Fast-food employees in metropolitan cities nationwide have decided to walk off the job today in protest of higher wages. The workers, many of whom make the federal minimum wage of $7.25 an hour, are pushing for a $7.75 pay increase, brining their earnings to $15 an hour.
Though the employees — who work at Wendy’s, Burger King, KFC, Domino’s and McDonald’s — argue the $11,000 average yearly income is impossible to live off of, their efforts may end up thwarting the goal of earning more pay to support themselves and their families.
President Obama floated the idea of raising the minimum wage — from $7.25 an hour to $9 an hour — in his 2013 State of the Union address by the end of 2015. The White House said raising the minimum wage would have positive effects on the estimated 15 million low-income workers and would not burden businesses or raise the unemployment rate.
But the President’s proposal was met with opposition from a host of conservatives who argued raising the minimum wage hurts job creators.
And though Obama’s proposed increase is substantially less than the protesters’ $15-an-hour demand, his dissenters raise both important and accurate points.
As the Heritage Foundation reported, raising the minimum wage does little to benefit those living in poverty — many of whom work in the fast-food industry. The fast-food workers protesting are hoping for higher wages to ease the burden of the cost of living, but instead, higher pay could cost them a job.
Raising the minimum wage by the President’s proposed 25 percent would put 5 percent of low-income workers out of work. But increasing the minimum wage by more than 50 percent would put even more minimum wage employees on the unemployment track.
As James Sherk, senior policy analyst in labor economics at Heritage, noted, an employer will not hire and pay a worker $7.25 an hour if they add only $7 an hour in revenue. The same principle can be applied to a worker making $15 an hour.
Consequently, if companies are required to pay their employees more, the cost of running a business automatically goes up. Profits, however, stay the same, and the burden of those increased costs shifts to consumers — or leads to layoffs.
As fast food companies mull the possibility of increasing protesting workers’ wages to $15 an hour, top officials should look to Wal-Mart’s recent confrontation with the Washington, D.C., city council over a “living wage.”
New legislation proposed by the board would force the retail giant to pay its employers a “living wage” of $12.50 an hour. Wal-Mart — which has six stores planned for the District — threatened to halt projects and stay out of the nation’s Capitol if the proposal was passed.
Opponents of the “living wage” cite reasons similar to those against raising the minimum wage.
“Because low-skill workers will be more expensive to employ than they were before, the increase will cause many workers to have their hours cut and to lose their jobs,” Aparna Mathur and Michael R. Strain, scholars with the American Enterprise Institute, wrote in The Blaze.
And as consumers benefit from Wal-Mart’s and fast-food restaurants like McDonald’s low prices, low-income workers would be burdened by an increase in prices — which companies are likely to deploy to compensate for the increased costs.
Yet as hundreds of fast-food employees continue to protest, they may want to consider how their actions will have adverse consequences on their overall goal. And $7.25 an hour is better than nothing at all.