The American Dream, not higher wages, leads to income equality


WASHINGTON, September 5, 2014  – People seeking higher wages for flipping burgers and counter work are saying “we can’t feed our families on minimum wage” and that is probably true, but was entry level fast food industry jobs supposed to be a career choice?

At one time, the goal was to get that starter job, work your way up in the company and eventually get the gold watch at the end of a long career. Whether it was in the corporate mailroom or in the fast food industry, it was the American Dream.

Today’s millennial worker (born between 1977-1997) expect their job tenure to last less than three years according to a survey of 1,189 employees and 150 managers.  (“Multiple Generations @ Work”).

One thing that is striking about the fast food wage protests is that the protestors are mostly adults – not the young teens of yesteryear that worked behind the counter after school, or the older retired persons looking for a way to keep active.

A job flipping hamburgers, which can and will be automated in the near future, will go the way of other jobs and August’s reported 142,000 jobs created will simply be one more stone along the path leading away from job growth.

Because progressives focus not on creating more businesses that do a better job in training and growing a work force and jobs, but making those businesses we have pay more, we are inhibiting business and economic growth.

And big business, with an eye toward the bottom line and the unending quest to reduce costs and increase profits are creating work environments that are not encouraging to employees seeking growth. They know that $8.50 per hour job will never grow.

Hence the demand for unskilled labor jobs to be seen as a wall not a bridge.

In the very near future we may find ourselves asking if the automation of jobs, such as the self-check stations found at most grocery and big box stores, like Walmart, has its genesis in this wage debate.

Four self-check kiosks, or pods, at Walmart have a cost of between $70,000 and $80,000 and require only one person to monitor them according to Jerry Sheldon, an analyst for IHL Consulting Group. Other automation trends could include tablets integrated into shopping carts with the goal being to eliminate the checkout line – and checkout person.

And while adaptation and ease of use is still on a learning curve, anyone that uses these kiosks knows the lines are getting longer and the process getting easier for both the store and the shopper.

“Any increase in pay has to be offset with higher prices, less job creation, reduction in hours, automation improvements or some combination of all of the above to make up the difference,” say Micael Lotito, and attorney with Littler in San Francisco.

The mandatory, versus market driven. wage hikes will hurt not only employers and job growth but also employees and job seekers.

“A raise in the minimum wage to $10.10 is the break-even for a restaurant [in terms of] earnings before interest, taxes, depreciation and amortization (EBITDA),” noted Eric Oppenheim, chief operating officer and franchisee at Republic Foods Inc. in Rockville, Md. “And a $15-an-hour wage would equate to a -14.9 percent EBITDA. One cannot ignore the laws of economics, and small, entry-level and retail business cannot support mandatory wage hikes that aren’t market-driven.”

So did the fight for a $15 minimum wage slow job growth? Most likely.

Communities Digital News writer Michael Busler is a public policy analyst and a Professor of Finance at Richard Stockton College. In his article Fast food workers strike for higher prices and fewer jobs, Busler writes:

“If the minimum wage is raised to $15, the result will be higher prices for consumers and far fewer jobs available as entry level positions. Order takers will be replaced by touch screens. Hamburger flippers will be replaced by an automated cooking system and young people will have far fewer opportunities. Already teenage unemployment exceeds 20% nationwide and for some teenage minorities in large cities, the unemployment rate exceeds 40%.

If the fast food workers want to be paid more, they must figure out a way to contribute more. Isn’t that how you and I did it?”

READ ALSO: Fast food workers strike for higher prices and fewer jobs

For many, throwing more money to entry-level job wages is not the answer.  The answer is for company’s to invest in their work force. To train and promote from within. To encourage employee growth, including in the paycheck.

But when you start that employee out at the top of the pay scale for the job, there is no incentive for growth and employers will, instead of absorbing the cost of training and promoting from within, simply replace disgruntled employees whose job positions has limited growth.

Possibly progressives need to speak to those who have gone before, and succeeded.  There is a formula for success and it’s not stressing lower paying job growth, but in encouraging growth in those companies.

Ron Piazza, owner of the world’s oldest-operating McDonalds, started at fifteen-years old, worked his way from operating the fryers to management to ownership.

In an article with The Wire, Piazza pushes back against the idea that the minimum wage and poverty are inextricably linked.

“I started at a dollar an hour. Poverty is as severe as it was when I was making a dollar an hour. The minimum wage increase, frankly, hasn’t reduced our poverty problem.

Do I think it’s fair that people live in poverty? Of course not. But I don’t know how you can say that business is responsible for that.”

Today, Piazza owns multiple stores and he says that each of his managers has risen through the ranks, and that working hard is how we erase income inequality.

“People think we’re a dead-end job. Well, I’m not a dead-ender. I’ve got 585 employees and 55 managers, they’re not dead-enders.”

Piazza sees the minimum wage increase a “disincentive for hard work” offers the example of an employee hired for the $8 an hour minimum wage whose salary increases too $10 an hour after learning more of the job and moving up.

“The way we have tried to bring our employees together is to motivate them, since the fact is, they do need motivation. The way you motivate them is with wage and perks and things that you give them. You take all that away when the government forces people to increase the wages.”

READ ALSO: Minimum-wage protests reveal a lack of work ethic, not a lack of pay

According to the Society for Human Resource Management, employer trends are to expect more and reward less with average base pay increases remaining at 3%.

According to Towers Watson Data Services Salary Budget Survey (2013), for 2014 companies planned pay increases averaged 2.9% for salaried non-management employees.

It seems that the answer is not in making entry-level jobs career choices, but leaving them as stepping-stones. That incentives to businesses to invest in strengthening the relationship between employer and employee makes more sense than having employees outside the business disrupting business.

And for employees to honor not only their jobs, but also the customers that create the demand for those jobs.

Bad Fastfood Employees
Bad Fastfood Employees

The solution is not a higher minimum wage but employee training and retention, which includes yearly pay increases and job growth. Instilling pride, which is sorely missing, to the worker and the workplace.

The solution is not a higher minimum wage. The solution is for Americans to once again pursue the American Dream, to work toward skills growth so that they can take advantage of the areas where jobs paths, and income, grows. And that requires a contract with employers that encourages and rewards hard work with skill training, promotion and the ability to earn higher wages.

For everyone to recognize America’s recover requires better jobs, not higher minimum wages, that the Dream is not the entry level job behind the counter. Its the job that comes next.

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