Tuesday, 30 July 2013

A Real Pay Scale Dilemma

Across the US.....there are various one-day strikes going on....mostly in urban areas....where employees of fast-food franchises are demanding a $15 an hour pay scale.....roughly double of what they are getting today.

The cause?  Most all of them have awaken and realized the problem with the healthcare business, the real cost of living, and that fast-food job isn't going to be a lifetime job with any future.

The truth?

Fast-food operations were never a place where someone stayed twenty years and built a career unless it was as a manager.  It just wasn't designed as a business model to operate that way.

What happens if they go to a $15 an hour wage?

Well.....your simple meal of a burger, fries and ice tea goes to $8.  A Big Mac meal.....probably around $11.  Pizza Hut couldn't sell you a pizza for less than $18 (the smallest size they make).  Subway could make up the traditional six-inch sub for around $12.  Breakfast at IHOP would run around $16 for the standard plate that you pay $8 now.

But why stop there?  A can of Pepsi would have to be around $2.50 at Wal-Mart.  A beer at Hooters would have to run around $8.  A two-scoop cup of ice cream could not be sold for less than $6.  Newspapers would all run $2 a copy or more.

Inflation in full bloom?  You could say that.  It'd only take a year for everyone's pay to adjust to reality, and the $15 an hour wage would deemed as unfit for survival in the new America.

The problem is that regionally, there ought to be a mechanism where pay is shifted up three percent every eighteen months.  We've sat around for four decades now and tried to admit to ourselves that $8 an hour works pretty well, but when you look at the crowd holding the jobs....their lives aren't moving.  The old mentality of getting a job anywhere and later finding better work?  Gone.  Those manufacturing jobs that we always moved into during the 1960s and 1970s?  Gone overseas.

There's a point to the strikes, but doubling it overnight would likely destroy the business model that most fast-food franchises have built.  No one is going to walk into McDonalds to buy a burger-meal for $11.  We need to be smart but careful about screwing up these business models.