How a High Minimum Wage Can Cripple a Business
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AFAIK, all UK fast food joints only pay the national minimum wage. Mostly zero-hours contracts as well. The good news is that it is now illegal to use tips to "top up" wages to the minimum wage.
Given that the new minimum wage is set to go up dramatically if you're above the age of 25, but stay low if you're below 25, I don't expect to see anyone old working in fast food restaurants for much longer as it will be nearly twice as expensive to employ someone above the age of 25 than someone who is 17.
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@Dashrender said:
Why do you think it's churn for churn sake? I don't have any personal experience in fastfood -- do those workers who are the better employees ask for raises and get denied?
Because the actively encourage people to not stay but to leave and go to competition and the competition encourages them to leave to go to you. Everyone transfers employees around and discourages them sticking around.
Yes of course they are denied raises, that's the whole point. The only way to make more money is to go to another place as a new hire because the new hires make a little more than the senior people who drop to minimum wage over time as the minimum wage increases faster than their "raises" do - so they actually lose value over time whereas new hires basically always get hired over minimum wage to attract them.
It is literally churn purely for the sake of churn.
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@thecreativeone91 said:
I worked FastFood a lot in middle school. There are no raises in FastFood. Every one I worked at had a written policy against giving raises.
I knew some that had raises and some that didn't. But the ones that did did not give them fast enough to outpace the gradual increases in minimum wage so they amount that they earned over minimum wage decreased instead of increased.
But certainly none ever allowed employees to get paid differently based on skill. The concept of even considering the skill of an employee did not exist.
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@Dashrender said:
There's also the other side - Fastfood, is it suppose to be a long term job/career except for the rare few who are managers, etc?
Why would it not be a career? The idea that entire market segments exist only for high schoolers or whatever is not for the real world. No matter what job you imagine: babysitting, farm work, fast food, etc. All of those exist as careers for adults.
Fast food is staffed, at least back in my day, about 50% of more by adults for whom it is a career. They tend to cover the shifts that do the overnight, breakfast and midday. Teens are more likely to work evening and weekend shifts.
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Some "near" fast food that I worked in, like Pizza Hut, was exclusively adults. Not that they wouldn't hire teens, but almost never did.
Some positions are barred from teens as well, mostly depending on state safety laws. In many states teens (under 18) cannot operate fryers, bladed equipment, etc. So a certain number of adult staffers are necessary.
In many fast food restaurants that I worked in, the long term career adults represented effectively the entire functioning portion of the restaurant and the teens were only used to fill in staffing gaps or to be the "extra on call" people when things got busier than normal.
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@scottalanmiller said:
Some positions are barred from teens as well, mostly depending on state safety laws. In many states teens (under 18) cannot operate fryers, bladed equipment, etc. So a certain number of adult staffers are necessary.
Not that restaurants actually follow that. I worked in a Fazoli's for a few years starting when I was 14. I solely worked in the kitchen as a cook.
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Few small businesses follow the law. Even fewer employees hold them accountable to it.
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@JaredBusch said:
@art_of_shred said:
Sounds like a page out of the communist manifesto. It works great, as long as you can keep milking the producers to feed the non-producers.
You obviously did not read the entire article then. It clearly states his inspiration for the idea. It was a religious leader not communist.
That doesn't change what it is.
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Employees are producers, by definition, aren't they? If they're not producing anything, why are they employed?
<confused>
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What is the greatest lie every created? What is the most vicious obscenity ever perpetrated on mankind? Slavery? The Holocaust? Dictatorship?
No. It's the tool with which all that wickedness is built: altruism. Whenever anyone wants others to do their work, they call upon their altruism. Never mind your own needs, they say, think of the needs of... of whoever. The state. The poor. Of the army, of the king, of God! The list goes on and on. How many catastrophes were launched with the words "think of yourself"? It's the "king and country" crowd who light the torch of destruction. It is this great inversion, this ancient lie, which has chained humanity to an endless cycle of guilt and failure. My journey to Rapture was my second exodus.
In 1919, I fled a country that had traded in despotism for insanity. The Marxist revolution simply traded one lie for another. Instead of one man, the tsar, owning the work of all the people, all the people owned the work of all of the people. So, I came to America: where a man could own his own work, where a man could benefit from the brilliance of his own mind, the strength of his own muscles, the might of his own will. I had thought I had left the parasites of Moscow behind me. I had thought I had left the Marxist altruists to their collective farms and their five-year plans. But as the German fools threw themselves on Hitler's sword "for the good of the Reich", the Americans drank deeper and deeper of the Bolshevik poison, spoon-fed to them by Roosevelt and his New Dealists.
