On 8 Aug 2014
Meet "McCashier" Your $15.00 Per Hour McDonald's Worker Replacement,
No, no one decided anything other than the worker and the employer. The employer has to pay as little as possible, otherwise a competitor will, and the customer will go to the cheaper purveyor of hamburgers.
The same thing goes for the worker, if he can find someone who will pay better wages he will go to that employer.
Its that mindset that got us into trouble and where we're at now.
The reason this is faulty logic is because it ultimately doesn't work in the end. Simply put: If the correct approach- as you mentioned- is to pay as little as possible, well then that creates a gradual slide into financial obscurity and in the end nobody can afford the goods they work to sell. Make sense?
But here's an historical fact. In 1914 Henry Ford decided to pay his workers $5 a day. At the time this was unprecedented. The average pay in other automotive plants was about $1 a day. So Ford more than quadrupled his pay overnight. At the time he did this economists claimed he was insane. In fact they called it Ford's Folly.
But in the end what happened was first of all, more scrutiny was given per each employee. Quality improved and as a result, costs went down. The Model T actually got cheaper with time. Ford at one time controlled over FIFTY PERCENT of the global automotive market.
Other automakers started doing the same. Most including Ford had special programs in which their employees could get a new car every 4-5 years at cost.
This general notion was used well into the 50's and 60's at a time when the US middle class was at its healthiest: The pay was good, the employees had money to spend, they bought goods which were made in the factories they worked in. Lastly, the companies whom employed them grew into global giants, dominating their respective markets. RCA. GM. Ford. GE. and a host of other US companies were individually larger than the entire collection of foreign companies in their fields.
So you see, the idea of paying employees a decent wage paid off. It makes sense. You give your staff more money... what do they do? They spend it!
Let me give a personal example. When I graduated from college there weren't any jobs in my field due to a recession. All during high school I'd worked at a number of Big Box home supply retailers for minimum wage. After College I worked at a local Mom and Pop home supply and lumber yard.
The differences between these two experiences was like night and day:
Big Box experience:
A: High turnover: I was at one of these for a year and was the most senior in my dept. when I left.
B: Pay was minimum wage, raises based on time, not merit. Raises were shall I say... a joke, as in 10 cents.... whoopeee.
C: Zero healthcare or any other benefits to speak of.
D: Overall dissatisfied customer base: Nobody had worked there long enough to know what they needed to know to help customers for starters.
Local Mom and Pop yard Experience:
A: Very low turnover. Many had been there for decades.
B: Good starting pay. I started at $12 and hour, eventually made it to $16.hr, which was good for back then. Raises given by merit.
C:Healthy benefits. We got healthcare, a matched 401k, all paid holidays off and 2 weeks of vacation.
D: Very loyal and contended customers: We knew what we sold, how to help people, and since everyone had been there forever the customers knew us by name.
Lastly and most importantly, the Mom n Pop place made good profits EVERY year. Yes, I'm sure the Big Box store did well too. But percentage wise they probably didn't do as well as we did.
So in the end- the notion that wages MUST be low for XX work is bullshit plain and simple. Its a system that is prone to eventual failure because as I said before- the race to the bottom means eventually we'll all be broke and everyone- including the companies paying the low wages- will lose.