David R. Henderson  

Blaming the Person Offering you the Best Deal

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I saw a woman on Stossel tonight who works for McDonald's. She said she was paid $8 an hour, but felt she deserved $15. I thought: Wait a minute, McDonald's isn't the only company not paying you $15 an hour: neither you nor I are aware of anyone willing to pay you that much. So why is your problem with McDonald's?
This is what a friend on Facebook, John T. Kennedy, wrote. It makes a good point. The woman felt or thought that she deserved $15 an hour. But Kennedy's point is: Why single out McDonald's? Indeed, there's a presumption that McDonald's is paying her more than anyone else would. Why? Because if someone else would pay more, she would likely be working for someone else. Or, it's possible that someone else would pay more, but she likes McDonald's because the job is better, on a non-wage dimension, than that other higher-paying job. In short, she's in the best place she can find.

McDonald's is giving her a better deal than anyone else is offering. So her beef, so to speak, is with the very company that's giving her the best deal!

In blaming McDonald's rather than other firms, she is kind of like the minister who, on Sunday morning, expresses his anger at his congregation for poor attendance.


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CATEGORIES: Labor Market



COMMENTS (31 to date)
Krishnan writes:

We are indeed living in a world today where envy is running amok - and it will get even worse as politicians jump in to "save" the "middle class".

Even if McDonalds were to pay her$15/hour, she would then demand that she be paid $30/hour - because at $15/hour she cannot afford a new car every other year OR is "forced" to live the way she does and it is still not a "living wage".

Class warriors know this - and will take advantage of it every chance they get. I see the war against profitable companies accelerating - I see determined efforts against companies like WalMart that employs hundreds of thousands/millions and has done an amazing job of lowering the cost of living for everyone - and particularly for those that can afford the least.

The primary aim of (prog)regressives is NOT to improve the lot of those that do not have much skills or are unable to compete with others in the work force - BUT to spread as much misery as they can to those that do have jobs and are able to make a better living than those that do not.

Boyd Ingalls writes:

I know this audience will disagree. I won't attempt to influence. However, you might be interested in knowing that this sounds a lot like the smug voice of someone who already has his. There is good reason to believe that the US is experiencing a reduction in opportunities for labor. Adjusted for inflation $ 15/hr wouldn't be minimum wage a generation ago. If the best deal labor is offered is not enough for a decent standard of living in one of the most productive economies in history an argument could be made for structural issues. While arguments can be supported for many points of view, for those who have to snipe at those who don't could be seen as less than generous

Acad Ronin writes:

There's another aspect to a job at McDonalds. McD's estimates that one person in eight has worked for the company. It apparently has an employee turnover of 150% per annum. What all that indicates is the McD's is a stop-gap for many workers. I suspect that it is often a first job, one in which the worker can learn skills - teamwork, service, punctuality, cash register operation, and the like. Once one has succeeded in holding the job for a reasonable time, one can apply for other work, using the McD's job as evidence of those skills. In that case, one can think of the McD's job as an apprenticeship and the wage as incorporating a discount for training and screening.

BMan writes:

And of course we blame oil companies for the high price of oil, even though, by producing oil, they are driving the price down. What of the companies who produce none at all? Or the companies and individuals who are net consumers of oil, and thereby drive the price up? Why is all the venom directed at the small subset of actors who are doing what we purport to want done? Arg.

Acad Ronin writes:

Correction, in the second sentence, the phrase should read "...one person in eight in the US...".

John Fembup writes:

Boyd said "this sounds a lot like the smug voice of someone who already has his."

No doubt it sounds like that to you.

But right here, on this blog, the key question is, if another company offered the woman more money, would she not leave McDonald's in a New York minute to work for the other company? That's the question.

I also think you miss the mark here: "If the best deal labor is offered is not enough for a decent standard of living in one of the most productive economies in history an argument could be made for structural issues."

If all companies paid the same as McDonald's I might think about your comment. But they don't so I won't. I mean, name a company that pays its employees on the basis of the "productive economy"?

McDonald's pays its employees based on what the jobs are worth to McDonald's. If one is looking to McDonald's for a job that will secure a decent standard of living, one should be seeking to secure a franchise. If that is not one's ambition, the alternative is to work for a while at McDonald's but keep looking for better opportunities elsewhere.

