Driving Wages: Low Unemployment, High Labor Demand, NOT The Government
For years a huge vote-buying push for the Democratic Party has been the minimum wage. The non-stop bemoaning over entry-level wages became just one of their continuous drumbeats. Never meant to be a single source of support for anyone for any long period of time, the minimum wage was just what the 16-year-old entering the job market could expect from fast food eateries like McDonald's, Burger King and Taco Bell.
Well, the times, they are a changing. And fast.
According to Market Watch, Taco Bell, the California-born fast food giant founded by entrepreneur Glen Bell in 1962 (now part of Yum! brands), will make a major move toward recruiting and retaining quality management candidates: a $100,000 per year salary. According to the Market Watch article:
The home of Doritos Locos Tacos says it’s going to test paying managers $100,000 a year at some company-owned locations in the Northeast and Midwest starting later this year. Taco YUM, +1.26% announced the plan Thursday and also said that as of Jan. 1, 2020, all of its company employees “can become eligible to receive” at least 24 hours of paid sick time per calendar year.
For the past two years, the 'Help Wanted' sign has been out at nearly every restaurant we've visited in North Texas and Southern Oklahoma. It's not just a struggle to find quality employees, but to keep them. What we see happening here is a situation where supply and demand are driving wages up. I've spoken several different restaurant managers and owners in just the past couple of weeks, all of whom have indicated their starting wages are at leas $1.50-$3.00 above the federally mandated minimum of $7.25/hour. One manager indicated that they may have to go higher to become competitive.
You also hear concerns about rising wages driving up costs to consumers. Have prices gone up? Yes, they have, but that doesn't seem to be hurting anyone's appetite for dining out. Been through the Chick-Fil-A drive through lately? It's efficient, but super busy. And they start their non-management employees out well above $7.25 per hour. Want a seat a McBride's on Friday night? Get there early or just be prepared to wait a bit. Steaks are flying off the grill!
While concerns persist about wage disparity between fast food executives pay and the fast food worker's wages, the fact remains that minimum wage jobs such as this have, traditionally, been entry-level jobs and not something you count on to support a household. But there are great success stories from within the industry. I personally know a man who went to work for McDonald's at fifteen making minimum wage (it was well below $7.25 in those days) and went on to become an McDonald's franchise owner-operator, and a multi-millionaire as well.
The main driver in this wage rise is the labor market itself. The U.S. unemployment rate as of the end of 2019 was just 3.5%, about one-third of the rate 10 years ago, a staggering 9.9% according to the Bureau of Labor Statistics. Here in Wichita Falls, that number is even lower, at 2.9%. Help is indeed very hard to find in some sectors. This, more than anything else, is driving wages up. The economy is roaring, jobs are plentiful, but labor is not; supply and demand is what it's all about.
The Market Watch article also points out that In-N-Out Burger already starts managers above $160,000 per year and hour wages range from $12-17 per hour. This isn't the same fast food work environment that so many of us started out in decades ago. And the days of politicians being able to bank on the minimum wage argument as a vote buying tool are probably coming to an end.
Bernie, have a seat.