And so, I asked myself: in what country was there a place for men like me - men who refused to say "yes" to the parasites and the doubters, men who believed that work was sacred and property rights inviolate. And then one day, the happy answer came to me, my friends: there was no country for people like me! And that was the moment I decided... to build one.
- Andrew Ryan
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@Carnival-Boy said:
Employees are producers, by definition, aren't they? If they're not producing anything, why are they employed?
<confused>
Sometimes because there is a law requiring it. Many times because of welfare. That employees must produce seems logical but millions of people in the US alone are employed for other reasons.
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@scottalanmiller said:
Sometimes because there is a law requiring it. Many times because of welfare. That employees must produce seems logical but millions of people in the US alone are employed for other reasons.
This is one reason of the many:
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Well, I dunno much about the US labour market, but I'd be really surprised to hear that a millionaire entrepreneur employing 120 people employs anyone who isn't productive.
Reading the article, it should be noted that the lawsuit is totally unrelated to the pay rise and there is no mention of an "exodus of the talent at the top". They quote two staff who quit, one of whom is a web developer who didn't want to work there long term anyway. The number of new clients far outweighs the number of clients who left and it sounds like the whole exercise has generally been a massive success. The OP uses the word "cripple", whilst the article uses the word "bonanza".
Whilst a high minimum wage is unlikely to suit every business, it appears to be a good fit for this particular one, and good on the owner for giving it a go. He's worth $3m so he's clearly no mug when it comes to money.
I'm curious to hear that a millionaire entrepreneur owner of a private financial services company choosing to pay his staff generously is something out of the communist manifesto. Have you read it?
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The main problem I have with setting a high minimum wage is that it encourages outsourcing. Let's say I employ Bob on $40k and I could outsource their role for $60k. I'm saving $20k. If I raise their salary to $70k then I become better off letting that person go and outsourcing the role. Let's say that Bob goes to work for the outsourcing firm and earns $35k. So I'm paying $60k, of which $35k goes to Bob, and $25k goes to the owner of the outsourcing firm.
In this situation, I'm worse off (I'm paying $60k rather than $40k), Bob is worse off (he's earning $35k rather than $40k), and evil-capitalist outsourcing firm owner is better off (he's earning $25k). This is neither efficient or altruistic, it is simply a transfer of $25k from my bank account to another firm's bank account.
Of course, this guy can avoid that by never outsourcing, but I'm sceptical that that will happen. It is so easy for him to take the high moral ground whilst outsourcing his guilt to some other firm. We see this all the time with US organisations who claim to be fair employers whilst turning a blind eye to the exploitation that is carried out by their sub-contractors in the Far East. But perhaps I'm being overly critical in this case.
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@Carnival-Boy said:
Of course, this guy can avoid that by never outsourcing, but I'm sceptical that that will happen. It is so easy for him to take the high moral ground whilst outsourcing his guilt to some other firm.
You have the added complication that many people, especially in the US, see the moral highground and going to the outsourcer because those people are deserving of the work because they are providing it at a better value. Many people view people fighting for high minimum wages as unethical or, a bit better, as clueless and that it is the moral high ground to make them reap what they sow.
So it even makes the moral high ground people sometimes choose the less expensive option.
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@Carnival-Boy said:
But perhaps I'm being overly critical in this case.
Not at all, this is exactly what happens. High wages means outsourcing, non-sourcing (giving up on the work completely) or automation (replacing people with machines.)
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Correct me if I'm wrong, but this is a situation that probably would never be tolerated in a public company either. The share holders would demand that you only pay what the market will bare for salaries to ensure they get the greatest reward for their investment, right?
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@Dashrender said:
Correct me if I'm wrong, but this is a situation that probably would never be tolerated in a public company either. The share holders would demand that you only pay what the market will bare for salaries to ensure they get the greatest reward for their investment, right?
In the US this is actually a legal requirement too. In a public company (except for B companies) you can't just waste money for the sake of it. A CEO could argue that the US staff works harder, is more productive, etc. but he'd better have something to back it up if the shareholders or the board decide that that was not the case.
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So yes, you are correct.
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@scottalanmiller said:
@Dashrender said:
Correct me if I'm wrong, but this is a situation that probably would never be tolerated in a public company either. The share holders would demand that you only pay what the market will bare for salaries to ensure they get the greatest reward for their investment, right?
In the US this is actually a legal requirement too. In a public company (except for B companies) you can't just waste money for the sake of it. A CEO could argue that the US staff works harder, is more productive, etc. but he'd better have something to back it up if the shareholders or the board decide that that was not the case.
Well, the shareholders only recourse would be to fire the CEO and hire one that cares more about having high share prices instead of well paid employees, right? Could they sue the CEO, and if so, on what basis?
