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May 25, 2007

Polly on McJobs

Oh dear:

But do the sums, and the odds aren't good: 67,000 people each year work in the restaurants, and there is a 67% annual staff turnover. About 1,600 have made it from crew into management, earning £28,500 after many years. It may not be as bad as the odds of winning the lottery, but it's not what you'd call fast-track social mobility.

Well, actually, you would call that pretty good income mobility (social having many other overtones of course). According to the BBC that's a movement from two thirds of median income to nearly twice median income, purely by starting in a McJob and moving up the promotions ladder.

It would be interesting to know whether there were other companies and industries where this sort of income mobility was possible, remembering that the entrants require no qualifications whatsoever, not even a GCSE.

They are just a part of Britain's low-pay culture that sets a minimum wage too low to live on, so hard-working taxpayers subsidise wealthy companies like McDonald's with tax credits for their workers.

Of dear. She's lost it again. Tax credits are not a subsidy to the companies. They are a subsidy from taxpayers to those whose lack of human capital means that their labour is not very productive and therefore not worth much.

She really ought to think through that statement a little more. She (like myself and all other right thinking people) is against corporate subsidy from the tax-payer's coffers. So if she actually does believe that tax-credits are such a subsidy, she should be campaigning against them. Which of course she isn't.

We can also put this another way. Labour is worth what it gets on an open market. No more and no less. If we collectively decide that this value is not enough, for some reason or other, then it is us collectively who have to pay to top it up. Thus through the tax system. Doing it via the minimum wage puts the costs elsewhere: on those who consume the services, invest in the companies that do so and, crucially, on those without work because their labour is worth less than the new higher amount.

However, British law allows escape clauses from paying the minimum wage. Last week, another restaurant chain was denounced for paying its waiting staff only £3.75 an hour, which is £1.60 below the minimum wage. Carluccio's wages are topped up out of tips - that's legal: the company says virtually all restaurants do the same, and that at least all their tips go to the staff - and they claim some, like Strada, are worse. (So never add service on a credit card, but pay cash tips after ensuring the waiting staff genuinely keep it as an extra: if not, don't tip).

Yes, that last is good advice. Cash tips pay income tax but not national insurance or VAT. The waitron unit therefore receives a much greater sum (and Gordo less) if you tip cash.

But reputable large companies want bad employers that cheat on pay to be driven out of business as unfair competition.

Of course, large companies love heavy handed regulation. It stops upstart firms from competing with them.

Will it ever be possible for Polly to understand the most basic points about labour economics?

Answers on a postcard, please.

May 25, 2007 in Idiotarians | Permalink


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Analysing social mobility strictly within McDonalds is pretty ridiculous anyway isn't it? For many it's a first job/part time job especially the young who seem to dominate behind the counter.

Take my brother for instance, he used to work in McDonalds in between school and university. He didn't climb the corporate ladder to a management position. He left, got some more education, joined a different company and now gets paid a (relative) fortune.

How about looking at how well those 67% did after they left McDonalds?

Posted by: JayN | May 25, 2007 11:42:15 AM

Hurray for McDonald's, hurray for supermarkets, hurray for cafés and restaurants!
They provide jobs for the relatively unskilled and those seeking flexible or irregular working hours!
Many offer some sort of career progression!
They provide goods and services and choice!
They collect and pay tax!
They create wealth/income!
(Sure, top up low wages with a Citizen's Income by all means, problem solved).

Posted by: Mark Wadsworth | May 25, 2007 11:50:35 AM

Before we can make sense of these figures, don't we need to know more about McDonalds' recruitment and promotions structure? I mean, if their version of a graduate recruitment scheme for would-be senior management is predicated on starting on the bottom rung rather than as a more highly-paid management trainee, in the expectation that you'll thus learn the business from the bottom up, but will reasonably expect rapid and regular promotion through the ranks if all goes well, that might explain a lot about McDs' apparently high income mobility.

I'm not saying that is the case; I'd just want a bit more background before I'd feel safe interpreting the raw figures.

Posted by: Not Saussure | May 25, 2007 1:10:29 PM

The nepotistic trades are perhaps not the best background for someone trying to understand the market parts of the economy.

Posted by: dearieme | May 25, 2007 1:56:34 PM

"Labour is worth what it gets on an open market. No more and no less."

Go, Tim, Go! Spin your prayer wheel and chant 'Om!'



The rest of us will grapple with 'global labour arbitrage' theory (Fuck's sake, I'm getting bored typing those words here) -


Posted by: Martin | May 25, 2007 8:19:59 PM