Andy Puzder, CEO of CKE Restaurants, wrote what has to be one of the worst counterarguments to increasing the minimum wage in the history of ever. Honestly CKE’s board should be looking to fire him with cause for
A) Being stupid
B) Putting it in writing (in the WSJ no less)
C) For then going on TV to defend his sloppy work
Let’s start here…
Generally, highly compensated employees contribute more to a company’s success than minimum-wage employees, who are often less experienced and entry-level workers.
Well, I’ve met everyone from entry level employees to CEOs at a variety of companies. There’s only one CEO who’s ever impressed me as exceptional and the rest have been underwhelming on a personal and intellectual level. Lower compensated employees usually don’t have a say in things so they CAN’T, by management’s design, contribute. When employees ARE able to contribute, it’s usually very productive since they understand the day to day operation of the business far better than, honestly, the CEO. I’ve never met Andy, but I have a feeling any member of middle management (or a damn line cook at any given CKE location) could do his job better, so let’s replace him and then use his salary to bump up the minimum wage paid out by CKE.
Then there’s his math issue…
At $12 an hour, the employee would make $7,410 more a year resulting in a loss per employee of $1,110, eliminating the employee’s entire contribution to the company’s success. At $15 an hour, the employee would make $12,090 more a year, resulting in a loss per employee of $5,790.
Yes, because prices would remain static. And if you believe that, I have this AMAZING insurance product to sell you! Seriously, research has already been done and the price increase to cover $15/hour is a little under 5% or 25 CENTS on a $5 burger, because the labor component of the price of fast food is REALLY low. That research didn’t really look into the cost savings realized from lower turnover and the productivity increases when someone isn’t constantly under stress about how they’re going to pay bills. It also doesn’t look at the broader impact of having tens of millions of workers with higher incomes and a history of spending those incomes, in the economy.
Now, I knew about the Purdue study and I have no investments in businesses directly affected by minimum wage increases… the big question is how the hell old dumb as a box of hair Andy missed it given that IT’S ABOUT HIS DAMN BUSINESS. I don’t know, but if I was a fancy fast food CEO like Andy, I would have a Google search set up for everything related to my industry from commodity futures to restaurant design trends. But I’m probably smarter than Andy so we’ll cut him some slack on that.
Finally, let’s address poor dumb Andy’s comments about Wal Mart. Wal Mart’s problem begins with a management culture that actually devalues hard work and decision making in employees. Now, I know management has been crowing about how much they’ve done to increase wages, but what they’re NOT saying is that they’re doing it to compete FOR EMPLOYEES. Apparently, paying the minimum wage left them understaffed and shelves untended. It’s poor operation which has already caused the loss of the middle market consumer, who are predisposed to thinking their stores sucked and that their food is sourced from China and filled with exotic poison. Wal Mart’s problems are DECADES in the making and you would need wholesale change within the management to overcome that. I shop at Costco, Tom Thumb and occasionally Central Market. I don’t step foot in a Wal Mart because I think of everything in it as Poisoned in China.
Change the culture and you’ll see profits rise even with higher wages. Until then, I would avoid Wal Mart stock like it’s an infectious disease.
Speaking of changes in culture, I think maybe it’s time to do the same thing at CKE. I know I won’t be eating a Chili Cheese Six as long as Dipshit Andy Pozner is the CEO… he could be sourcing melamine tainted produce from Wal Mart for all I know!