And above all, remember that the baker does not sell you bread because she wants you to eat; but because she wants her own children to eat.

egd writes:
Adjusted for inflation $ 15/hr wouldn't be minimum wage a generation ago.
If (hypothetically) she is entitled to $15/hour, is McDonalds entitled to the same number of sales when they double their prices?

I suspect if McDonalds doubled their prices they would see far fewer customers. Increasing costs (wages) and decreasing your customer base doesn't seem to be a good recipe for success.

Ted Levy writes:

Obviously, David H. has the economics correct (and I have made this same argument myself, so obviously I agree...), but to play devil's advocate...

All the OTHER companies not paying her $15/hr are abstract. She hasn't applied to them. No one of them stands out against the others. She doesn't KNOW they'd refuse her.

Meanwhile, McDonalds is the company she goes to every work day, the one company she KNOWS isn't paying her $15/hr, and clearly would refuse to if she asked (or maybe has refused her when she asked). So it is easy to distinguish McDonalds from all other companies on grounds other than "It is the company demonstrably willing to pay her $8/hr."

This in no way justifies her inappropriate feelings of being wronged, and in no way accepts her presumably petulant over-estimation of her own worth. It merely tries to answer the question asked: "Why is [her] problem with McDonalds?"

David R. Henderson writes:

@Boyd Ingalls,
However, you might be interested in knowing that this sounds a lot like the smug voice of someone who already has his. There is good reason to believe that the US is experiencing a reduction in opportunities for labor.
Boyd, When I wrote that, I wondered if it might come off that way. But then I did a test that I often do when writing such things. I asked myself, "If this were my daughter, who, by the way, is experiencing frustration as she looks for a job that pays well, would I say this to her?" And the answer is: yes. The love a parent has for a child, or, at least, that I have for my child, is very strong. And one of the biggest favors I can do for my daughter is to convince her that the world does not owe her a living.
Which gets to the second sentence I've quote above. I think you might be right that there is a reduction in opportunities for labor. That makes it all the more important for people looking for work not to have unrealistic expectations that make it even more difficult for them to play the hand they're dealt.

Daublin writes:

Acad, that is my point of view. It is a good thing to have lower quality stepping-stone jobs.

Krishnan writes:

Far too many people do infact believe that the world owes them a living - in fact a "living wage" - like students who attempt to get a degree and if they do not make it, will blame it on the a) school b) professors c) peers who refused to help them with their homeworks d) next door room mate who played loud music and so on ... (they were perfect and so it could not be something they did not do, like go to class, study and attempt to understand how to solve problems).

Casey Mulligan's book "Redistibution Recession" (econtalk with Russ Roberts) may permit one theory on why that person complained about not getting $15 from McD's - Perhaps she wanted to get fired - so she could collect unemployment (and other benefits) - and because of the change in several rules (including extension of unemployment benefits, food stamps ...) the unemployed can in many cases make almost 80 to 90 percent of what they would make by working - Apparently, in many cases the incentives are perverse - the more some people work, the more they lose in benefits that are available for not working ...

John T. Kennedy writes:

I need to clarify one point: The woman I saw on Stossel did not explicitly complain about McDonalds or call for an increase in the minimum wage - I read that in. All she said was that she made $8/hr and felt she deserved $15/hr. I apologize if I unfairly attributed to her a complaint she wasn't making.

Boyd Ingalls: I reject the notion that every job must pay a to support a "decent standard of living", which is often called a "living wage". And I don't see why this is the responsibility of the employer - why not call for "living prices" from grocery stores and apartment owners?

Wages are prices determined by supply and demand, just like any other prices. Coercive price fixing on wages doesn't benefit low skill workers across the board, it benefits some at the expense of others.

I made my living working in restaurants for a few years in my younger days, starting out as a dishwasher at a low wage. When that wage wasn't enough to satisfy my idea of a decent standard of living I took a second job working different shifts in another restaurant. So I think I have a fair idea of what the woman is facing.

