Why Do Some Jobs Pay So Little?

(Photo: The Eyes Of New York)

A recent one-day strike by fast-food workers has called attention to the low wages in the industry. James Surowiecki offers one reason that the issue’s visibility has increased recently:

Still, the reason this has become a big political issue is not that the jobs have changed; it’s that the people doing the jobs have. Historically, low-wage work tended to be done either by the young or by women looking for part-time jobs to supplement family income. As the historian Bethany Moreton has shown, Walmart in its early days sought explicitly to hire underemployed married women. Fast-food workforces, meanwhile, were dominated by teen-agers. Now, though, plenty of family breadwinners are stuck in these jobs. That’s because, over the past three decades, the U.S. economy has done a poor job of creating good middle-class jobs; five of the six fastest-growing job categories today pay less than the median wage. That’s why, as a recent study by the economists John Schmitt and Janelle Jones has shown, low-wage workers are older and better educated than ever. More important, more of them are relying on their paychecks not for pin money or to pay for Friday-night dates but, rather, to support families. Forty years ago, there was no expectation that fast-food or discount-retail jobs would provide a living wage, because these were not jobs that, in the main, adult heads of household did. Today, low-wage workers provide forty-six per cent of their family’s income. It is that change which is driving the demand for higher pay.

Given that reality, Surowiecki writes, raising the minimum wage by a few bucks a hour won’t fix the problem. His prescription: more truly middle-class jobs and an expansion of the social safety net. “Fast-food jobs in Germany and the Netherlands,” he writes, “aren’t much better-paid than in the U.S., but a stronger safety net makes workers much better off.”


People are just not satisfied with a mcdonald job (which, among other benefits include two meals a day) while all they have on their CV is a useless liberal arts degree from a community college. Fair enough, for a population used to entitlements. But even with their low wage, people are too eager for the latest version of the iphone and samsung galaxy notes. I feel that anyone who can afford anything beyond basic biological necessity, is absolutely fine so far as wage goes and if he/she wants to earn more he/she should either get the appropriate skill or education or work harder, all instead of depending upon government mandates.


Sure, a minimum wage hike won’t fix all the problems, but that’s no reason not to do it. It will help some people for sure, and it will provide a boost to the economy because the money is going to the people most likely to spend it (by taking it away from large corporations most likely to sit on a pile of cash)
Middle class job creation and strengthening the safety net would be great, but there’s no way you could even start talking about it in the obstructionist political environment we are in. A minimum wage hike seems unlikely, but there’s at least some chance of it happening.


Increasing the minimum wage is a terrible economic policy. One of two things happens:
1) The McDonalds of the world keep prices the same, pay the higher wage and employ less people
2) The McDonalds of the world raise prices, pay the higher wage and employ the same amount of people.

McDonalds won't take the hit, either consumers or workers will. Raising the minimum wage is effectively a tax.


That doesn’t make any sense economically. If the minimum wage is raised, it cuts into their profits. They Could respond to that by trying to increase profits by laying off workers or increasing prices, but if they could do that They Would Have Done It Already! Your scenarios imply that McD’s and others are leaving money on the table and that raising the minimum wage would just remind them they should grab it.
It could be the case that if you raised the MW too much, many restaurants would no longer be profitable at all and they might close, but looking at the history of the minimum wage, Fast food has clearly been profitable with a higher MW in the past, so there’s likely considerable room to raise wages before it becomes a problem.


A safety net helps when people fall, not when they are just paid poorly. If low-wage workers are subsidized by the government you are not providing a safety net; you are providing a subsidy to the industries that employ low-wage workers. That's the worst of all worlds!
Any real solution to the problem has to come from empowering workers. The safety net really should be there, so that workers can tell their employer to shove it, not so the employer can pay less than a living wage and get away with it.
This problem doesn't go away, though, until we decide that we can't afford to lose kids during their early education. All of the research is pretty consistent in demonstrating that by the time we're discussing 'workers' the game is already up. We need to be spending WAY more time and resources figuring out how to keep ten-year-olds from failing. Then wage laws will become less important.


Most of this conversation is wrong. The solution to our problems isn't an OR equation it's an AND equation. We need a higher living wage for all workers. We know this works because working people spend nearly 100% of their income back into the economy.

Perhaps we don't truly understand what the social safety net is in Europe. Above all else it is a guarantee of health care. Our system is so incompatible with other rich countries that you cannot extract individual elements and compare.

Until the USA decouples health care from employment and guarantees it to all citizens, minimum wage discussions or policy changes will have little real effect.


Ever think the reason the US economy has done such a poor job of creating middle-class jobs is that government has been offering financial incentives to workers (minimum wage) and subsidies for employers (expansion of the social safety net) to encougage and sustain minimum wage jobs?


