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  • What Should Be Done About Minimum Wage? 4 comments
    May 9, 2014 4:41 PM | about stocks: MCD

    Minimum wage has long been a touchy topic between Democrats and Republicans. Mitt Romney, Rick Santorum and Tim Pawlenty made news today when they criticized GOP senators for not helping pass a Democrat-crafted bill to raise the minimum wage to $10.10.

    I guess it would be ironic to point out that none of the aforementioned gentlemen are planning on running for president in 2016, but let's not get too much into political banter. Rather, let's talk about what minimum wage is going to do to the economy, because it seems more inevitable than ever before.

    According to the Congressional Budget Office, raising the minimum wage would effectually reduce employment in the United States, obviously because employers are going to try to make due with less people if they have to pay them more. There's no doubt we would also see an increase in prices, especially for our favorite fast-food restaurants.

    Because what most people don't understand is that most of these places are small businesses, franchises that don't share in the massive profits the main corporation enjoys. For example, out of the 14,000 McDonald's in the U.S., only 3,000 are actually run by McDonald's. So in order to keep franchisees happy, the corporate giant will have to change the pricing structure-which people, in turn, will complain about.

    At the same time, though, putting more money in workers' pockets will be putting money into the hands of those who actually spend in the real economy, which can have a positive effect on the economic recovery. According to Dairy Queen CEO John Gainor, it also drastically decreases turnover and training costs.

    Personally, I've never been paid minimum wage. My first job as a 14-year old middle school custodian paid me $0.35 more than the federal minimum. That being said, I can't properly empathize with those people who are working 40 hours a week and still living in poverty. That being said, I lean more toward increasing it, preferably at the expense of ridiculously high-salaried CEOs.

    What are your thoughts?

    Stocks: MCD
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  • Overanalytical
    , contributor
    Comments (1297) | Send Message
     
    Of course increasing pay reduces turnover. That's why companies should raise wages. Not to chase some fantasy of a "living wage".

     

    I was taught that when I thought I was underpaid, I should make myself more valuable. I was a shift manager for a Church's Chicken a few years ago making minimum wage like everyone else. I wanted a raise to go along with the added responsibility. So I explained my value. I told him I'm the only person with a clean record, I'm the only one he trusted with cash, I'm not afraid to write people up (last resort of course), I'm not above getting on my hands and knees to scrub floors, I'm being trusted with a $5 million store every night, and as a bonus I don't need smoke breaks. That to me was worth more than $7.35. I got the raise.

     

    If I want more money, I try to earn more, not just make more. Point is, wages are agreed upon between the employer and the employee. Raising the price floor never even came up when discussing my pay. What you make is the median between what you would pay for you and what your employer will pay for you.
    12 May 2014, 10:36 AM Reply Like
  • Anyoption
    , contributor
    Comments (1367) | Send Message
     
    Author’s reply » I like what you said about chasing some fantasy of a living wage. For some, a couple hundred grand a year isn't a living wage. Part of it is based on lifestyle. Not that I believe we shouldn't raise minimum wage. But it's important to realize that it may never be enough for some people.
    13 May 2014, 09:58 AM Reply Like
  • Overanalytical
    , contributor
    Comments (1297) | Send Message
     
    Absolutely, not everyone "requires" the same lifestyle.

     

    I always find it detestable when an executive says, “People need to be paid a fair wage” (from the link) when he pays $2 below the proposed minimum. Pay your dang employees more and reap the benefits or shut up. Reduced turnover and training costs, better service, higher morale, and better press, who doesn't want that?

     

    Correction on last comment: we were paid $7.25 not $7.35
    13 May 2014, 10:17 AM Reply Like
  • Anyoption
    , contributor
    Comments (1367) | Send Message
     
    Author’s reply » I think the majority of executives focus so much on the increased costs that they don't even want to think about all the other stuff, because that sort of stuff isn't as directly quantifiable--and their investors demand that.
    14 May 2014, 09:56 AM Reply Like
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