The fact is: Free market economies are the most efficient in providing humans with goods and services that enhance their lives. When government manipulates prices and wages, the outcome is typically rife with flaws.
Fast food workers in New York City received the "good news" that they would be the first to benefit from the governor's agenda to force their employers to ratchet up wages to the $15 watermark.
The flaw is: Cost of living expenses will necessarily be accelerated and the victory will be short-lived.
• I can recall when Dad earned $5 per hour. I can also recall him buying a brand-new, 1962 Chevy station wagon for about $3,000.
Today the average price for a new vehicle is over $31,000. Relative to prices, my dad was earning about $50 per hour in today's money.
When government tinkers with the economy the outcome is usually an upward cost-of-living spiral. That is, McDonalds employees earnng $15 per hour will find their grocery bill increasing as the guys stocking shelves at Krogers quit their jobs to find more green at Taco Bell. Grocers will be forced to raise their prices to cover the cost of labor to compete with fast food.
Nothing is gained.
• Factor The Federal Reserve into the equation. The Fed is little more than a price-fixing cartel that, in most of fields of business, would gender prosecution.
Retreating from the gold standard to embrace floating consensus for the value of currency inevitably leads to inflation. I can think of no extended time in history when the outcome was any different.
When I was ten years old I routinely slipped a dime a day in pop machine after delivering newspapers to neighbors who paid forty-five cents per weeks for the service.
Yesterday I forked over about $2 for a 20-ounce bottle of Pepsi at the local dollar store.
With the government and the Federal Reserve forcing inflation, there is no reason for fast food workers to rejoice beyond temporal relief. Costs have always caught up to wages.
Consider that $15 today will be worth $1.50 in a few years as new cars sell for $310,000 each. The fries guy at McDonalds will still have to invest the same number of hours to buy a new car or soda pop. The wage increase is superficial in that it won't translate into more goods and services
• Were the dollar tied to the gold standard -- and were gold actually deposited at Fort Knox to back up the green pieces of paper and consensual bytes we transfer electronically -- workers would still be earning $5 per hour, new cars would still cost about $3,000, soda would still be vended at 10 cents per pop, and dollar stores would still be called 'dime stores.'
The advantage would be that savings accounts would increase in value -- even without interest -- as the gold supply remains stagnant while goods and service increase.
Comprehending that fundamental basic of economics requires minimal abstract thinking skills, an ability most politicians possess but don't use and many fast food workers can't grasp which is why they are working fast food.
• When government moves to increase wages and simultaneously fixes prices, the result is a decrease in available goods and services as the profit motive is removed from the business equation. No one in their right mind is willing -- or able -- to make widgets for $1 each and sell them for a negative profit.
Widgets disappear from the shelves, a lesson learned in Soviet Russia, Mao's China, and their client states.
The government's solution is to force higher wages, wait for inflation to diminish the value of currency, then force wages even higher.
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The labor protest movement that fast-food workers in New York City began nearly three years ago has led to higher wages for workers all across the country. On Wednesday, it paid off for the people who started it.
A panel appointed by Gov. Andrew M. Cuomo recommended on Wednesday that the minimum wage be raised for employees of fast-food chain restaurants throughout the state to $15 an hour over the next few years. Wages would be raised faster in New York City than in the rest of the state to account for the higher cost of living there.
The panel’s recommendations, which are expected to be put into effect by an order of the state’s acting commissioner of labor, represent a major triumph for the advocates who have rallied burger-flippers and fry cooks to demand pay that covers their basic needs. They argued that taxpayers were subsidizing the workforces of some multinational corporations, like McDonald’s, that were not paying enough to keep their workers from relying on food stamps and other welfare benefits.
The $15 wage would represent a raise of more than 70 percent for workers earning the state’s current minimum wage of $8.75 an hour. Advocates for low-wage workers said they believed the mandate would quickly spur raises for employees in other industries across the state, and a jubilant Mr. Cuomo predicted that other states would follow his lead.
“When New York acts, the rest of the states follow,” said Mr. Cuomo, a Democrat, citing the state’s passage of the law making same-sex marriage legal. “We’ve always been different, always been first, always been the most progressive.”
The decision, announced in a conference room in Lower Manhattan, set off a raucous celebration by hundreds of workers and union leaders outside.
Flavia Cabral, 53, a grandmother from the Bronx who works part-time in a McDonald’s for $8.75 an hour, pointed out the scars where fry baskets had seared her forearms. “At least they listened to us,” she said, referring to the panel. “We’re breathing little by little.”
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