Fast food has been notoriously minimum wage in its pay structure. This goes back to the very beginning of the category. But why is that? Obviously, a family cannot live comfortably at minimum wage, but that was never the intent. Back in the 1930s, 40s, and 50s, we had soda jerks. These were primarily high schoolers who were saving to buy a car, or other thing that was important to them. The wage rate was at the bottom of the heap because how much skill does it take to do the job? But generally the kids were happy, since they were gaining independence, and the parents were happy, because their children were learning a life lesson.
After High School, these kids would go to college, or perhaps get a job in a plant in town. This was just a bridge from childhood to adulthood. The same is true in grocery stores where baggers were employed at minimum wage, or theater ushers. There were many things requiring little skill that kids could do. There were very few, if any, that expected to do that job for the rest of their lives. In our town, we had Steak and Shake restaurants that employed a great many teens. There were ice cream places that were only open in the summer, a great place to make spending money.
Fast forward to today. When you go in to a fast food place, have you noticed how many non teens are working there today? It is no longer just a teen job, but rather many different age groups find themselves in that job. The primary reason for this is we, as a nation, have lost a lot of manufacturing jobs to lower wage nations. Places like China, India, Mexico, and others have grabbed these jobs off our shore. This is where our economic system seems to be failing us. We have the additional pressure of immigrants, both legal and illegal taking jobs that can't move. After all, it would be hard to package a Big Mac in China, and have it show up on the tray hot and juicy. When was the last time you saw a shoe that was made in the USA? Or cell phone, or computer, or even a faucet?
Not everyone can be a CEO. Not everyone can be even middle management. There has to be good paying alternatives to those that can't be. We used to build a lot of cars, with good wages paid, but how many shuttered plants are there. My grandfather made shoes. My dad was a printer. It would be hard to have those jobs today. The gap in our economy is those mid level pay jobs primarily in manufacturing.
Before you say, but China has lower wages, we can't compete, let me say that I don't believe that. Yes their wages are much lower, but their transportation costs are much higher. So why are these jobs leaving? And what can we do to get them back?
Some of it is government interference. When a cell phone company makes a phone in China, they pay Chinese workers, they buy Chinese raw materials. Then they sell those phones to companies in the US. What those companies pay goes as a cost of business. With those dollars going to China. The factory there has made a profit, and paid their Chinese taxes. When the company sells the phone, they profit and pay US taxes. The problem is vertically integrated companies like Apple or GE. These multinational corporations use their presence in different countries to minimize the taxes they pay. As long as they leave the money in China, there is no US tax liability. So those profits go to build more plants there, rather than coming home to the US.
The US has one of the largest tax burdens, especially compared to developing countries like China. It benefits them to grow their business away from the IRS. And yet the calls come to tax the rich, especially the corporations. They are demonized for not paying tax. Yet, have you ever not taken a deduction you were entitled to? Why should they be any different? It's only fair. Where these companies make money is the lower tax rate in other places, not because those places have lower wages. And they are encouraged by the tax code to leave it there, instead of bringing it back and using it to build domestic operations.
We need to level the playing field. Once we do that, jobs will stop leaving. Then we need to find ways to draw the lost jobs back. I remember grandpa telling of the hard work done making shoes. The factories were hot, the job was physical. But for many, that is where their skills are. They would not make good salesmen, or executives, engineers, computer programmers, doctors, lawyers, or even teachers, but they make a heck of a widget, and can be proud of that. Unfortunately, these are the jobs we are losing.
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There are two things that will bring these jobs back. First sanity in Washington, and a realization that our tax code is the problem. Second, a concerted effort by consumers to reward those companies that produce here by spending their money with them. A few years ago we needed a new faucet in our bathroom. I went to a big box hardware store. I noticed some big American brands were made over seas, primarily China. Now these companies will tell you that the design is done here. Perhaps their customer service line is here as well. As I looked, I found two that were made here. American Standard, and Moen, although Moen said they were made here of domestic and foreign parts. I made a decision to buy Moen. When I got home, I even sent an email thanking them for building my faucet here.
When companies find out that we are looking at where their goods are made, and giving preferential treatment to those made here, which will by economic law force down the prices of imports to a point where it will make sense to build them here, or cheapen the materials there, further eroding their brand. The choice will be made for them.
The people are a massive force. Governments can fall to the people. Companies can go out of business by the people. We need to use our people power to reinvent the manufacturing sector of our economy, then Fast Food can go back to what they do best, employ teens for spending money.
Spend Wisely!
