Fast Food Strike Raises Questions About Availability of Good Jobs

Nearly one hundred cities saw striking fast food workers earlier this week. No longer confined to just major metropolitan cities like New York City, the strikes spread to dozens of other cities that hadn't before seen fast food worker walkouts, like Richmond and Detroit. 

A common battle cry among protestors was the implementation of a federal minimum wage hike from the current $7.25 to $10.10 per hour, but there is a strong pushback from fast food leaders who claim the industry thrives on low prices. Wage increases would force those prices to go up. Those in the industry believe such price increases would result in reduced business across the board. 

A fair point. However, the workers have a point, too.

Fast food employees in Detroit outside of a McDonald's (NYSE: MCD  ) could be heard shouting, "Hey hey, ho ho, $7.40 has got to go!" Similarly, workers outside of a McDonald's in New York City offered a comparable chant: "We can't survive on $7.25."

When you account for rapid inflation and the cost of living in these cities, it's definitely understandable why workers are struggling. Working full-time at the federal minimum wage only amounts to $15,000 a year. Factor in the average cost of rent, utilities, health care, and a little important thing called food and there's not much left in the pot. You do the math. 

From another fast food worker strike in July 2013 Source: Annette Bernhardt

A common rebuttal from the industry is that fast food workers are typically younger folks looking to pick up part-time work while they're in high school or in college. It's not meant to be a career, they say.

While that might have been true 30 years ago, the latest statistics show that the average age of the fast food worker is 29--well above college age. What's more, 31% have completed at least some college, so the stigma that fast food jobs are for high school dropouts should probably be put to rest for once and for all.

The problem here is the continual drying up of higher level positions across every industry. Young people rush off to college, get in massive loan debt, and graduate only to find the jobs they were promised aren't there. "If only you get X degree, you can get Y job," they're told. And the jobs just aren't there anymore. Call it entitlement all you want, but it seems a lot like false promises made to hopeful youth to this Fool. 

To make a long story short, the "they're just part-time workers and don't need a livable wage," excuse doesn't hold up. And that being said, those without college degrees arguably deserve a livable wage, too. Whether a minimum wage increase is the fix remains to be seen.

What is apparent, however, is when regular consumers like those working for fast food joints have a bit of extra cash, they're more likely to spend it on consumer goods and services. And that spells increased revenues for companies across every industry, including the fast food companies at the focus of the strike. 

Looking ahead 
 
In order for these strikes to produce results, they're going to have to grow yet again. Yes, the strikes this week took place in a hundred cities with thousands of people in attendance, but they'll need to get bigger and louder before the top industry leaders -- McDonald's, Burger King (NYSE: BKW  ) , and Yum Brands (NYSE: YUM  ) -- will sit down at the table with the Service Employees International Union (SEIU) to start labor negotiations. 
 
And whether or not industry top dogs would even be willing to negotiate remains to be seen. Economists teeter on either side of this issue, leaving the real effects murky at best. Industry leaders have real concerns about the bottom line. Some go so far as to say minimum wage hikes cause unemployment to surge. There are quite a few studies backing up this notion. However, a paper published by the Institute for Research on Labor and Employment at U.C. Berkeley shows that increasing the minimum wage by a couple of dollars has virtually no effect on employment levels at all. 
 
While instinct might dictate that increased wages equals increased unemployment, there are other options for fast food employers than just laying off workers. They could cut benefits, raise product prices, or require employees to complete more tasks to save money. 
 
What is certain is fast food workers are paid very little, so little they can barely make ends meet. And fast food employers want to make healthy profits year in and year out. So where does the compromise lie? 
 

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 07, 2013, at 5:18 PM, kimlo53 wrote:

    There are no skills needed to work at a fast food places, so why do they think they deserve $15.00 an hour. Higher wages come with more experience and a skill. Not because you want to make more. You earn it and have a skill to receive that kind of money.

  • Report this Comment On December 07, 2013, at 5:27 PM, Mathman6577 wrote:

    Less than 0.1% of fast food workers protested in NYC.

    Do you want your Big Mac to cost $10?

