What happens when minimum wage goes up
Posted on February 3rd, 2005 in General, Economics by tavaresforby ||
Here is a perfect example that tampering (hiking) with minimum wage is not always the best idea. Every company optimal goal is to reduce business cost. Hiking minimum wage increases business cost. So, what is a company to do to replace their lost revenue? Well, a McDonalds in Oregon has the solution. When a customer drives up to the drive-thru window, the customer is not speaking to someone that works at that McDonalds, but to someone in North Dakota that makes more than $2 less than the minimum wage in Oregon.
HERMISTON, Ore. —
The McDonald’s restaurant in Hermiston, Oregon appears to be “outsaucing” customers drive-thru meals.The restaurant on Highway 395 has outsourced one of the most important jobs at the drive-through window — order taking.
When a customer drives through, they’ll be patched through to Grand Forks, North Dakota to place the order. Why? Because the minimum wage in North Dakota is $5.15, compared to Oregon’s $7.25.
Tim Nesbit is head of Oregon AFLCIO. He says this undercuts Oregon’s minimum wage by more than $2 an hour.
A McDonald’s media relations person in Illinois, where the corporate headquarters is based, never returned a phone call to the AP.
When you hike up minimum wages, employers feel you should have a higher skill set. And evidently, the McDonalds in Oregon do not feel that the work it takes to operate a drive-thru is worth $7.25, but rather worth $5.15.
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