Why Paying Fast Food Workers $15 per hour (a Living Wage) is Good for the Economy: What Would Henry Ford Do.

poverty-wages_2-28-08Late last year the fast-food industry workers lobbied in Flint, Michigan for increasing their wages from the standard minimum wage of $7.25 an hour to $15.00 an hour; a living wage. I would also suggest we do away with the notion of a ‘minimum wage’ and consider using the language of a ‘living wage.’

A living wage is an hourly wage that is sufficient to meet the basic needs of living a reasonably good life. As an economist who analyzes living wages and the cost of living, a living wage for an individual worker in the US or Canada would range between $13-$15 per hour. Anyone can do the math: just consider the actual costs of living in your community and determine the wage necessary to meet these costs.

What is surprising is how many of us are working in jobs that do not pay a living wage.

Are the demands of the fast-food industry workers reasonable and legitimate? I believe so. First paying fast-food industry workers a living wage would increase their own purchasing power in the economy thus benefiting the local economy.

The workers are rational when they say they can’t survive on $7.25 an hour. Could you support your household’s budget on a $7.25 an hour wage, even if you worked 40 hours a week? I know I couldn’t.

Some would consider this demand a threat to inflation; raising the price of an otherwise cheap ‘happy meal.’ While fast-food prices would certainly rise, this might actually result in net positive well-being impact throughout our communities. For example, people might make more meals at home at a lower price point. Families might enjoy more time together; too many American and Canadian families do not eat together.

What would Henry Ford have to say about such demands by the fast-food industry workers. Ford understood that only by raising the wages of his factory workers could his employees have enough money to afford buying a Model-T Ford. He was understood that sharing some of his financial profits with his employees was a win-win scenario. Ultimately he sold more vehicles, which was good for his financial bottom-line and for the well-being of his employees and their families.

John Rudolph, is modern-day example of Henry Ford. John owns one of the largest drycleaning businesses in Edmonton, Alberta. In 2004, compelled by his father on ethical grounds, introduced a living wage policy in his business. A living wage is a wage sufficient for paying for the basic needs of life. John understood that many of his workers were not making a sufficient wage for the basic foundation of a happy life; an income that ensures the sufficiency of life’s basic material needs. Happier employees also meant happier customers. John was motivated by a motto of doing well, by doing good. He understood that his own economic well-being depended on the economic well-being of his employees. Moreover, John felt he already had enough financial wealth to satisfy his family’s good-life expectations and felt compelled to share his surplus of wealth with his workers.

John’s actions were derided by his competitors. They argued that raising wages would raise drycleaning prices, upset customers, make their own businesses unprofitable, and damage the drycleaning business. John, however, persisted and since 2004 set has set a new ethical business standard for paying drycleaning industry workers a living wage. John did ensure that increasing his staff wages to a living wage (and higher) was tied to productivity and hard work. John’s actions were not simply corporate welfare.

John is a rare business person with the moral conviction to do well by doing good. John and Henry Ford understood that business, not governments, have a responsibility to provide the sufficient means (a living wage) for their employees to help meet their economic needs (costs of living), so we can all enjoy a good life.

If more business people thought and behaved life John Rudolph and Henry Ford, businesses could lead the way to help resolve the rising tide of income inequality that now threatens the social cohesion of our societies. As a business owner myself, we have a responsibility to our employees to pay a living wage to those who help make our enterprises successful.

Mark Anielski

This article was originally published on Troy Media
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Mark Anielski is the author of the best-selling book The Economics of Happiness: Building Genuine Wealth and co-founder of Genuine Wealth Inc. which works with communities and businesses to help build a new economy of well-being.