Economic Recovery Should Help Workers

McDonald’s has said that its franchisees are independent owner-operators who set their own policies. The restaurant leader has also said that it respects employees’ right to choose whether they want to unionize and that it offers “competitive pay based on the local marketplace and job level.”The business press — and the major stock averages — suggest that an economic recovery is well under way. That may be so, but it would be hard to convince most ordinary Americans. Though unemployment has declined, much of the gains derive from workers departing the labor market, thus not adding statistically to the unemployment rate. At the current pace it still seems unlikely that prosperity will trickle down to the working class and the poor. Just how far down the social ladder renewed prosperity will penetrate is likely to depend on two struggles, one public and the other carried on within one of our most insulated institutions, the Federal Reserve. In both cases, advocates of status quo draw on tired Economics 101 arguments.The most public struggle is the growing push by fast food workers for a wage boost to $15 per hour. McDonalds responds that it “offers competitive pay based on the local marketplace and job level. References to competition and the marketplace call to mind images of a local farmers’ market, with many farmers selling similar, well-known local crops. Ads, if present at all, take the form of a list of raw produce or baked goods and their prices. McDonald’s is one of the largest national corporations, biggest ad spenders, and largest employers-especially in many inner cities. The only perfect competition in the fast food industry is among the numerous workers competing for a relatively small number of jobs in a high unemployment environment. McDonald’s wage offer is hardly determined by some impersonal market. Within limits it can set the bounds of the market. The argument that setting a higher minimum wage for labor would force immediate unemployment is disingenuous. In addition, labor markets differ from other markets in one other way. Labor is a cost of production, but it is also a source of demand. Better pay for its workers might add to cost, but also puts more money in the hands of potential Big Mac consumers.Read More.Source: Progressive Populist/John Buell