Not So Fast Food

A lot of comment has been made recently on social media regarding the decision by the New York State Wage Board to recommend a hike of the wages of fast food workers to $15 per hour incrementally over the next 6 years. I have a few comments and questions about it.

First, I want to address it from my personal perspective. Sorry, gang, like everyone else, I’m just a tad selfish, and think of my own interests first at times.

I work at a job that requires a minimum of an Associates Degree and prefers a Bachelor’s Degree. (I actually have about 1/2 of a Master’s Degree, but that’s beside the point.) I work in a business office setting, dealing with peoples’ confidential information. My work requires skills in multiple computer software products (including Lotus Notes, Microsoft Office Suite and work-specific software), high-level typing and data entry skills and dealing with the public. While it is not a professional position, it does require skills I needed to train to acquire to get the job, as well as experience in the field.

My starting salary was less than the Wage Board’s recommended $15 per hour. After almost 10 years with my current employer and multiple raises for high performance, it’s still less than $15 per hour.

Where will it end? I know professional teachers, health care workers, first responders and members of our U.S. Armed Forces who make even less, despite the incredibly higher stress levels of their jobs, let alone the greater physical demands placed on them. These people deserve much higher wages than I make and often make less, and in the case of our military, much less. But where does the “Me, too!” attitude stop??

Something isn’t quite right with a system that demands fast food workers are paid higher wages than employees on jobs that demand higher levels of training and skills. Fast food has always been meant to be an entry level position for a teenager, a stop-gap someone older might get while training to get a better position, or a job a retired person might get to supplement their pension. It was never meant to fund a lifestyle, which is what the demands for a $15 per hour wage really is when you look at it realistically.

I am not meaning in any way to criticize families who are caught in a minimum wage trap through no fault of their own. I know some of them. They are good people, caught in a circumstance beyond their control. They are making the best of their situations, and working to get out. Such folks deserve all the help we can give them. I’m just not sure $15 per hour is the answer. It’s too broad a brush to paint across too many different lives and circumstances.

Many fast food corporations have training programs for ambitious young people to move up within the company, to take on more responsibility and make more money. McDonald’s Mike Andres started as a manager of a family-owned store. and is now its U.S. Corporate President.  McDonald’s Charlie Robeson started as a crew person and is now its U.S. Corporate  Chief Restaurant Operations Officer. Restaurant Brands International’s David Clanachan started as a crew person for Tim Horton’s and is now the Corporate Vice President, as well as President and Chief Operating Office of the Tim Horton’s chain.  (Their bios are easily found on the corporate websites.)  These are just a few of the corporate success stories available.

How are businesses going to afford this? Before you tell me, “Out of their corporate profits,” may I remind you of something? Fast food restaurants are generally operated as franchises. Corporate owned stores are the exception, not the rule, and the corporations tend to try to get these back into the hands of franchise holders as quickly as possible.

This means the corporation offers its name, training, and supplies and leaves management up to the franchisees. The corporate profits of an entity like McDonalds come out of franchise fees and a percentage of the daily take. The rest of the daily take is what the franchisees use to pay their bills for lights, heat, taxes, salaries, supplies, food, losses, improvements, training and whatever else is needed, and eke out a living for themselves and their families. When the employees or managers don’t show up, franchisees have to be ready to fill in. When there is a crisis at a store, the franchisees have to be available to fix it, or arrange for it to be fixed. In other words, franchisees, like all other small business owners, take all the risks, and don’t really net all that much in profit.

Speaking of risks, are you aware of how much it costs to become a franchisee in the first place? A simple internet search yielded some astonishing results! Someone wanting to take such a risk must have a minimum of $100,000 for a smaller franchise with low returns on investment. To buy into McDonald’s, a minimum of $1.1 million is required, and often you need to have extra for the land, and you don’t get to decide where you’re putting it. They do. The returns on investment on one franchise are so low, most own at least 3 to eke out a living wage for themselves and their families.

It is from these people the NY Wage Board wants to take the $15 per hour. Not corporate entities like McDonald’s or Burger King. But the owner of the store down the street, who must raise prices and/or let go staff, and/or find other ways to cut costs to meet these demands.

So where will these wage hikes come from? If these business owners don’t cut staff or otherwise cut costs, then the only pockets these raise hikes will be coming out of will be those of the consumers. Because sure as I am sitting here writing this, prices must go up to accommodate it if nothing else goes down proportionally. This means fewer people will be spending less at fast food places, and more will close for lack of business, causing job loss and business closures, leading to these workers making less money, instead of the more for which they petitioned so vigorously.

Do you want some proof? Here’re a couple of links: Fox News Article and Give Away Pundit Article.

Getting back to my own (perhaps a tad selfish) perspective, with this decision by the NY Wage Board, my already stretched budget just stopped including any fast food place that pays its workers $15 per hour. On my salary, quite frankly, I just cannot afford it. And the problem is, I don’t think a lot of others can, either.