People of many different age groups and circumstances takeadvantage of part-time
ID: 1238501 • Letter: P
Question
People of many different age groups and circumstances takeadvantage of part-time employment opportunities provided by thefast-food industry. Given the wide variety of different fast-foodvendors, the industry is fiercely competitive, as is the unskilledlabor market. In each of the following circumstances, indicatewhether the proposed changes in government policy are likely tohave an increasing, a decreasing, or an uncertain effect in thisindustry.a. elimination of minimum wage law coverage from those working lessthan 20 hours per week
b. an increase in spending for education that raises basic workerskills
c. an increase in the employer portion of federally mandated FICAinsurance costs
d. a requirement that employers install expensive new worker-safetyequipment
e a state requirement that employers pay 8% of wages to fund a newnational health care program
Explanation / Answer
The way the question is worded asks to rate whether the EFFECT willbe increasing, decreasing, or uncertain. I.e., are we talkingabout growth, or job growth/ decrease, etc?. I'm assuming that since your topic is labor policy its asking theeffect on jobs: a. uncertain effect--- to no effect. Unskilled labor iscompetitive so long as the labor force competing for the jobs thatrequire no skill remain unskilled. Some scholars argue thatmin. wage is a detriment insofar that it freezes wages in anarbitrary time--- meaning that wages could rise with growth andperiods of lower unemployment if no min. wage wasimplemented. Hence, always competition with little to noincentive for raising wages via the market... Imagine anindustry with paltry minimum wage and job competition: waiter/ressin the food industry, their primary source of income is from pooledtips, not hourly wages, competition for work does not slow due tothe nature of the payment program, and in this less regulatedsystem, we see that when restaurants do well, waiters haveincreased wages--- fast food industry does not and it could beargued a function of min. wage stagnation-- that said, unskilledlaborers have few wagering chips. However, the min wage woulddecrease and job demand would rise if employers maintain allemployee hours at less than 20. I.e., employers could offeran unskilled labor force only 19 hours per week at $4.00 p/h---thus, job seekers need more work, employers pay less with asatisfied labor demand, if a sufficient unskilled labor poolexists. b. spending on education for basic worker skills would decrease jobdemand in the fast food industry due to the labor pool being ableto branch into other industries. Decreased competition forjobs would increase wages. c. increasing employer FICA insurance costs could increase jobdemand if the labor force is aware of the change. Employers,to buttress the cost tho', would decrease job availability andincrease individual employee hours-- this would create the cycle tomoving the lowering of costs by decreasing job demand. Thisdecrease in jobs could increase job seekers to gain greater skillsto be competitive in the overall workforce. d. if employers are required to install safety equipment, the costof this would be redirected to maintain profit/ growth--- it isuncertain where this cost would be redirected but likely to workersor in the price of goods to consumers. A byproduct would bean decrease in worker related injury suits but this requires datare. the comparison of employer costs to worker injury and the valueof cheaper equipment. The requirement tho' would generallyhave the effect of redirecting costs: lowering wages or increasingthe consumer cost in the short-term--- how long it will last isuncertain. e. 8% of wages to healthcare for employees would decrease the jobsupply (again retain fewer workers), again to buttress the cost,and thus increase job demand in the industry of unskilled labor/employment opportunities in general. However, in a state likeMassachusetts, where healthcare coverage is mandated, restructuringwould occur. Job loss would no doubt occur and for those whoretain their jobs, fewer in-pocket wages, less possible consumerdemand for those employees towards other industries. Thatsaid, long term restructuring could even this out--- but theimmediate effect would be uncertain. Again, not sure what "effect" and where we're evaluating.
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