The fact that some workers in fast food & similar jobs are no longer unskilled teenagers &c does not change the fact that this work could still be done by unskilled teenagers. So if you mandate paying more for such unskilled labor, 1) What does that do to the rest of the market; and 2) What do we do with the really unskilled teens who can't find fast-food jobs any more, because some adult is collecting a "living wage" for doing them?

Brian O

One of the things that needs to be done is to regulate the cost of fuel. Every time fuel goes up it gives owner/operators of other businesses an excuse to jack up their prices anywhere from 5 to 20%. It will not matter what the minimum wage is as long as prices continue to rise. I have been working for the same exact salary for the past 7 years. In that time, food costs have gone up at least 60% and in some cases a 100%. Pretty soon, the minimum wage will have to be what I make in a year.

Surowiecki is absolutely correct in saying that there must be more truly middle class jobs. However, today's federal education reform movement is driven exclusively by big business who wants to get more people focusing on skills necessary to do high-tech, math intensive jobs. They are doing this so they will have a wider pool to employ for those jobs in order to reduce the amount they pay for those workers. So, our government is really helping to eliminate the middle class jobs that already exist instead of creating more.



How do you regulate fuel cost? That sounds terrible. See Egypt.

What would be your advice about education? Don't get the math education that is in demand? Then do what? If math/technical job wages are going down, you can bet the wages of those with out it are also falling. Educational premium should exist where future innovation is bound to come from. The facts are science drives innovation, innovation drives wealth. Not a lot of Philosophy majors pioneering the next Fortune 500. Thems the breaks.

Follow the money...


Let's identify who tied this Gordian Knot. It's been layer after layer of short-sighted governmental policy designed to socially and fiscally engineer some desired outcome that has so distorted the basic economy that too many people are under-employed for the skills they have. Until Congress simplifies and reduces these inhibiting forces, no amount of tinkering with individual components will get the machine working properly at full speed. This isn't an argument for uninhibited laissez-faire. It is an argument for ceasing the constant efforts to give advantages to special groups of all sorts.


If you pay a living wage - and this means bare minimum to put a roof over your head, feed and clothe yourself, get basic health care, etc., not the ability to buy the latest Air Jordans and iPhones - then you do not need as large a safety net. That means lower taxes for everyone. Would you rather pay an extra $.25 for a hamburger or an extra $.50 in taxes for the required safety net?

Lower taxes + more money in the economy = a more resilient economy and more economic growth.


That is a problem I've had for a long time. I had some college education but not a degree. I was working low-paying jobs struggling to get by & trying to get back into school, but because of my low-income I couldn't afford classes & because of my parents' income I didn't qualify for any kind of aid. I was basically stuck in limbo working a crap job trying to make ends meet.

I was just recently accepted into a union job & my income is about to quadruple. Plus I'll have health/dental for the first time in over 8 years.


A Mcdonalds employee in Florida earns 3$ less an hour than an undocumented worker who you can hire out in front of home depot. (I have tested this myself). If a McDonald's employees were truly concerned about their wages, then they would all just switch to manual labor and make more money. To me, this indicates that a person who works at McDonalds past the age of say 18, either has some serious problems, has made some bad life choices, or doesn't want to put in the work that an illegal immigrant does.

I live in Florida (TONS of unskilled labor here). Somehow the millions of illegal immigrants here manage to survive without a "fair living" wage and a safety social net. Just sounds to me like a lot of "entitled" people are crying.

Julien Couvreur

I agree that understanding why jobs are not getting created fast enough is the key. Parts are probably due to the bubble/bust (so understanding what makes those happen, such a credit expansion, is important), and other parts probably due to regulatory constraints and uncertainty (Obamacare is one example of many). It is not just a lack of creativity on the part of entrepreneurs or a supposed Keynesian "demand slump".

It is hard to see a stronger safety net as a solution, as Europe won't be able to sustain their safety net for long, despite the fact they most countries there don't have as high a military spending level as the US.
For instance, the French safety net provided an illusionary solution while the demographics supported the ponzi scheme, but conditions have been steadily deteriorating and the economic reality (no free lunch) is catching up. It worries me for my friends and relatives who still live there (they are stuck with the bill from earlier generations).


John Smith

Is the title a serious question? I literally have to say every fast food order 3 times because the person taking the order is too dumb or illiterate to understand what is being said. At this point, a monkey randomly pushing keys would almost be as good at that job. Yet you wonder why they don't make more money?

John Smith

Shouldn't we pay McDonalds workers $100 an hour. Because then they could live really well. I mean, a burger would cost $20, but it's not about business, it's about fairness to workers, right?

John Smith

I've been to the Netherlands and to Germany. The prices are almost double what they are here for the same basic fast food. But let's not worry about where the extra money really comes from when paying workers more. Liberals like to believe it's all magically created and free.

David Bley

If companies could, they would reduce their labor costs to zero in order to maximize profit for shareholders. It is simply supply and demand (and minimum wage) that makes them pay anything at all for labor.