Wage war

I've seen some stuff on TV recently where people are protesting for more wages in front of Wal Mart. Fast food workers have even gotten into the protest mood and started demanding higher wages. It always seems like this sort of thing happens somewhere else, Ohio or something. The other day, there was a crowd of people gathered in front of the Wal Mart in my town. They had signs, megaphones, chants. I even noticed a number of people walk through the parking lot, see the protest and leave.

The whole scene made me kind of happy. The issue with Wal Mart is irrelevant to me. What made me happy was that people actually cared about stuff. In the decade before I was born, the world was full of a sense of "War, huuh, good God, y'all..." and when I was in high school, people still wanted to "fight the power." Now, it seems like things are, "War, huuh... yeah, could you move a bit? I'm trying to watch Real Housewives of Beverly Hills..." That people still care enough to stand for something was encouraging to see. We are, after all, a country built on telling people in charge to go stick it. It also made me happy to see other people walk away. There weren't too many picket lines in my childhood–after all, I didn't grow up in the 30s–but when there were, my dad, a lifelong union member, always respected them. It's not his fight, but his willingness to stand out of the way of those wanting more for themselves always stuck with me.

So the argument these days is over raising the minimum wage. Can the workers live on the current minimum wage? Do they even deserve more? What will this do to the companies that have to pay these wages?

Few people have argued the workers can adequately live on the current wage. I'm not sure what kind of egotistical jackass you have to be to argue whether someone deserves whatever wages they make. I mean, it's called a minimum wage. Companies pay it because that's the least they are required to. They'd pay less if they could. You deserve $5 an hour...I'm paying you $8...stupid federal law!! Do they deserve it. What an argument. As for the companies, they will bear an additional expense. They always do with everything. Gas isn't 29 cents a gallon last I checked. The price of stuff goes up. So businesses adapt or die. But what if they do die, you ask? As Ivan Drago said in the 1985 classic, Rocky IV, "if he dies, he dies." Go cry on the shoulder of the ice truck company, the milk man and the dude that makes beta max video tapes.

Many of the business analysts on the 24-hour news channels have made all sorts of claims of the economic ramifications of increasing the minimum wage. The problem is, yea verily, while economics is a social science, there is nothing remotely scientific about it. Real science done by scientists for scientific reasons using science focuses on the elimination of variables. Here's the control; here's the control plus one change; here's the outcome; it is, ergo, highly likely the change is causing the new condition. You can't do that in economics. There are no certainties in social sciences because the variables are too plentiful.

With that, there is one certainty that the pundits have kicked around I disagree with. I'll leave the debate over whether raising the minimum wage will cause a black hole to swallow the Earth or not, but one thing I know won't happen–to any great degree, anyway–is the cost of the increase will be shifted to consumers. This is a consumer-driven economy. You can shift the cost of a Happy Meal to consumers but at a certain price-point, they'll stop paying. Your sales will plummet and you can then go commiserate with the encyclopedia salesman and elevator operator. "OK, here's your Happy Meal... that'll be 10 bucks!" There's a conversation you'll never hear.

Companies will instead have to shift the costs elsewhere. However, if they cut costs on maintenance, infrastructure or health and safety then they are likely to be shut down by health inspectors or people simply won't want to eat in a poorly kept up, dirty restaurant. Sales plummet and you commiserate with...well, you get the idea.

So maybe shareholders will have to eat the cost. And maybe they'll get ticked and sell their shares. Yep, probably. But as they are also consumers, that's their right to do so.

But then maybe the workers who don't work hard and do a good job will lose those jobs to better workers. The companies, do in fact, retain their right to fire bad workers and hire better ones. And so maybe customer service standards improve and productivity increases and that attracts more customers willing to pay a bit more for the product and maybe profits increase and shareholders don't sell their stakes. Interesting.

And here's an additional interesting fact. Increased wages serve to strengthen the consumer class. More consumers with more income rubs off in a positive way on all types of businesses. They'll buy more TVs, more cars, more cell phones, more clothes and, indeed, more hamburgers. And will some companies collapse? Probably. But companies that can't adapt to change are weak and destined to fail at some point anyway, right Eastern Airlines? And those companies aren't good for the overall economy anyway.

So when you see the picket signs the next time you contemplate what number value meal to order, just remember, "it's 1, 2, 3, what are we fighting for..."