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Fast Food Strike Raises Questions About Availability of Good Jobs

By Brenda Barron – Dec 7, 2013 at 10:25AM

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Minimum wage hikes and labor complaints aside, the lack of job opportunity is the real issue for fast food strikers.

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 (MCD -0.30%) 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 (BKW.DL), and Yum Brands (YUM 0.36%)-- 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? 

Fool contributor Brenda Barron has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide and McDonald's. The Motley Fool owns shares of McDonald's. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

McDonald's Stock Quote
$272.58 (-0.30%) $0.82
Yum! Brands Stock Quote
Yum! Brands
$129.65 (0.36%) $0.46
Restaurant Brands International Inc. Stock Quote
Restaurant Brands International Inc.

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