This past Saturday the panel on Cavuto on Business debated a recent walkout by workers at a McDonald's restaurant in Milwaukee. It was one of our typical heated segments with strong views expressed in rapid fire. Some panelists empathized with the workers, or at least their rights to demand an immediate one hundred percent increase in wages; others felt it was irresponsible for several reasons.
Doubling wages means fewer workers, higher prices for customers, and less profit for shareholders. Essentially those are the goals of the puppet master behind the walkout.
These kinds of debates, which we'll see more of as there is a push from the left for a dramatic hike in the federal minimum wage, always miss the true human angle - the true human tragedy.
During our dustup I mentioned the city of Detroit as a glaring example of how the progressive agenda can destroy industry, family and even a grand city once called Paris of the West. Amazingly the idea of wages that exceed the boundaries of the free market is always promoted as fair, or caring, or smart. In the end it is none of those things. This ideology skews reality while mitigating the obligations of would-be workers. It encourages minimum effort to learn to sacrifice to be a greater asset to the employer and community.
To be frank, it's a lie that destroys futures.
Those McDonald's workers in Milwaukee were carrying nice signs obviously designed and made for them by others. Behind the scenes union officials have been pushing organized labor at the largest businesses in America from McDonald's to Wal-Mart. Part of that push means wage demands that are unrealistic for reasons already mentioned that would reward mediocrity. We are told, and evidence backs up the notion, the more education we attain the more money we'll earn. The narrative these days, however, is we must reward those that haven't made the effort, that somehow those with the least amount of education should be rewarded with large increases in wages.
For me it gets back to the most dreaded aspect of liberal thinking - making poverty just comfortable enough for those snared by it to not make the right kind of effort to escape.
The avalanche of programs from food stamps, tax credits and local programs has put recipients in a position of actually having to take a haircut to go to work and early possible raises in salary actually result in lower net income. That's the drawback for those that want to work and for those people that don't want to work - they really don't have to so millions have checked out. The pride, rigors and foundations built from going to work at any job aren't developed by these people otherwise portrayed as victims of capitalism rather than victims of policies designed to hijack capitalism.
When someone is overpaid for their skill set they rarely bring up those skills. To reward McDonald's workers with a 100% wage increase would remove the urge to find better employment and remove the need to sharpen skills that would have been needed to attain a better job. This is how it happens. In Detroit wages were too high, the entitlement culture from city officials to city residents ran amok to the point of implosion. Now the city must brace for true austerity if it is ever going to shed the shackles of deficits.
I've seen this on household and neighborhood levels in my lifetime. It's politically incorrect to demand more from disadvantaged people. Over the years we've watered down school tests, implemented employment quotas and had hundreds of jobs programs. What has never been done is going to people and saying: "You must bring it up!" Businesses deal with demands from powerful politicians and organized labor and rich special interest groups, yet we don't demand sacrifice or extra effort from those getting all the attention, money and sympathy.
Those workers at that Milwaukee McDonald's would be cursed if their wages doubled. They would become complacent and future expectations for what their limited job skills would demand would lead to heartache and frustration if they ever decided to leave Mickey D's in the first place. Those pulling the strings honestly don't care about people becoming lifelong welfare recipients or fast food employees as long as they can chip away at the capitalistic structure of America.
I worked at McDonald's between high school graduation and entering the Air Force. It was a nice place to work and had programs for those eager enough to give extra effort. In fact, I met a young Black manager from another store who was in a program that would eventually help him purchase his own franchise. The program demanded a lot from him including a grueling work schedule and continued education. Imagine that, a program with real demands and real rewards.
The cycle of poverty will never be broken with government programs, higher taxes for the rich and businesses, or artificially high wages. It can only be broken by individuals that demand more of themselves. It can only be broken by people that reject trinkets like free cell phones and the narrative their lot on life is determined by others that don't like them. The cycle of poverty can only be broken by people that reject the notion of victimization, embrace the idea life isn't fair but can be altered.
The chains of poverty can only be broken when people know they are being played by special interest groups and politicians and reject their Faustian deals.
The beautiful thing about America is the chains of poverty can be broken.
Scandal's Silver Lining
If there is a way to stall President Obama's anti-business campaign it's great news for the economy and stock market. Sure, higher taxes and oceans of new regulations are in place or on the way but the dream goal of making corporate profits part of the public domain get pushed back. Moreover, there is greater hope Obamacare could be derailed, although the administration will fight with and without Marquis De Queensbury rules to keep it on track.
In the meantime these scandals should embolden the GOP to put up more fight and make a charge in 2014.
Historically these scandals haven't had much impact on the economy, save for the bitter end of Nixon which coincided with the Oil Embargo.
GDP: 1972 5.3% (up even more after scandal broke) 1973 5.8% and 1974 -0.6%
Jobs: 1972 1.8 million after scandal broke, 1973 2.76 million and 1974 584,000 into August
GDP: 1985 4.1%, 1986 2.2% in first quarter
Jobs: 1985 961,000 from August to end of year, 1986 1.89 million 1987 652,000 to March
GDP: 1998 4.4%
Jobs: 3.0 million
Throughout these scandals the market mostly went sideways until the final days of Nixon, while up dramatically during Monica Lewinsky scandal.