The Empty Feeling of McDonald's Pay Raise

Barry Ritholtz writes about The Empty Feeling of McDonald's Pay Raise.

But there are other issues worth discussing: Social media’s impact on consumers and competition for employees as the economy improves.

Both of these seem to have worked to the detriment of McDonald’s — especially among the millennial generation, which has voted with its dollars to eat at places that serve fresher, healthier food such as Chipotle. McDonald's also faces stiffening competition from burger upstarts such as Shake Shack, 5 Guys and Bobby Flay's Bobby’s Burger Palace.

Don’t underestimate the competition for quality workers at fast-food restaurants. The supply of people willing to do the difficult, dirty work of grilling greasy burgers and fries or interacting with drive-through customers is finite. Wal-Mart has similar issues finding qualified minimum-wage workers. And as the economy continues to slowly improve and unemployment declines, that pool of workers gets smaller. It really was just a matter of time before wages had to rise.

That is a positive development — especially for two companies with business models that are so dependent on government aid, tax breaks and Medicaid. As Bloomberg Businessweek reported in 2013, “Fast-Food wages come with a $7 billion side of public assistance.” Indeed, a higher portion of employees of fast-food restaurants receive taxpayer aid than in any other industry.

Wal-Mart isn't much better. As we noted, Wal-Mart employees receive $2.66 billion in government aid each year. That works out to $5,815 per worker, and $420,000 per store. Why private-sector employers require public assistance for their full- or part-time employees is beyond me. But it is why I've labeled these two corporate welfare queens.

Raising the minimum wage nationally to $12 would drive more of the employment costs back to the companies, which is where they belong. Estimates vary, but it would probably take a minimum wage of about $15 to make these companies' employees independent of state and federal aid.

It is worth watching to see what the tandem of social media and basic economics does to push these companies toward a higher minimum wage. With April 15th right around the corner, it would be nice to know that your tax dollars aren't going to subsidize huge for-profit, private enterprises.

Emphasis Mine

The limits of proletarisation have been reached. Basic jobs are being automated. Any job that can be learned by rote and through an instruction manual is one that can be done by a machine. Replacable workers have been replaced by machines.

Workers who can add value to the customer interaction are now needed. These workers do things that cannot be learnt by rote or through an instruction manual. They must be self-motivated to learn and try new things, and then to evaluate their own performance in order to improve.

In other words, they have to expand their consciousness about how the world works. They must educate themselves through study and interaction with other workers.

Economic survival is driving this expansion of worker consciousness. It is no longer adequate for a worker to be told what to think or what to do by a manager. The manager is now hopelessly lost in a rapidly changing environment.

A worker with a better understanding of how the political and economic system works is in a better position to see and take advantage of opportunities as they arise.

In my opinion, a worker with a Marxist understanding of the world is the one best able to survive in these turbulent economic. The primary reason is that Marxism gives the best description of how Capitalism works.

But it does not necessarily follow that a worker with a Marxist understanding will become a Communist.