- Posted September 2, 2013 by
Fast Food Labor Economics 101
Point One – Labor is a matter of supply and demand, not arbitrarily legislated levels of pay for services rendered. The laws of economics are as absolute as the laws of physics. You cannot legislate higher demand for products. You cannot legislate a minimum supply to create artificial demand. Just as you cannot legislate an end to sickness and death. Legislating or extorting higher pay from fast food chains will only lead to less people being employed. Higher paid employees means higher cost of food and therefore less demand. The decrease in demand will force many struggling fast food units to close their doors thereby decreasing the number of employed fast food workers. If there is X amount of money being invested into labor, a negotiated higher wage will not yield an X+Y wage. It will become a redistribution of X from fired workers to the remaining employed workers. And typically the formula for labor costs becomes X-Y, or a reduction in the overall funds invested in labor as the industry contracts. So the question becomes, ‘is it better to have 500,000 employees making $9.00 per hour, or is it better to have 300,000 employees making $15.00 per hour and have 200,000 additional unemployed people on the government dole.
Point Two – As the U.S. economy has a healthy appetite for competitive labor, we have over the course of the past many decades ignored our border laws and hired illegal aliens willing to work for less of a wage. This policy has two negative effects. The first negative effect is the undermining of the natural maturation process of U.S. labor. The second negative effect is that we have stolen Mexico’s labor force and robbed Mexico of a stable future. Shame on us. In order for wages to increase in the U.S., we need to cease the undermining of our entry level labor force by allowing massive illegal immigration to continue.
Point Three – Taken in total, the effects of the AHCA and subsequent heavy regulations accompanied with our national debt and increased labor/wage demands will create a footing for an inflationary economic cycle to take hold. If this occurs, and the probability is increasing, the increase in wages will be dramatically offset and overcome by an increase in the cost of living. This the historic nature of economic cycles.
Therefore, increasing wages for fast food chain employees or any industry based on arbitrary means tends to be economically counterproductive.
I find it interesting that workers do not have the understanding that corporations do not draw their capital from some unlimited pool or from the government. Large corporations and small businesses risk capital to provide a good or service for the prospect of a return. The business must be managed in this manner in order for there to be a return on capital. Therefore, the available positions are directly related to economic factors anchored in reality. Do they not understand that increasing wages means that a good portion of people will lose their jobs? Is that the objective? To have fewer employees that make more money? I would think that the liberals would want to distribute income as widely and broadly as possible rather than increase the relative income of a lesser number.