Saturday, January 24, 2015

Food for Thought ... Lessons We and the Young Should Learn from McDonald's, Government, Employment, and Minimum Wage Legislation

McDonald's is struggling to simplify its menu and get customers to return. {See McDonald's Extends Slump.}

Government laments the lack of good paying jobs and wants to raise the minimum wage while implementing ObamaCare universally.

The solution is simple for McDonald's: simplify the menu, implement productivity enhancing measures and reduce its number of employees.

Will this help the young get jobs and learn about showing up and taking care of customers, aka those with the money? Of course not. Europe here we come.

'Secular Stagnation' and the Cheap Burger has the story:

"Europe, Japan and the U.S. have been desperate to stir private-sector growth and yet refuse to consider how they treat their private sectors. Europe gave itself austerity in which the private sector shrank and the government didn’t. . . .

Nobody asks: How can we make our societies ones in which people find opportunity? They worry about the distribution of income but not the absence of income-creating opportunities for individuals.

The lesson of Sheldon Silver is that this phenomenon has mostly to do with a self-interested machine protecting its own privileges.

Mr. Silver . . . is the long-serving speaker of the New York state assembly, a man the New York Times calls the state’s “most powerful Democrat” and the capital’s “most powerful figure.” He was arrested Thursday for millions of dollars in graft. Two decades of his “service” is why upstate New York is America’s microcosm of France, a place of permanent stagnation. . . .

McDonald’s has had two bad years, and sales are down sharply in the U.S. . . . its real future may lie more in cost control than in imitating the boutique burger chains like Shake Shack and Five Guys.

McDonald’s has decades of experience in Europe and Japan, and can see where things are going. Our youth unemployment may be half of France’s, but it’s twice the rate that prevailed at a similar point in the 1990s recovery. Our new business formations are the lowest in 35 years, more like Europe than the U.S. According to Gallup, companies are dying faster than new ones are being born.

The administration’s Affordable Care Act raises costs for businesses like McDonald’s that hire thousands of full-time workers at a low wage. Its labor enforcers are overturning settled law to make McDonald’s liable for alleged violations of its independent franchises.

A writer for the New Yorker applauds academic studies showing that hikes in the minimum wage have only a small impact on overall employment, “usually confined to teenagers and unskilled workers”—i.e., McDonald’s workers.

President Obama himself, when he keeps intoning that every job should pay enough to support a family of four, is essentially saying McDonald’s jobs shouldn’t exist.

Though McDonald’s would never put it this way, the company has already started adapting. McDonald’s once filled its U.S. menu with salads, wraps and fruit options that few customers buy. The idea was to appease its foodie critics. Now the company is “simplifying” its menu and giving franchisees freedom to drop non-sellers—and the disproportionate staff needed to support them.

McDonald’s customers were never keen on customizaton, preferring speed and a cheap price. But now the company is introducing customization-friendly automated and smartphone ordering—because it allows franchisees to cut counter staff.

The essence of Europe’s malaise has long been a politics tilted heavily toward protecting those who have jobs from those who want them, where the biggest losers are the young and unskilled, and where stagnation is the general fate.

Even with the bad news of recent years, McDonald’s U.S. stores still generate twice the sales of its competitors, even Burger King. But they also employ twice as many workers, upward of 50 per store.

Look for that to shrink as McDonald’s adapts to an America becoming more like Europe, with an economy unwelcoming to the unskilled and unprivileged trying to find an entry into the world of work."

Summing Up

More 'help' from the government doesn't help our young people in need of help. They need opportunities.

More private sector innovation and the 'creative destruction' of the marketplace do help grow the economy. They also create both more entry level as well as high paying jobs.

Education and effort are the keys to individual and societal progress and not government programs.

We became the nation with the highest standard of living the world has ever known by following the basic principles of freedom, education, hard work and innovation. Not by government dictates.

Will McDonald's succeed in reinventing itself through innovation and productivity enhancing programs designed to better serve its customers? Probably but that's not the important point of the story.

How about our young people starting out? Will they succeed? Not if they depend on government to make it happen. What they need to learn about climbing the ladder of success are the keys --- showing up' and then 'working hard' to improve their position on the ladder. But first they have to be able to get on that ladder.

It's all about learning the most important personal habit of all --- the habit of improvement. The result is self reliance.

That's my take.

Thanks. Bob.

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