Fast-Food Strike Means Time to Buy Gold
August 29, 2013
Today is: Bring Your Lunch to Work Day. I hope you remembered to pack some leftovers.
Well, itâ€™s not officially Bring Your Lunch to Work Day. But unofficially, it is, since Americaâ€™s fast-food workers have announced plans to walk off the job in protest against the wages their employers pay. Those who flip burgers and deep-fry chicken nuggets are demanding a wage increase to $15 an hour â€“ what they deem a livable wage in modern America. Iâ€™ll leave it up to McDonaldâ€™s and Papa Johnâ€™s to figure out if such a set of skills demand that kind of paycheck.
But thatâ€™s beside the point. A much bigger front is exposed in this picayune skirmish over low-income wages.
The key reason inflation has not rooted in America, despite the best efforts of the Federal Reserve to manufacture rising prices through dangerously unconventional monetary tinkering, is because zero wage pressure exists in the labor market.
Wages in our (once) great nation stagnated years ago and have actually retreated. Median income for the average working family is down a bit more than 12% since 2000. Thatâ€™s a function of globalization and the fact that American labor has priced itself out of the market for many tasks. Jobs vanished because Koreans and Mexicans can make cars cheaper, the Pakistanis and Cambodians can make clothes cheaper and the Indians can handle customer complaints cheaper. Problem is, the skills that are easily exported arenâ€™t easily transferable to many other occupations here at home. So, we end up with a nation of displaced workers whose only viable career path in many cases is in the service sector, where the supply of help outstrips demand, which, in textbook fashion, keeps a cork on wages.
But what happens when that cork pops off? What happens if Burger Nation successfully pressures employers for $15 an hour instead of the $7 to $10 that workers generally earn now? Well, three things I can think of, and none of them are particularly good.
The Law of Unintended Consequences