Ted Levy: I agree that this is an example of "What is Seen and What is Unseen". What is seen is the business handing one the check and not all the parties unwilling to pay more. When government forces wages higher than market prices what is seen is bigger checks, but not the workers laid off or left unemployed.

Boyd Ingalls writes:

Re: no one owes anyone a living. I agree. The rabbit does not owe the hawk his dinner, nor does the mouse owe the owl a tasty morsel. I think the owner of the MD franchise, business risk aside, dines well enough from the profits provided him or her by labor.

That said, are humans really just economic predators who prey on their own kind? The world I move through on a daily basis looks to me to be more complex, more interesting, and more profound than that. Nor is the predatory world one which I encounter when I read the thinkers that I admire most. Is it possible that a model which is morally and logically solid might be at a disconnect from what humans are all about? I'm just saying that I don't recognize the world I see described here. I hope I'm not wrong, but I don't believe I live in it either.

andy writes:

no one owes anyone a living...That said, are humans really just economic predators who prey on their own kind?

I don't think the first implies the second. It is assumed you have a 'right to be helped', meaning others have a duty to help you. I don't think so. I think we 'should' help people in distress, maybe even make a system that helps them; maybe even a state system. But I base all of this on the notion that it's a good thing to do; not that it is a duty. Because once you assume that poor people have a right to be helped, you end up in a contradictory system with very perverse morality; as an example - the Czech supreme court just decided that offering unemployed people to do some public works (and cancelling their unemployment benefits if they refuse) is tantamount to forced work, presumably because these people have a 'right' to be helped and making it conditional would infringe upon their rights.

James writes:

To blame McDonalds for paying too little isn't a useful sentiment, but it is understandable.

Every worker in this society pays heavy and invasive taxes, and has his savings depleted by the government's debasement of the currency ("inflation"). In addition, giant corporations like McDonalds prosper at the expense of small businesses because they find it easier to comply with burdensome regulations, because they get bailouts and slurp up artificially-expanded credit ("zombie money"), and because of the homogenisation that results from central social planning (lack of rights to exclude, and extensive state funding of healthcare, schools etc.).

I doubt that the average McDonalds or Walmart employee grasps these things clearly, but they probably pick up on the general sense that these soulless chain businesses proliferate despite the public's general antipathy towards them. They are the product of etatism, not truly free enterprise. And since the government acts as though it owns us and our possessions, doling out pocket money rather than defending property rights, what encouragement is there for a person to view himself as a free economic agent who gives and takes only what he owes and is owed?

egd writes:
That said, are humans really just economic predators who prey on their own kind?
No, of course not. Economic life isn't predator-prey, it's mutual beneficial exchanges. Employers don't prey on employees - they get a benefit from the employee (running the business) and the employee gets a benefit from the employer (wages).

To relate it to a predator-prey relationship you would have to assume that there is no reciprocity from the employer to the employee. That is definitely not the case.

John Smith writes:

To Boyd Ingalls:

Your position is without merit. You pre-position your ideas on the basis that you will not attempt to influence the audience here, and then thereafter immediately attempted to influence the audience here.

Silas Barta writes:

Seems like just a special case of the general phenomenon of "no good deed goes unpunished" or "blame whoever's nearby". Blame the one who lifts a finger for not lifting it enough, while ignoring the millions who lift not at all.

When told the "best option" argument, even the most articulate sympathizers will try to concoct a story of how McDonald's (or the sweatshop owner, etc) is responsible for the general political and economic environment in which the worker has no better options. It's a frustrating thing to deal with.

Floccina writes:

This is very important. Progressives need to understand that the problem that they are trying to address is not McDonald's or Wal-Mart paying to little but that there is not enough demand for low skilled labor. If you want McDonalds's pay more the best way to do that is get someone (you maybe?)to hire their employees away.

Seth writes:

"Adjusted for inflation $ 15/hr wouldn't be minimum wage a generation ago." -Boyd Ingalls

Fact check:
1) Minimum wage in 1987: $3.35/hr (source)
2) $15/hr adjusted for inflation back to 1987: $7.37/hr (source)

Technically, Boyd Ingalls' statement is accurate. $15/hr wasn't minimum wage a generation ago.

