Should fast food workers make $15 per hour?

I think we can all at least agree that this looks delicious

I think we can all at least agree that this looks delicious

A couple weeks ago fast food workers across the US started staging walk-outs in protest of their low wages. These workers want a “living wage”, they argue, and have targeted $15 per hour across the industry.

This story is a pretty interesting one from the point of view or economic justice and the Baha’i teachings. That’s because the demand for a higher wage forces us to ask a critical question: If the market sets wages too low for a particular group of people from the point of view of our own moral judgments, then is it right simply to mandate a higher wage?

This is a common question, especially among Baha’is and other people who seek economic security and dignity for all people. Usually, it’s asked in the context of developing countries, where wages are much, much lower than even the minimum wages here in the US and the rest of the developed world. Let’s imagine that the market pays Malaysian factory workers $2/hour and their American counterparts $20/hour. Is it morally wrong for companies to hire Malaysians at this lower wage? Does it constitute “exploitation”? Does it violate basic moral principles of fairness and justice? Should it be law that Malaysians make the same wage as Americans?

Many fair-minded, well-intentioned people believe the answer is yes to the questions above. The logic is clear: To make just $2/hour is horribly poor by the standards of developed countries, and if it would only be fair to treat everyone equally, then why not pay everyone a higher, “living” wage?

The Baha’i Holy Writings make no specific judgment on this particular issue, even though they teach that all human beings are equal in the sight of God, stand for justice in all arenas of society, and call for an eradication of extreme poverty (as well as extreme wealth). ‘Abdul-Baha did in fact hope “that laws be established, giving… workmen the necessary means of existence and security for the future”. But he also warned that “difficulties will also arise when unjustified equality is imposed”.

So, even as we desire morally for extreme poverty to be alleviated, there is a scientific question of how to achieve this goal. And in my opinion, I’d say that the imposition of a $15 wage floor for fast food workers isn’t the best approach. That’s because forcing the price above its market level is bound to create some adverse impact somewhere else. For instance, fast food companies may find it more cost effective to automate what they do, which means replacing some workers with machines. It may mean that some talented individuals are pulled towards working in fast food, rather than some other productive work. Or it may simply mean a higher cost of meals for those who actually depend on fast food because of a tight budget or a busy schedule.

The point is, simply targeting an economic outcome that we don’t like and attempting to change it by fiat is more often than not a fool’s exercise. What we care about here is not fast food workers, per se; it’s helping all people at the bottom of the income spectrum to achieve better-quality living standards. We need to do this right.

There are more economically-sound, less distortionary ways to deal with this issue than forcing wages upwards. Note that while we’re arguing over fast food, there is a larger debate going on in our Houses of Congress here in the US on things as basic as food stamps, subsidized early childhood education, and grants for college for those who can’t afford it. One way or another, as a society we are going to (as we should) collectively pay some money to help others achieve a better living standard. The way I see it, I’d rather strengthen — or, at least, avoid the destruction of — that institutional structure of support that the working poor currently rely on, rather than simply subsidize the labor of fast food workers.

Once again, that is my point of view as a) a person who’d like to raise the welfare of the poor and b) an economics nerd who’s interested in finding the best way of doing exactly that. Other people who fit into both of these categories may disagree with my conclusions, of course, but that’s the point of debate among people who share a common goal and are open to whatever works. As the Chinese premier and reformer Deng Xiaoping famously said, “I don’t care if a cat is white or black, as long as it catches mice.” In the case of poverty in America, we all want to catch mice, but it’s important to find the right cat for the job.


8 thoughts on “Should fast food workers make $15 per hour?

  1. Just to add one more thing to this post… Note that the $15/hour thing for the fast food industry is different from a minimum wage. Raising the minimum wage, in theory, should cause more people to become unemployed. But that’s not really what we see in practice, as employers don’t react that “elastically” to higher wages. I’m not smart or well-read enough to know why, but my suspicion is that if you can raise the wage floor for the whole labor force, rather than just for a particular industry, in an economy close to full employment, workers will end up doing something. In other words, you might raise wages in fast food and this might cause employment in that industry to fall, but the same impact might not be felt if you raise wages across all industries. There are other problems with using a minimum wage to fight poverty, but these, again, are scientific/economic problems about how to deal with the issue, rather than the moral problem of whether or not to deal with it altogether.

    • Raising the minimum wage may not lead to more people becoming unemployed (some would argue otherwise), but it will certainly make it more difficult for unemployed low skilled workers to find employment.

  2. I think answer for me is simple. We all swim for the moment in our respective economic seas, so wages and properity are relative although as global civilization advances equalization will occur, and it has and is doing so. I remember in researching prosperity in Bahai writings that it is defined in terms of basic necessities. An aye, there’s the rub in a society where material expectations include many TV sets and one person’s Civic Honda is not a another’s Mercedes.There’s much to be said for all having a “Living Wage” and various U.S. government metrics say what that is.

    But more to the point is a spiritual value system that guides us on how to live, Thoreau being one exemplar on an indivdual level for me. Another spiritual value is living in common cause and concern for others, a value embedded, yet ignored in practice, in virtually all faiths.

    • I guess there must be a word limitation in replies, so here are my closing points. A recent report said that a something like adding 10 cents to a big mac would allow for a $15/hour wage and health insurance. A trip to Walmart might cost 46 cents more to do the same (numbers may be off a bit as did not save to memory). So back to the common cause as shared value proposition. Have more to say, but won’t let me.

      • One mo’ try to finish. What happened when Henry Ford doubled workers’ wages and Wall Street went berserk against him?

  3. I really appreciate you keeping the concept of justice and equality at the forefront of the discussion, and reminding us that they can look very different according to many, many factors. And I am sure that as members of each society participate more and more into these discourses, they will be able to figure out what justice and equality look like in their own, unique communities. Thank you!

  4. Is it really true that the “market” sets the wage all the time? The market as I understand it is more or less what people are willing to pay. I mean, why couldn’t I open up a business selling fast food type products and pay my employees $15 an hour? I’ve actually read that a higher wage could help reduce employee turnover, improve customer service, and cut training costs in the long run. And while ‘Abdu’l-Baha did say that imposing equality may create difficulties, he also advocated for a profit-sharing business model as well as the moral imperative for the wealthy to make sure that everyone has a decent standard of living. I feel as though capitalism (at least in the West) is becoming a nightmarish experiment in social Darwinism rather than simply a means to allocate capital efficiently. As I understand it, Adam Smith basically stated that capitalism can’t work without ethics in the marketplace. And this is what is lacking here, except no one will come out and say it. Instead, we’ll say things like “imposing a minimum wage distorts the market.” Maybe so, except without the check of a moral compass, I dare ask what will stop corporations from exploiting workers even further?

    • Think about it this way. The market for an elite professional athlete is $20 million. The Yankees could try to pay $15 million, but the Red Sox would pay a higher wage.

      The market is also how much is a worker willing to be paid for job x. If a 16 year old wants to bag groceries for $6 an hour shouldn’t we let them? Yeah, it’s not very much money, but that young worker is attaining valuable experience.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s