THE BLOG
08/06/2013 02:48 pm ET | Updated Oct 06, 2013

Just Wages for Fast Food Workers: Split the Bill?

AP

In New York, Chicago, Detroit and cities across the country, fast food workers are taking to the streets to demand better pay. They're asking for a wage of $15 an hour. Is this a fair wage? Is it a "living wage"? The demands of fast food workers have caused many people to think about the meaning of a fair day's wage for a fair day's work.

Back in 1937, the year the UAW successfully organized the sit-down strike at General Motors, FDR spoke directly to the problem of low-wage workers when he said,

"Our nation so richly endowed with natural resources and with a capable and industrious population should be able to devise ways and means of insuring to all our able-bodied working men and women a fair day's pay for a fair day's work. A self-supporting and self-respecting democracy can plead no justification for the existence of child labor, no economic reason for chiseling workers' wages or stretching workers' hours."

In 1937 the average manufacturing worker was paid 65 cents an hour. Today's worker would need a wage of $10.54 an hour to match the purchasing power of a worker in 1937. That's just in order to have the same living standard as a worker in 1937. The sad fact is that across the country fast food workers earn hourly wages that fall well below this 1937 standard. According to statistics from the Department of Labor, fast food workers (cooks and combined food prep and service workers) make about $9 an hour before taxes. If they worked a full 40-hour week they'd be earning more than $18,000 a year. But the vast majority of these folks work far less than a full workweek. The average is more like 24 hours a week, which makes for an annual salary of only $11,250. That's certainly not a "living wage."

Even McDonald's understands that their wages are too low to make ends meet. Their advice to employees on how to budget their income assumes that they're pulling in a second paycheck in addition to their job at McDonald's.

Amy Glasmeier at MIT created a living wage calculator that estimates the wage necessary to support a family. The calculator takes into account variations in the cost of living across states and cities. In Detroit's Wayne County, for example, the living wage for a single adult with two kids is $22.80 an hour.

So, if the wage of a fast food worker isn't a living wage, is $15 an hour too much? Isn't it going to raise the price of my burger and fries, breakfast burrito and happy meal? Yes, it might, a little. It should also take a small bite out of corporate profits if workers' productivity remains the same. But workers earning $15 an hour will be less likely to quit and more likely to improve service. In addition, businesses might find smarter ways to utilize their workforce. So profits could even stay the same or grow. With fast food workers taking home $15 an hour they'll have more money to spend. This then benefits the local economy through their increased demand for goods and services. In Detroit, if every fast food worker saw their wages increase to $15 an hour the result would be over $123.5 million in additional income going to this growing sector of the workforce, with much of that income flowing back into the local economy.

A typical Detroit household spends about $818 per year on fast food purchases. The national average is $870. In order to give fast food workers a raise it would cost every household in Detroit slightly less than 50 cents a day. But that leaves fast food profits untouched. If we split the bill down the middle then it's only a quarter a day. If, on the other hand, productivity improves along with wages, then employers should pick up most of the tab. In any case, just wages should be a permanent part of the menu at fast food restaurants across the country.