FATTER WALLETS, THINNER WAISTLINES

FATTER WALLETS, THINNER WAISTLINES

Matt HealeyTuesday,3 September 2013

The Snap:

Last week, fast food workers in several cities went on strike. Their demands were money and the right to unionize. Specifically, an increase in wages from around $8.00 to $15.00. I am not sure how this will end, but this time I am on the side of labor. This is a first for me, because I am usually never on the side of labor unions.

The Download:

The main argument is that you can not make a living on $8.00 per hour. In this, the workers are right, you can not. Further, many of these jobs do not provide health care or other benefits, although that may be changing due to the Affordable Care Act (ACA). There are several reasons that $8.00 an hour is an acceptable wage. You can argue that fast food jobs are meant to be entry level jobs — not a full time profession. You can argue that raising the wage will result in increased replacement of humans with technology and reduce the total number of jobs available (I could easily see cashiers replaced with a touch screen kiosk and a credit card reader). All of these are good arguments with equally good counter arguments.

My reason for supporting labor in this cause has nothing to do with the workers. It has to do with public health. If you have ever eaten at McDonald’s, and I suspect you have, then you know that labor is the most costly portion of their operations. I say this because it clearly can not be the ingredients in their “food.” So let’s see what happens if fast food workers get a raise. The labor costs will increase. I suspect if you double the pay you will not double the costs as some jobs will be eliminated. Regardless, costs will rise. So what will McD’s do? They could absorb the cost increase through reduced profits. Ha — I said they COULD, not that they would. Or they could pass those costs on to the consumer through higher prices. You might see the 2 Big Mac’s for $2 deal go away (I am not sure it is still around as I have not eaten at McD’s in over 15 years). As an aside, I never understood the name anyway — I always thought it should be three 2’s — 2 Big Macs and a side of Type 2 diabetes for $2. Moving on, anyone familiar with microeconomics can tell you that as prices rise, the volume of goods consumed declines. So there would be less eating of unhealthy fast food. Given the current obesity crisis in the US, can this be anything but a positive? So, I want the strike to succeed.

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