Wednesday, September 03, 2014

Tomorrow, Fast Food Workers Begin Working Themselves Out Of A Job


Tomorrow, fast-food workers will go on strike or conduct sit-ins in more than 100 cities across the country. For whatever reason, these workers have concluded that they should be paid $15 per hour to fry chicken, flip burgers or take an order. As a service-sector worker in Cleveland told the New York Times earlier this week, "We deserve a good life, too.”

Ok. But not every job skill deserves $31,200 a year.

Deserving a good life and earning a good life are not interchangeable. I think I deserve a factory-correct Aston Martin DB6 like Sean Connery’s James Bond once drove … alas, I do not earn enough (yet) for a factory-correct Aston Martin DB6 like Sean Connery’s James Bond once drove.

The crowd that Obama speaks to loves to yabble about income equality and bringing more Americans into the middle class. They think that increasing wages is the answer to that noble cause, though they apparently don't stop to consider that old saw about pushing on a balloon in one area only makes it bulge somewhere else.

In this case the bulges that pop out elsewhere on the balloon are the signs that American service-sector workers, encouraged by the Economist in Chief, are ultimately working toward their own demise. They are pricing themselves out of a job.

Salaries do not grow on the magical salary tree. They come from what would otherwise accrue as profits to the capitalist, the business owner. Raising salaries, therefore, raises the cost of doing business, which has two direct, interrelated impacts:

It means you and I pay more for whatever we’re buying, since business owners — the ones who put up the capital to open the business in the first place — are not going to reduce their share of the business to any excessive degree. To keep their profits at an adequate level, they will raise prices to afford the higher wages … and, thus, begets inflation.

It makes America less competitive globally. If we lived in a closed economy, we wouldn’t care about the cost of labor in Brazil or Mexico or Malaysia. But because we operate in an open economy in a globalized world, we compete with global labor … and globally there is a glut of labor, which means certain categories of American worker are already overpaid relative to their peers overseas. So, every time we raise the cost of labor we are making America a little less competitive.

Thanks to Jeff Opdyke, Profit Seeker

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