In early August 2013 fast-food workers across the US staged a walkout in protest about their levels of pay – they were demanding an increase from $7.25 (Federal Minimum Wage) to $15 an hour. Under the current minimum wage a worker’s income is $15,000 per annum which is below poverty level pay. Although the minimum wage has increased it is still below its peak in 1968 when it was worth approximately $10.70 an hour in today’s dollars. As well as the low pay, workers in the fast food industry get few benefits and also prospects for full-time work are limited. Add to that a weak job market and ultimately bargaining position, the prospects for these workers look bleak. Although this low pay has been prevalent for many years why is it that is has become such a political issue?

1. Mark Johnston King’s College, Auckland
`October 2013
US needs to create good middle-class jobs
In early August this year fast-food workers
across the US staged a walkout in protest
about their levels of pay – they were
demanding an increase from $7.25 (Federal
Minimum Wage) to $15 an hour. Under the
current minimum wage a worker’s income is
$15,000 per annum which is below poverty
level pay. Although the minimum wage has
increased it is still below its peak in 1968
when it was worth approximately $10.70
an hour in today’s dollars. As well as the
low pay, workers in the fast food industry
get few benefits and also prospects for
full-time work are limited. Add to that a
weak job market and ultimately bargaining
position, the prospects for these workers
look bleak. Although this low pay has been
prevalent for many years why is it that is
has become such a political issue?
Why are older workers in fast-food and retail jobs?
Historically these part-time jobs have been filled by
students or parents looking for work to supplement
the family income. However with the downturn in the
US economy and increasing unemployment, many in
the labour force have had no choice but to try and
pick-up any available work. This includes major
income earners for families and today low-wage
workers provide up to 46% of their family’s income.
This is in contrast to forty years ago where there
was no expectation that fast-food or retail jobs would
provide the living wage as they were not the jobs
that the main breadwinner in the household was
employed in. In the 1980s profitable companies
like Ford, General Motors and other manufacturing
industries were big employers in the US economy.
Workers were well paid and also had the benefit of
pension plans and medical cover. However globalisation
and the drive for lower costs have seen a number of
US firms looking to locate overseas in countries such
as Mexico and China.

2. Mark Johnston King’s College, Auckland
Mexico
With the formation of NAFTA (North America Free
Trade Agreement) this allowed for free trade between
Canada, USA and Mexico which led to many US
companies locating their business in the low wage
economy of Mexico.
China
Furthermore with low wages also in China
accompanied by authorities fixing their currency to
the US dollar, this made it very hard for US companies
to compete with such cheap imports. This has
consequently led to job losses in the US manufacturing
sector. Today’s biggest employers are industries that
have built their business on low wages – ie fast-food
chains and retail stores. Therefore, if you are to give
higher wages to these workers, consumers have got
to be prepared to accept higher prices.
Final thought
By increasing the minimum wage you do give workers
extra purchasing power but this doesn’t address the
problem of more middle class jobs. The challenge
for the US economy is the creation of more secure
full-time jobs that create higher incomes. With the
US infrastructure in a state of disrepair, millions of
dollars could be spent on improving bridges, roads
and other infrastructure, which would not only create
a number of full-time jobs, but also improve the
productivity of the economy.
References
The New Yorker: “The Pay Is Too Damn Low” James
Surowiecki – 12th August 2013