Why $15 An Hour For McDonald’s Employees Is Ridiculous

Image via Flickr/ Mary Anne Enriquez

Workers in the fast food industry across major cities are striking for $15 per hour wages. Based on sales rankings from QSR Magazine, McDonalds’ sales takes up more than one-third of the top 10 grossing fast food industries, making it a focal target for wages scrutiny.

Arnobio Morelix, research assistant at the University of Kansas, told the Huffington Post that McDonalds simply needed to increase the prices of its menu items by 17 cents per dollar to be able to double the salaries of its employees—from the CEO to the bottom-of-the-chain employees assembling burgers.

This “study” (consisting merely of looking at the 2012 annual report, seeing that 17.1 percent of its wages went to the salaries of its employees and concluding that, by increasing menu items by that much, salaries would double) has been widely circulated.

However, the research conducted by Morelix fails to depict how doubling salaries could affect the fast food culture, and the chain reaction it could cause for other industries as well. Simply put, a $15 per hour salary for fast food workers is ridiculous. If McDonalds inflated wages, it could cause a cycle of monetary devaluation.

It’s not that I’m a firm believer that McDonalds should pay the lowest possible salary, or that they shouldn’t get some kind of wage increase, or that McDonald’s should be all about satisfying its shareholders. But the bottom line is, $15 an hour is ridiculous.

Bad Research 

Surprise, surprise. The research done at by the University of Kansas has some flaws, according to a report from the Columbia Journalism Review, which found that Morelix’s report only included company-owned stores and not franchises. According to the McDonalds website, franchises take up more than 80 percent of its stores, meaning that Morelix’s research is not accounting for more than 80 percent of its employee population. By taking a closer look at McDonalds 10-K, CJR concluded that to double salaries, menu items would have to increase 25 percent across the board. The Huffington Post has since taken the CJR article into consideration, and replaced its original article with this one.

$15 Per Hour—Across The Board?

Nathalia Sepulveda, 21, was one of the many striking for $15 an hour, and she had her 3-year-old son with her. “7.25 does not cut it, especially as a mom,” Sepulveda told The Huffington Post. “I have to sacrifice certain things to get by and sometimes I still don’t cut it.”

In other words, she, like many others in her position, is demanding—not what the value of her job or  position as an employee is worth—but what she feels she must be given in order to take care of expenses, such as her child, that she cannot otherwise support.

Alongside Sepulveda could be a 17-year-old girl saving up money for a car; their needs are completely different, and no company can accommodate what one person needs to live on from another. If salaries were strictly contingent on what it took for its employees to live comfortably with their added expenses (what if your salary increased when you had a child?—you’d get even more if you were a teen mom because, then, well, it’d be harder for you), there would be a different story to tell.

The Job Is Not Worth $15 Per Hour

When determining salary for a given job, three important things are taken into consideration: experience, education, and the level of difficulty needed to perform the job. Aside from an age factor, there are no requirements to work at McDonalds. You need no degree, experience with customer service or within the fast food industry.

According to the the Bureau of Labor Statistics’ May 2011 Occupational Employment Statistics, restaurant cooks are the largest single group of line cooks at more than 940,000 people. Yet, the highest-earning 25 percent earn just $12.98 per hour, while the lowest 25 percent making up to $8.96 per hour. The average salary for an Applebee’s cook, for example, is $10.68 per hour, according to user-submitted accounts at Glassdoor. The average pay for a similar position at T.G.I Fridays is $10.56.

Also according to the Bureau of Labor Statistics, citing data from the Airline Pilots Association, International, starting pay for most airline pilots is approximately $20,000, or $9.62 per hour assuming a full-time schedule.

The median salary of a nurse’s assistant, according to Salary.com, is $26,010, or $13.01 per hour.

These jobs require a great deal of training and education, but would be paid less than the average McDonald’s crew member employee at a $15 per hour starting base.

The Fast Food Industry Would Be Extremely Competitive

Imagine the amount of unemployed or unhappy workers who would flock to McDonald’s door if it were to make wages $15 per hour. According to research from the Center for College Affordability and Productivity, half of college graduates are working jobs that aren’t related to their degrees and 7.9 percent of degree holders are unemployed.

Many of these college graduates, facing tough economic times (or the entry-level pilot making less than a McDonalds employee), might opt to take a job at McDonald’s with its new wage increase. This would mean that, many of the employees striking for higher wages would probably be fired and easily replaced by more qualified, educated candidates. And while McDonald’s is not transparent about employee statistics, with such loose job requirements, I’m guessing many fit the bare minimum for employment.

The Chain Reaction

Seventeen cents or even 25 cents per dollar seems like a small amount, but like all small amounts, it adds up in other ways. A wage increase, as mentioned earlier, would make the fast food industry competitive. Restaurants, for example, would probably lose experienced staffers to fast food chains. They too, might have to increase the prices of its food to compete. The clothing retail industry, also open to catering to the younger, under experienced, would lose its employees to the fast food chains. How many cents on their dollars would need to be added to the price of clothing so that they could also afford to double the salary of its employees?

John Goglia at Forbes wrote regarding regional pilots entry level pay, “But once we’re talking about how much more a hamburger would cost to give workers a living wage, we should consider how much more would an airline ticket cost if we paid regional pilots a living wage.”

In the end, the consumer pays the price.