August 21, 2014 by Anders Ingemarson
A few weeks ago McDonald’s was in the news because of the National Labor Relations Board (NLRB) ruling that the company may be considered a joint employer with its franchisees in labor complaints, possibly making the company more vulnerable to campaigns by labor groups for higher wages and other concessions for its workers.
This is an obvious violation of the individual rights of McDonald’s and its franchisees. Both have the right to set terms of employment without interference from government regulatory agencies. More precisely, it is the individual rights of the individuals interacting with McDonald’s and its franchisees that are being violated by the NLRB ruling; the rights of shareholders, executives, employees, suppliers, and customers to trade their products and services without government interference.
With total separation of state and the economy neither labor regulations nor entities enforcing them would exist. An employee who thinks he has been subject to a breach of contract or other violation of his individual rights would be able to take McDonald’s to court and if found objectively in the right receive fair compensation. But his lawsuit and the ruling would be based on objective law, not on regulations.
In the case of the NLRB ruling, McDonald’s is a victim of government regulations and deserves our support in the fight against those who try to enforce and expand them, and in the fight to repeal existing regulations violating the rights of the company.
However, in a related regulatory area, McDonald’s is playing the role of the crony. The company’s CEO, Don Thompson, is reportedly supporting an increase in the minimum wage.
What would McDonald’s have to gain from such an increase? After all, isn’t inexpensive labor a cornerstone of McDonald’s success? The answer is not necessarily that the company would have anything to gain, but that it would have less to lose than its competition. As an article in Investor’s Business Daily explains
“While there are a large variety of fast-order restaurants, not all operate in the same manner, particularly in how they utilize labor. It’s easy for a company to support a higher minimum wage when it plans on employing fewer workers as a result of the regulation — and, that’s exactly what McDonald’s has the ability to do.”
McDonald’s size allows it to mechanize and mass produce its products to a higher degree than its competitors. Bob’s Burgers on the corner has to employ someone to slice tomatoes, bake the buns, and shape the patties. McDonald’s has automated these tasks, reducing its dependency on manual labor. An increase in the minimum wage will make a larger dent in Bob’s profits than McDonald’s, giving the latter a competitive edge.
Minimum wage regulations are no less rights violating than NLRB rulings. Neither would exist in a society with total separation of state and the economy.
Hopefully McDonald’s will see the light and change its position on the minimum wage. In the meantime, I will stay away from its unhappy meals, as ingredients like cronyism turn my stomach. I hope it does yours too.