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A fast-food worker yells before being detained by police during a protest outside a McDonald's restaurant in Philadelphia on Sept. 4, 2014. AP

A fast-food worker yells before being detained by police during a protest outside a McDonald's restaurant in Philadelphia on Sept. 4, 2014. AP 

 

Minimum Wage: Fast-food workers engage in a nationwide "Fight for 15" while ignoring the economic reality of higher prices, fewer jobs and the sawing off of that first rung on the economic ladder of success.

In a scene repeated in various cities across the country last Thursday, roughly 50 people were arrested as they protested in front of two Chicago-area fast-food restaurants as part of the push for a $15-per-hour minimum wage for fast-food workers, what they call a "living wage." These protests, organized by the infamous purple shirts of the Service Employees International Union, simply ignore economic reality.

It is a testimony to the economic ignorance taught in our nation's schools, supplemented by mass media misinformation, that these protesters believe that wages come from business owners' private stashes and not from the revenues from customers who buy that business' goods and services. Basic economic principles have been supplanted by demands for social justice.

As the Heritage Foundation points out in its Sept. 4 Issue Brief, "Higher Fast Food Wages: Higher Fast Food Prices," wages come from consumers, not owners, whose profit margin is small.

The protesters apparently don't understand that if you raise the minimum wage of fast-food workers, you raise the price of the fast food they serve. That cuts into profits and limits job opportunities. The irony is that these workers would find that the extra money they might earn would be consumed by the higher prices they themselves would have to pay.

Wages should be determined by the value of your labor, not the lifestyle you wish to live. It used to be that if you wanted a higher wage, you studied hard and worked harder. Now you're just supposed to write your legislator or call for union help. Equal opportunity has become supplanted by demands for equal success as politicians try to buy votes with other people's money.

The concept of economic mobility is also lost on these protesters. A minimum-wage job is intended to be a stepping stone and not a career. It is supposed to teach basic skills, such as showing up on time, working with others and following the instructions of a superior. One takes these skills and uses them to climb the economic ladder.

Studies of minimum-wage workers used by living-wage advocates often neglect to point out that they are not the same people from year to year. Some get a raise, often by being promoted or getting a better job. The Heritage paper notes a McDonald's study that found its franchises have a worker turnover rate of 150%. The tenure of an average McDonald's employee is a mere eight months.

Heritage also notes that two-thirds of minimum-wage workers earn a raise within a year, with the median increase being 24%.

This is called opportunity, not hardship, though it is more arduous than simply lining up overnight for the latest technology product. The hardship is actually imposed on businesses that are forced by government to pay higher-than-market wages. In the face of rising costs, they have to cut workers or reduce hiring — or both.

James Sherk, senior policy analyst in labor economics at Heritage and the paper's author, says that under a $15-an-hour minimum wage, franchises would have to raise prices by 38% as they saw their profits fall by 77%. Sales and worker hours would each fall by 36%.

As we noted in August, a Cato Institute study shows that welfare paid more than a minimum-wage job in 35 states, even after accounting for the Earned Income Tax Credit, and in 13 states it paid more than the $15 an hour fast-food workers are now demanding.

We need to restore a culture of opportunity, not entitlement and dependency.