Minimum wages – My life in fast food
When we talk about minimum wage laws, the fundamental thing to remember is that no employer will pay a worker more than they think that worker will add to revenues (their productivity). If they did, they would be hiring the worker in the expectation of adding more to their costs (wages) than their income (revenues). They would be losing money on the hire. This is not something a business with a bottom line to think about would do.
Keeping this in mind we can see that some of the arguments often put forward in support of minimum wage increases simply aren’t relevant.
“I’ve worked here for 15 years and I’ve never had a raise”
Sometimes you’ll hear an argument like “I’ve worked here for 15 years and I’ve never had a raise”. But remember, pay is a function of productivity. If more experience makes a worker productive then that worker can look to get a pay rise. But if it doesn’t, why would they expect their pay to go up?
The relevant question is “have you become a more productive worker over that time?” Sadly, in many cases where we have low skilled workers and labor intensive jobs, the answer is “No.”
I worked in the kitchen at a major chain of pizza outlets for two years from age 16 to 18. Pizza bases were delivered to us as little frozen biscuits which we would put in pans and place in the proofing oven overnight. The next morning we would come in and take out the bases ready for use that day. After two years working there, I couldn’t produce more pizza bases than I did at the end of my first week. I couldn’t proof more pizza bases than the oven could accommodate. My productivity increased a little bit on the first day as I learned how to put oil in the base of the pan and operate the proofing oven. Then it hit a plateau. In this aspect of my job, I was no more productive at the end of my last day than I was at the end of my first.
Likewise, after a month of making the various pizzas I could make them all from memory without looking at the chart that hung over the ‘make table’. But here, again, in the subsequent two years my productivity increased very little. You can only throw pepperoni on a pizza so fast.
In both cases, if I’d said “I’ve been here two years and haven’t had a raise,” the correct response would have been “That’s because you’re no more productive than you were”.
Towards the end of my stint at the pizza face, I did bump my pay packet up a bit. I did this by learning new skills and taking on new responsibilities. Supervising shifts, I started cashing up at the end of the night and doing some basic maintenance on our computers. I had become a more productive employee and my pay rose to reflect that.
I could have gone on a training course and become a manager, earning even more money. But fast food wasn’t my vocation and I went to college instead. That was the case for the vast majority of my co-workers. At the end of every summer, nearly half of our staff would quit as they went off to college and we would hire kids who had just turned 16 to replace them. There were a couple of exceptions where older people were working as delivery drivers to supplement the income from their main job. But there was nobody there who was looking at this as a way to support a family. And data from the Bureau of Labor Statistics shows that this is the case for the vast majority of minimum wage workers in the United States.
I haven’t proofed a base or topped a Super Supreme in nearly 20 years. It might seem that few of the skills I learned at that first job have subsequently come in useful. But that would not be correct. That first job taught me the most basic, important skill of all: getting my behind out of bed in the morning. And it showed me the freedom that came from earning my own money. These are things that you carry with you for the rest of your working life. By ignoring economics and passing harmful minimum wage hikes, we are denying these lessons to young, lower skilled workers.
John Phelan is an economist at the Center of the American Experiment.