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Fast food workers in New York, St. Louis, Detroit, and Kansas City have recently ignited a national debate about minimum wage, calling for an increase from as low as $7.25 to $15.00 per hour.
Economists and businessmen are split on the issue of minimum wage. Some think that rising the wage kills jobs, while others say that a rise in the minimum wage has no negative impact on employment. In this article I'm jettisoning economics in favor of ethics. My goal is to bring this discussion down to the human level, and think about the ethics and morals of a $7.25 federal minimum hourly wage. I think we are losing focus on the morals and ethics of the situation by thinking about the almost entirely unknown economic consequences.
Core Moral Question: Should we have jobs where working 40 hours a week won't earn you enough to feed, clothe, and house your family without government assistance?
I'd say the answer is no. Let's take a look at what it takes to support a family on minimum wage.
Working 70 hours a week
In the world's most powerful country, minimum wage employees have to work 70+ hours in order to support their families. This 70+ hours figure comes from a budget released by McDonald's to help its employees live on the federal minimum wage. The updated budget for its minimum wage employees (including heat this time) reads as follows:
The CEO doesn't need this financial advice website, he makes $35,000+ every day.
The budget has already been blasted by hundreds of writers and bloggers, including Stephen Colbert, and shows an unbelievable lack of empathy and understanding.
McDonald's underlying message: "Our wage is fair. You'll be fine as long as you get a second job and learn some financial skills."
The gap between CEO and Employee
This McDonald's line of thinking if rife with contradictions. Should employees make $7.25 an hour while their CEO makes $4,375 per hour ($8.75 million per year)? Should an employee's full time earnings over a year (7.25*2000 hours), $14,500, equal what their CEO grosses in 3 hours and 19 minutes, less than half of one day of work? A McDonald's employee earning the federal minimum wage would have to work full-time for 603 years, 5 months, and 12 days before earning the annual salary of McDonald's CEO.
If only minimum wage employees were immortal...
The Costco Model
Of course, a company like McDonald's whose CEO makes $8.75 million per year and profits $5.5 billion per year can afford to pay its employees more, a lot more. Costco proves that such responsible business practices are both possible and profitable. It pays its hourly employees an average of $20.89 an hour, compared to full-time hourly employees at Walmart earning $12.67 an hour.
Says Costco CFO in the same Business Week Article,
“Could Costco make more money if the average wage was two or three dollars lower? The answer is yes. But we’re not going to do it.”
They also aren't going to give their employees condescending financial advice.
So Increase the National Minimum Wage?
Not so fast. The discussion gets more nuanced when you include small and medium companies. What's obvious for McDonald's is less black and white for smaller independent stores. Nationally set levels often overlook regional variation and the needs of a diverse business community.
So maybe small and medium companies shouldn't be forced to pay minimum wage if they can't afford such an increase. Then again, maybe companies that can't pay $15 and hour to workers supporting families don't have a suitable business model.
Conclusion - Keep Protesting
I applaud the fast food wage-increase protestors. Multinational companies like McDonald's need to be paying employees a higher wage, simple as that. And get this, they have the money to do so while still making a substantial profit. Even if they paid for the increase by raising prices, it would only result in a small prices increase, i.e. Dollar menu items would cost $1.17.
For companies like McDonald's, Walmart and YUM! Brands (Taco Bell, KFC, Pizza Hut), it's time to make an ethical, moral, and financial choice that guarantees a fair wage for employees.
In their own words, "Every Day and Every Dollar Make a Difference."
*** Update: Congrats to Seattle for raising their minimum wage to $15!
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