Not paying $1 above minimum wages

Back a while McDonald’s announced that it would be paying – in those company owned restaurants where it controls the wages – a $1 over the local prevailing minimum wage. This was not, no way, because they thought this just or righteous, it wasn’t even because the Fight for $15 was on their case. It was because the labour market was getting tighter and finding someone who could both breathe and walk at minimum wage alone was getting ever tougher.

Tempus fugit and all that and the union activist types are getting angry because McDonald’s is not still paying $1 above the local prevailing minimum wage everywhere. To which complaint the answer should be “Awww, shame!” given that the minimum wage has risen in so many places. But, still, they’re complaining:

McDonald’s move to boost pay came in April of 2015, as union-led protests that came to be known as the “Fight for $15” were sweeping the nation. Under pressure from activists, the company said that it would set the starting pay for 90,000 workers at company-owned restaurants in the U.S. at one dollar over the local minimum wage. The announcement generated a raft of generally positive headlines, with Easterbrook touting his desire to build a “progressive burger company.”

Workers say McDonald’s hasn’t delivered.

“McDonald’s publicity stunt has turned out to be a sham,”

Well, what did anyone really think would happen? Wages are set according to the balance of the supply of and demand for the labour desired. If there’s lots of it about then wages will be low, if there’s a minimum then they’ll be that minimum. If the supply of the relevant labour is tight then wages on offer will be higher than that minimum. And? Don’t these people understand what it is that sets their own wages?

As to why Maccy D’s raised those wages it was simply because by 2015 low end labour was becoming in shorter supply. That’s also why Target, Walmart and others raised their entry level pay at the same time. As unemployment fell following the recession and recovery – however that recovery stuttered or took time – then such employers were finding that discovering or keeping labour that could both fart and chew gum* at the same time was getting much more difficult. So, they raised wages in order to get a slightly better class of employee:

In Milpitas, California, north of San Jose, where the local minimum wage rose to $12 an hour on Jan. 1, several workers’ February paychecks show they received $12.35 or $12.45. In Los Angeles, where the minimum wage for large employers has been $12 since July, some checks show hourly pay of $12.69 or less.

The minimum wage rose. Now the premium above it required to find the staff is smaller. So, the premium over the minimum wage being paid is smaller. D’ye recall what it is that people were saying about a higher minimum wage? People would stick with their jobs longer, be more motivated, because of that higher wage. I’ve never been sure about that being true but surely those who argued for the higher one should be celebrating that success? And that’s really all there is to it. This isn’t a protest by the Fight for $15 and it’s not even a complaint, it’s whining.

*Yes, crudity, but if it’s good enough for an American President it’s good enough for me. And yes, that’s the correct version of what Nixon said about Ford.

Support Continental Telegraph Donate

5 COMMENTS

  1. Yes, McDonald’s responded to the national labor market. It had occasionally employed people who could not walk and breathe at the same time, which is in conflict with the global goal of leaving the customer feeling he would like to return to the store. If there were a city with a bizarrely lower wage scale, Walmart would have carved out a silent exception.

    Leave it to a labor union to argue that a wage increase stated as an equation must always remain stated as that equation (relation to the local minimum wage), if and only if it works out to the worker’s benefit. Likewise, the benchmark of $15 was grabbed out of thin air. If McDonald’s had capitulated, then unions in the vicinity of McDonald’s would have Grieved something else. Professional agitators are not satisfied, or they stop being agitators.

    If the legal minimum is raised, it does cost more to offer a differential to get people above average among the entire labor pool. But at the same time, the set of “those employed” decreases. Everyone left with a job is above average — or at least everyone whose skills are so below-average as to not be worth the new minimum wage turn into Kiosks. So the only criterion for attracting workers of a given quality is pay (plus benefits) of a given, real, after-tax value.

  2. study of motivation quickly comes to the conclusion that wages are not a good motivator as we feel it is what we are due, if you raise them
    I may feel good briefly, but that feeling of this is what I’m due will reassert itself pretty quickly.
    Wages are actually a really good demotivator as if people are unhappy with their pay there’s not a lot else you can do to stop them feeling unhappy

    • Pay is not the final word in motivation, but it is a damned fine motivator, compared to no pay. A raise is a damned fine motivator, compared to no raise. Yes, if an employee has a chip on his shoulder, something extra on the pay stub will not remove it. In contrast, a manager or a baseball coach can motivate for a while just by giving the impression of changing something, however ineffectively. But the union is not asking for universal job satisfaction, just a pay scale that they define, so that is what we are discussing.