  • Report this Comment On December 07, 2013, at 7:47 PM, Gotlift wrote:

    So because our country can no longer create meaningful jobs we are going to try to move money around at the lowest level. Please target the right businesses. Maybe some larger businesses like Walmart can support that type of wage increase, but smaller businesses will close up. Most small business owners operate on a small profit margin. I would really like to see a small business owner write about a jump to $15.

  • Report this Comment On December 07, 2013, at 9:44 PM, Mathman6577 wrote:

    A friend of mine, a small business owner, once told me he can employ 10 people at $8 per hour or 8 people at $10 per hour. At $15 he can employ 5 people.

  • Report this Comment On December 07, 2013, at 10:37 PM, NOTvuffett wrote:

    I know for a fact that the illegal aliens working at my local McD make more than minimum wage. I have a couple people on my payroll that aren't legal, they make well above minimum wage.

    So, this is a tempest in a teapot kinda thing. I don't know if people realize that fast food and big box stores operate on razor thin margins. I also don't know if people making the argument for increasing the minimum wage has a net effect of merely inflating the money supply, while also giving employers reasons to lay off employees and reduce hours of work.

  • Report this Comment On December 08, 2013, at 1:07 AM, RxPro wrote:

    I worked at McDonald's when I was in highschool, not too many years ago. It was a fun job and I enjoyed it especially since our owner let us get free food during our lunch break on days we worked. There was also opportunity to move up slightly to manager positions making over $10/hr witihin a year or 2 if you were willing. However, most of the employees had drug and alcohol issues, some even using while at work. Clearly all the protesters complaining about money they must not spend ANYTHING on alcohol, tobacco, or drugs... right?

  • Report this Comment On December 08, 2013, at 7:45 AM, scipiojr wrote:

    Despite some of the negatives on here I agree with the article, but I would not raise the wages to $15 right away. We do need some bump in the minimum wage. Yes we'd lose some small businesses, but we'd gain others. As for companies hoarding money I'd change the tax laws in some fashion. How about taxing capital gains in different ways, for example higher rates for overseas investments lower ones for US investments. What about tax incentives for investments here in the next 2-3 years? I know there are smarter people than me on here--ideas?

  • Report this Comment On December 08, 2013, at 8:47 AM, marchhare847 wrote:

    It's true that these were once starter job and that young people usually took them to earn spending money but when you have an employee that's 40 and has worked 10 years in the job it's a sign of a deeper problem. When I was young the fear was losing your job to a robot. Big business has changed that to cheap foreign labor. How many machinists do you know? The wealthy corps. in this country have turned it into a nation of stay at home computer whizzes and Wal-mart greeters. Remember the old saying "When they came for your job I did nothing, when they came for mine there was no one left to do anything".

  • Report this Comment On December 08, 2013, at 9:27 AM, NoiTall wrote:

    This should not be about what they would LIKE to get. Options are limited for those here illegally, very young people, and those who have basically no skills or education. This is typical of those employed by fast food places.

    The only way to keep wages fair is that people are willing to work for what the place is paying.

    Once they have trouble finding workers, they will pay more. Having the govt force a raise of min wage will only put people out of jobs.

    In EU where workers are pricing themselves out of the workplace in many situations, McDs is replacing order takers with touch screens in 7,000 restaurants.

    If it keeps going then there will only be delivery companies restocking machines and repair guys in occasionally to fix them, no workers at all.

    The govt has destroyed the economy with its credit expansion binge in the trillions and workers are blaming companies who are managing to provide food at a reasonable cost. If it goes up much, I won't be able to afford to eat at these places.

  • Report this Comment On December 08, 2013, at 10:05 AM, danish58 wrote:

    Thank to NAFTA, good paying jobs left the states long ago. Lower paying jobs was all that was left. Now we are dealing with illegal immigrants, which they should be as our jobs are in there countries, paying lower wages then they would have gotten here. They want the pay they would have gotten here, they can't have it both way, just like here. Big Business wanted bigger profits, they got it by moving jobs out of the states to countries where they can pay slave labor wages, ignore our environment, and hide they profits in off shore accounts and not pay the taxes... Congress hasn't woken up to the fact that they are the problem with this country.

  • Report this Comment On December 08, 2013, at 10:33 AM, wildwillywong wrote:

    "....A friend of mine, a small business owner, once told me he can employ 10 people at $8 per hour or 8 people at $10 per hour. At $15 he can employ 5 people...."

