A whopper about fast-food wages

by Walter Olson on July 31, 2013

So McDonald’s Dollar Menu would go up only to $1.17 if the company doubled all wages? Oh, Rep. Keith Ellison (D-Minn.), you’re so gullible it’s almost cute. [Tom Maguire]

Update: Well, hats off to HuffPo, which has now withdrawn the piece, apologized for its errors, and substituted a piece that tries to take a more sober look at the issue. I wonder whether Rep. Ellison is feeling sheepish now (via Twitchy).

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Update: HuffPo yanks its fastfoodwages piece - Overlawyered
08.01.13 at 3:45 pm

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1 wfjag 07.31.13 at 6:20 pm

In “A Politician’s Dream Is a Businessman’s Nightmare” former Democrat Senator and Presidential Candidate George McGovern, described the reasons why the only business he ever attempted to operate, went bankrupt after a few years (after decades of successful operation by other owners):

“In 1988, I invested most of the earnings from this lecture circuit acquiring the leasehold on Connecticut’s Stratford Inn. Hotels, inns and restaurants have always held a special fascination for me. The Stratford Inn promised the realization of a longtime dream to own a combination hotel, restaurant and public conference facility–complete with an experienced manager and staff.

In retrospect, I wish I had known more about the hazards and difficulties of such a business, especially during a recession of the kind that hit New England just as I was acquiring the inn’s 43-year leasehold. I also wish that during the years I was in public office, I had had this firsthand experience about the difficulties business people face every day. That knowledge would have made me a better U.S. senator and a more understanding presidential contender.

***

In services, however, consumers do have a choice when faced with higher prices. You may have to stay in a hotel while on vacation, but you can stay fewer days. You can eat in restaurants fewer times per month, or forgo a number of services from car washes to shoeshines. Every such decision eventually results in job losses for someone. And often these are the people without the skills to help themselves–the people I’ve spent a lifetime trying to help.

In short, `one-size-fits-all’ rules for business ignore the reality of the market place. And setting thresholds for regulatory guidelines at artificial levels–e.g., 50 employees or more, $500,000 in sales–takes no account of other realities, such as profit margins, labor intensive vs. capital intensive businesses, and local market economics.”

http://digital.library.ucla.edu/websites/2008_993_056/Politician_Dream.htm

It appears that the “learning curve” for Democrat elected officials is flat.

2 Jason Barney 07.31.13 at 7:54 pm

Meanwhile, in Washington the City of SeaTac plans to have a ballot initiative raising the wage in city limits to $15/hr, up from $9.19.

http://www.komonews.com/news/local/SeaTac-City-Council-votes-to-raise-minimum-wage-to-15-216755921.html

3 Ed 07.31.13 at 7:58 pm

My wife works in child care earning $10 an hour. Which is OK with her since she works part time to earn retirement and SSI credits. To get her job, she had to have an associate degree and must do continuing ed credits every year. If you double the pay of a hamburger flipper to $15 an hour, what’s the incentive for her to work in child care. Do you double her pay to $20 an hour? If you do that will require raising the cost charged to the parents. As a non-profit, they don’t have dividends to reduce or High rolling executive salaries to cut.

4 Scott 07.31.13 at 10:33 pm

Good point Ed. Rather than scaling lower skilled workers to higher wages it will bring in new higher skilled competitors and squeeze the lower skilled worker out of the market.

I’m game for anyone that wants to pay me $1M to ride the back of the garbage truck. I have a PhD, many years of work experience and can lift 50 pound cans into a truck. Plus I can convert pounds into any unit of weight you want.

5 marco73 08.01.13 at 7:14 am

Math is hard for most politicians.
The McDonald’s Dollar Menu will not go up to $1.17. It will stay at $1.
Portions will shrink, and minumim wage people will see their hours cut, or lose that part-time job entirely.
Rep. Ellison is not serious about $15 per hour. He is pushing an outrageous number to get headlines. Really, if we just doubled the wages of every person in America, would politicians be happy?
Rep. Ellison wants someone to propose a lower number, like $8 or $9. Then he can demagogue about cruel big business, making record profits on the back of the oppressed laborer.
Rep Ellison doesn’t give a darn about helping poor people, he just gives a darn about being able to scream about helping poor people.

6 Jamie R 08.01.13 at 8:30 am

Ed,

Your wife works part-time to earn SSI credits. You’re whining about incentives. If we give every part-time child care worker SSI credits, where’s the incentive to actually save for retirement? You sound like the old Republican woman at the Tea Party rally demanding the government keep its hands off her medicare. If we really wanted an honest incentive structure, your wife wouldn’t get SSI credits for part time work, and child care centers would have to pay a wage that’s commensurate to the amount of training they require for their employees.

7 KB 08.01.13 at 3:39 pm

Ok, double everyone’s wages to increase their standard of living. And that cost is then passed in the form of higher prices, offsetting the increase in the standard of living. You’re right back where you started.

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