Concise Background Term Paper

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Economics Consulting on Minimum Wage

Despite the recent wringing of its stockholder's hands at the poor image of health of McDonald's products in the weight-conscious media, McDonald's minimum wage model of corporate profiteering may become the model of the services sector future. In a recent article for the trade publication Industry Week, economist Michel Evans noted that the "U.S. will increasingly become a service-based economy. This trend has been apparent for many years, but if there were any remaining doubt, it has been erased by the inability of core manufacturing industries to generate a profit even as margins rise to record levels in the rest of the economy." (Evans) Wages are too high to compete with the developing world, and demand remains too low in this sector. As a result, "there has been a great ... gnashing of teeth about high-paid manufacturing jobs being replaced by minimum-wage jobs at McDonald's and Wal-Mart." Yet interestingly enough, "less than 1% of the full-time jobs in this country actually pay only the minimum wage." (Evans, 2004)

This apparent discrepancy between high levels of employment at the company and low levels of minimum wage employees is because McDonald's employs so many part-time workers, to whom it does not have to pay benefits, such as teens, retirees, and minimally skilled employees desperate for work of any kind. The standardized operating procedures of the fast food franchise ensure that such employees are easy to train, and often make few demands of the company, given that they are often quite transient in their employment (particularly younger or older workers) or quite compliant (such as workers struggling with learning the English language for the first time).

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From a managerial perspective, McDonald's emphasizes on its website that it has a strong commitment to training franchise owners and managers at 'Hamburger Universities' across the country. But in terms of its minimum wage staff, its promises of a commitment to diversity and people ring hollow, given that they are not backed up by a guarantee of benefits or job security. McDonald's began as a successful chain because of its commitment to produce a relatively minimal selection of….....

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