But, taken in context, I believe Ingalls was implying that $15/hr would be less than minimum wage a generation ago, which is not accurate. It was more than double the minimum wage (2.2x), while $15/hr is 2.1x the current minimum wage of $7.25/hr.

"If the best deal labor is offered is not enough for a decent standard of living in one of the most productive economies in history an argument could be made for structural issues." -Boyd Ingalls

Or, you're committing a fallacy of composition.

nholzric writes:

Markets - including labor markets - are not perfectly efficient. It seems glib to dismiss this woman by saying "if she could earn more somewhere else, she would". It takes significant investment in time, resources, and flexibility to look for another job, and even then you are unlikely to uncover every possibility.

Yes, I think it's very likely this woman is biting the hand that feeds her out of a since of entitlement, but it is unhelpful - and too easy - to say "markets are efficient, your labor isn't worth more by virtue of the fact that it is not earning more".

David R. Henderson writes:

@nholzric,
It seems glib to dismiss this woman by saying "if she could earn more somewhere else, she would".
You're right. It is glib. Which is why I didn't do it. I don't know where you got the quote above, but it's not from my post. Here's the closest I could find in my post:
Because if someone else would pay more, she would likely be working for someone else.
Notice the word "likely." That's there precisely because I was aware of the factors you mention later in your comment.

nholzric writes:

@David R. Henderson
The quote was a paraphrase of the glib attitude that we both agree is unproductive. Rather than disagree, let my comment accentuate your use of the word "likely".

David R. Henderson writes:

@nholzric,
Rather than disagree, let my comment accentuate your use of the word "likely".
Fair enough. As one of the participants at a Liberty Fund conference I was at this weekend put it, "Let's agree to agree." This might well become my favorite line.

wsanman writes:

I'm a Realtor, and David Henderson's point reminds me of something I've pointed out to home sellers before. Say I've got a house listed for $300,000, and after 4 months of not receiving an offer, the Seller receives one single offer for $240,000. An offer such as this is often greeted with anger and hostility directed at the offeror. In an effort to calm the Sellers down I usually point out that although the offer is for less than what they were hoping to sell the home for, perhaps their anger should be directed at the multitudes of faceless buyers who offered them NOTHING for the house (and didn't even bother to come inside and look at it) rather than the only buyer who has offered them SOMETHING for the house. It's logic that doesn't occur to most folks, but is often useful giving the situation much needed perspective.

vikingvista writes:

How does she know she deserves $15/h and not $20/h? For that matter, how does she know she doesn't really deserve only $4/h? How does she know if some price (like a wage), or even all prices, are too high or too low or just right?

Eric Hosemann writes:

I would go one step further. Don't be angry at McDonald's. Be angry at the fast food eaters who steadfastly refuse to pay more than what they think a burger is worth!

Chris H writes:

Boyd Ingalls writes:

Adjusted for inflation $ 15/hr wouldn't be minimum wage a generation ago.

Others have covered the more fundamental problems I have but this statement is factually inaccurate.

Check out that graph. The highest the minimum wage ever got in this country in real terms was about $10 an hour. Indeed, looking at the minimum wage chart the current minimum wage is at it's highest real level since the Carter administration.

Russell writes:

McD's has more to worry about than this ingrate. They have their billions of customers to worry about. And if they double prices to satisfy the unrealistic dreams of every "underpaid" worker, they'll have much bigger problems. And so will the "underpaid worker, who will likely become the "unemployed" worker.

Cecil writes:

There is also a fundamental misunderstanding by many about the wages a company pays. Wages, strictly speaking, are not paid to a person, they are paid to a "job" or "position". If a person becomes "worth more" than the job they are in, they must find a new job. For McDonald's a cashier is worth $7.25 an hour or so. Doesn't matter if the person has a PhD in nuclear engineering, they're not paying the person, they're paying for a job done.

Jim Stickann writes:

If you make $8.00 an hour and feel you are worth $15.00 an hour, certainly you must have the wherewithal to convince that employer or another employer to pay you $15.00 an hour.
If you are the type of employee whos name will be forgotten 10 minutes after your resignation, you should be thankful for the $8.00 an hour.
She should put her resume together: quantify her background, qualify her outstanding life experiences and not hold her breath waiting to hear back from interested employers.

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