    Here is what your friend didn't say:

    He can employ 5 taxpayers at 15 dollars an hour, or he can hire 10 food stamp, medicaid, and housing assistance clients at 8 dollars an hour, which is what is currently being done.

    This leaves the working taxpayer to borrow money from China to provide all of those welfare benefits, to employees of the largest, most profitable corporations in world history, which the taxpayer's children's children's great grandchildren will have to repay.

    Don't you dare ever refer to fast food and retail maggots as "job creators". Unless you create a taxpayer they have done no good at all.

    When they create only welfare recipients as they do now, hundreds of thousands of them ride our backs and pick our pockets every day, they are the hateful, greedy, un-American leechs, not the people they "employ".

  • Report this Comment On December 08, 2013, at 11:53 AM, tjtjay wrote:

    any and all increases in the minimum wage are going to be passed on to the consumer. If a big mac costs $4 today, and min wage goes up .50 cents, expect the big mac to raise in price also. along with the rest of the menu. Why would the owner take the hit?? Not good business. His profits will stay the same, and the "hit" will be passed on to the consumers. Who really benefits from this??? Payroll tax? State and Fed income tax? Any consumer that does not get a cost of living increase is going to suffer the increase in prices from every business that must raise their prices to compensate for the raise in minimum wage. I am not that smart a guy, but I can see this happening. I am sure there are smarter people reading this that can add to it.

  • Report this Comment On December 08, 2013, at 4:48 PM, Hank356 wrote:

    It really is quite comical reading all these comments. It has everything to do with Corp Welfare and how this is passed on to the taxpayer, of either party. Each Walmart store costs, on average, the taxpayer at large $900,000. There are over 4620 Walmart stores in the US. Do the math. Now look at that huge number that you are paying for. Now (wait for it) come to the realization that the number you are looking at does not include ANY of the OTHER minimum wage jobs in the US. A safe bet would be to multiply that number by 25 ( low estimate). Now do a Google search on the US GDP. Look at the two numbers before you. There you have it.

    Now imagine what the new tax base would be if people did indeed get $12-$15 an hour. There would be no food stamps given to these people. the State and federal governments would no longer have to pay for health care for these people.

    . Now think of what would happen to the deficit.

    Now think what would happen to your wages (they would go up)

    Now remember what America was like when it had a strong middle class.

    Now smile.

    Now the true whiners amongst you will whine even more, thinking that the world will end if the huge mooching of Walmart, McDonalds and all the rest of them would stop. Well just so you know. The minimum wage of 1960, if calculated at todays worth would be $12.00 an hour. And the world did not end.

    I see people write that if the wages went up the price of food would double. Not true. If the wage went up to $15 an hour the cost of the excess labor would add .63 cents to the cost of a Big Mac. That is IF the full cost is passed on, which of course it will not be. The companies in question still have to be competitive.

    In 1974 the hiring wage of a fully FAA certified Aircraft Mechanic was $11.50 an hour. These are highly skilled workers. Right now in 2013 the starting wage for the same position at the feeder airlines is $11.50 an hour. This is what Corp America is doing to the American worker. I could go on, but hopefully many of you that read this will perhaps wake up.

  • Report this Comment On December 08, 2013, at 8:08 PM, drivetosucceed wrote:

    I have been in the restaurant business for over 18 years. Starting as a dish washer and now owning a restaurant business. The lack of opportunity is a misconception, in fact there are probably more advancement opportunities in the restaurant business than any other. The problem with the majority of people working in the restaurant business is they feel entitled because they stuck around for awhile. They need to self-improve learn some leadership skills and work hard to prove themselves. It's not easy but possible. I worked 2 full-time jobs at first.

  • Report this Comment On December 09, 2013, at 8:32 AM, Bildog13 wrote:

    Well if the minimum wage is raised to $15 an hour do you not think McDonalds, wendy's, WalMart and countless other fast food places minimum wage jobs would start requiring people to have some type of degree to work there?? Come on now there are billions of jobs out there that require a degree of higher education and only make $12 or $13 an hour. Look at medical billing postions and medical transcription or even a person working in the electronics industry. Most of these positions do not even come close to the $15 an hour mark!! Can you imagine having to have a 4 year degree to put pickles on a bun or dip fries in hot oil???

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