Sunday, September 1, 2013

Ya Want Fries With That?

On Thursday, fast food workers from McDonalds and other fast food chains went on "strike" to protest low wages & benefits and to demand the right "to unionize without interference" from the franchise owners.

Their most immediate demand is for a new "minimum wage" of at least $15 per hour.


They justify their demands by repeating the irrelevancy that it's impossible to support a family on the current federal minimum wage of $7.25 and that corporate profits are such that they can "easily afford to pay us more".  Got some news for ya:  (1) The minimum wage was never intended to provide support for an individual living alone, much less a family of four.  Minimum wage jobs are entry-level positions meant as a single step on the stairway of success, not a landing you can stay on indefinitely and (2) corporate profits belong to the corporation, to be used as they see fit to pay for needed capital expenditures, encourage future growth and satisfy shareholders. 

It's hard for me to fathom the idea of workers walking out on strike when they aren't unionized.  If you aren't unionized, it's not a strike, it's an illegal work action against your employer and should result in firing.  Unfortunately, I researched this a little and was surprised to find that these workers can not be fired for their actions.  Even though they aren't unionized, they are still protected by a federal law that shields them from the consequences of walking out on their job as long as they "act in concert with fellow employees or on behalf of other employees and strike over wages, benefits, or other terms and conditions of employment."

Yep.  For legal considerations, all of these employees are "altruists" interested not in their own desires, but protesting for their co-workers.  Convenient.  It means that a business owner can find him- or herself crippled by an employee walkout in the middle of a busy work day and powerless to do anything about it.  If the employee is fired, they can sue, claiming protection under Section 7 of the National Labor Relations Act, and have the court force the employer to reinstate them, with full back pay and "damages".  Where's the protection for the employer?  Almost non-existent.  About the only exception to the NLRB regs concerning employee walkout "strikes" by non-union workers is if  they walk off the job "in a manner reasonably calculated to cause harm to the employer".  Violence in the picket line is also not protected under the Act.

Included in this now year-long drama over wages is the possibility of illegal actions by the Service Employees International Union (SEIU).  It's common knowledge that these work actions are being aided by leaders and activists provided by the union.  The SEIU and the AFL-CIO aren't formally aiding the action by providing direct assistance with funding and supplies, as that would trigger a law that would allow the franchise owners and the corporation to work together to force a resolution to the conflict by demanding a company-wide unionization vote and allow them to present their arguments why they believe unionizing would not be in the best interests of the company.  By avoiding such a vote, the big unions (who are in this solely for the prospect of adding millions of dues-paying members to their declining roles) can take a piecemeal, divide-and-conquer, strategy by attacking individual franchisees (mostly in very liberal cities) who don't have the financial resources to fight back.

What's perhaps most distressing is the media's largely non-critical reporting of the strikes and the claims of their proponents.  Another of their claims is that they only want to be paid a wage "in line with that paid in 1963 (adjusted for inflation)".  The March on Washington in 1963 was, in part, about demands for the establishment of a new federal minimum wage of $2 per hour.  Adjusted for inflation, that figure is put at approximately $8.37 per hour in today's dollars.  Problem is, the average wage for fast food workers in these cities is just over $9.  In other words, they are already getting what they say they deserve.  No one in the major media is taking the time to point this out.

What's likely to be the result of this unrest?  Not much.  Earlier strikes had little or no impact.  The people participating in these walkouts are ignorant of even the most basic economic realities.  Just because McDonalds Corp. is raking in "record profits" and the industry as a whole profits annually to the tune of more than $200B, it doesn't mean that the individual franchise owners are rolling in dough.  In fact, the restaurant business operates on extremely low profit margins.  If the protesters were to be successful in forcing a doubling in the federal minimum (for the more rural outlets) and a 60% rise in the labor costs of these outlets, the most likely outcome is a steep rise in prices to the consumer, which will be followed by a reduction is sales, which will lead to a reduction in staffing and potentially a future closure of the business.  Or, maybe the owner will attempt to keep prices down by reducing his labor costs by replacing people with automation?  Instead of having people working the drive through window and the counter, these employees can be replaced with technology.  Simply install "self-service" kiosks.  The customer orders via a touch screen, swipes their credit card or pays at a bill acceptor, and drives/walks over to the window to pick up their order.  You've already seen these "self-checkout" systems in use in grocery stores and big box stores like Home Depot and Lowe's.  Such a system would be a boon for the fast food industry.  They could realistically eliminate as many as 6-10 employees per store.  Or, they could agree to pay the $15 per hour and simply cut back the number of employees/hours to keep their labor costs stable.  Either way, the employee is left worse off, not better.

I haven't even addressed the larger picture of how mandatory increases in the costs of doing business slows the economy, drives higher unemployment numbers--increasing demand for social services and the tax burden on those still employed--leading to less money available for consumers to spend, which slows the economy further......etc., etc.

These people are under the mistaken idea that they somehow "deserve" more money.  I've got some hard truth for them:  The reason why you're not getting $15 an hour is because you're not worth $15 an hour.  Harsh?  Perhaps.  The truth often is.  We are all getting paid exactly what we're worth, regardless of our own biased opinions.  The marketplace is the ultimate determinant of what we are worth.  You are only "worth" what you can convince someone else to pay you.  If you are not self-employed, your boss determines your level of pay by the level of benefit he gains from you.  If you want to earn $15 an hour, you have to provide a benefit to him/her much greater than that.  Remember that the amount of your paycheck is only part of their cost to hire you.  There's the costs involved in staying in compliance with all the federal and state employment rules, unemployment insurance, health insurance (if provided), worker's comp, etc.

The purpose of any business or corporation is not to provide you with a wage, health insurance and 2 weeks paid vacation.  The purpose of every business is to provide a good or service, in return for financial gain.  Period.  In order to fulfill public demand they hire employees and pay them according to their contribution to the success of the company.  If you want greater pay, first start by finding out how you can provide your boss with greater benefit than the other employees.  Ask for greater responsibilities.  Show him that you're capable.  Then, and only then, can you expect greater pay.  Give up the demand that "He needs to pay me what I'm worth, THEN I'll agree to do more." 

Finally, if after all this you still insist that you are being mistreated by "greedy capitalists" and you could run the business better (and fairer), prove it.  Get together with all your like-minded friends in the picket line and form your own business and run it according to your self-proclaimed tenets of "equality" and "fair pay" and a "living wage for all".  I'm sure you can appeal to your friends in the big unions to finance your experiment with such an egalitarian enterprise.  Just don't be too surprised when you go out of business.  Even the UAW found it necessary to bow to financial realities when it took over GM (btw, they STILL haven't turned a real profit and they still owe the American taxpayers billions of dollars).

What should happen (but won't) is that the owners of these restaurants hold a meeting for all employees and tell them that they are legally allowed to "express their 1st Amendment rights" by walking out in protest of what they're able/willing to pay, BUT if they do, the owners will exercise their right to run the business as they see fit by firing anyone who doesn't show up for their scheduled shift.  Any employee thus fired will not be eligible for re-hire.  They will then be replaced with a new hire, who will be paid $.50 more per hour than the former employee.  The employees would then be left free to decide for themselves which path to take:  continued employment with at least the opportunity for advancement and raises, or certain unemployment, potentially lasting months.  It's their choice.

It's time we stopped handcuffing business with unreasonable demands and let them get back to the business of providing goods and services at affordable prices.  Our economy will not fully recover until we do.

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