly make sense, and millions of restaurant workers will lose their jobs. Many fast food places are already experimenting with people-replacements.
Applebee's is currently experimenting with 100,000 tablets on their tables. Customers come in, sit down, and look at the tablet/menu. Then they place their orders with the tablet, which are in turn read on screens in the kitchen. No waiter necessary. McDonald’s is experimenting with iPhones. Customers both order and pay for their food on these devices.
Another aspect of this madness that is being ignored is that most fast food workers live in households with other wage-earners. In almost all cases, the head of the household is not earning minimum wage. The average family that has one or more minimum wage workers living in the home has a household income of $53,000. So just because one or more people in a household is making minimum wage does not mean that they're living in poverty.
Perpetuating the idea of a national minimum wage is ridiculous on its face. Local franchise restaurants pay wages based on the local cost-of-living. Therefore, a worker in New York City is paid more than one in Asheville, North Carolina. That just makes sense.
I remember when I was a General Contractor doing fire-damage repair work in Florida. I discovered that most of the insurance companies who paid for the repairs were national companies. They used a national scale of payment based on the cost of labor and materials in the most expensive states. It didn’t take me long to figure out that their scale was often double what I would have charged. I stopped giving them estimates. I told them, “Just pay me what your book says.” It didn’t make sense for them to pay me the same as they paid contractors where labor and materials were more expensive. But they did so because they were national.
Friends, this is all about politics, not poverty. As I mentioned in a recent article, less than 3% of workers in the United States earn the minimum wage. This is simply not a major issue. That being true, why is Obama suddenly beating the minimum wage drum? For two reasons: First, to distract from all his foreign policy failures and ruinous mistakes. Second, because we have a major election coming up and the Democrats have nothing to run on. The minimum wage is the one issue that Obama hopes he can count on to get out the vote.
Ever since FDR, the main goal of Liberals has been to try to control everyone and everything, including the economy. They're not concerned about the minimum wage workers. They know full well that there's no way on earth the minimum wage is going to double. This whole scheme has been designed to unionize fast food workers, and to get low-wage workers out to vote in November.
As someone who has been both a minimum wage worker and an employer, I have some advice for people earning minimum wage. Instead of spending your time demonstrating, spend it getting an education that will make you worth more than minimum wage to an employer.
If you have minimum education, minimum English ability, and minimum skills, you should expect a minimum wage. But you live in the only country in the world where someone born in poverty can become the CEO of a national corporation. Stop letting the unions and politicians exploit you, and start doing something to better your situation.
Forbes: $15 Minimum Wage Would be a Tax that Would Move Jobs Offshore
US Department of Labor Federal Minimum Wage Increases
SEIU Union – “Spent More than Any Organization to Elect Obama President”
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