A harsh, impersonal economy

A friend of mine who likes to eat at the Taco Bell fast-food chain was given an invitation to participate in a customer survey.  Her reward would be a free meal—for a Taco Bell employee.

My friend worked for the Wendy’s fast-food chain in her youth, years ago, and she told me that in those days it was taken for granted that any employee was entitled to a meal (within reason) on their shift.  She was surprised that this is no longer the norm.

What we have now is a fast-food restaurant chain whose executives not only underpay their employees, but don’t care that they have a reputation for underpaying employees, and appeal to the public’s sense of charity to help.  Not that this is unique.

I realize how lucky I have been to spent most of my adult life in the afterglow of the New Deal.   I wish I could think that today’s harsher, more impersonal world is a temporary aberration.

Poverty-wage professors and higher education

Hat tip to corrente.

Overcoming the Iron Law of Wages

One of the arguments against raising the minimum wage is that employers won’t hire people if the wage is higher than the value of the employee’s work.

Obviously this principle is true.  In fact, an employer will not hire someone unless the wage is less than the value of the employee’s work to the employer.  Otherwise the employer would make no profit.

Under conditions of economic competition, there is pressure to keep wages as low as possible.  This is especially true for franchise and subcontract businesses, when the franchisers and the buyers have the economic power to squeeze their profit margins as low as possible.

Workers have no power, as separate individuals, to prevent wages from being forced down to subsistence level.   There’s a name for this process, the Iron Law of Wages, which was formulated by the economist David Ricardo 300 years ago.

The reason that, contrary to Ricardo, wages have risen over the century is that sometimes skilled workers are scarce and command a higher wage,  sometimes workers have been able to organize unions and bargain collectively, and sometimes governments have set minimum wages to limit how far wages can be pushed down.

Certain libertarians and free-market theorists oppose a role for government or even for labor unions.  They say wages should be negotiated between free individuals.  When an individual business owner is hiring an individual worker, that may make sense.

When a worker is up against a powerful collective organization, such as a corporation, then the worker needs something to equalize bargaining power.   And in the case of fast-food franchises, workers are not up against the individual business owners.  They are up against the corporations that set the terms for the franchisees.   A higher federal minimum wage would change the equation.

A new way to nickel-and-dime low-wage workers

This is from a report by the New York Times.

A growing number of American workers are confronting a frustrating predicament on payday: to get their wages, they must first pay a fee.

For these largely hourly workers, paper paychecks and even direct deposit have been replaced by prepaid cards issued by their employers.  Employees can use these cards, which work like debit cards, at an A.T.M. to withdraw their pay.

But in the overwhelming majority of cases, using the card involves a fee.  And those fees can quickly add up: one provider, for example, charges $1.75 to make a withdrawal from most A.T.M.’s, $2.95 for a paper statement and $6 to replace a card. Some users even have to pay $7 inactivity fees for not using their cards.

These fees can take such a big bite out of paychecks that some employees end up making less than the minimum wage once the charges are taken into account, according to interviews with consumer lawyers, employees, and state and federal regulators.

Devonte Yates, 21, who earns $7.25 an hour working a drive-through station at a McDonald’s in Milwaukee, says he spends $40 to $50 a month on fees associated with his JPMorgan Chase payroll card.

Click on Paid via Card, Workers Feel the Sting of Fees for the full New York Times article.

Click on More Than 286K People Ask McDonald’s Franchisees to Stop Paying Employees With Debit Cards for more.