Introduction
Nowadays, data is important element when policy makers want to make informed decisions. Penalty rates are an amount of compensation offered to workers for working on Sundays and Public Holidays (Kenny, 2014). There was an implementation of the Penalty rate cuts on the full time and part time workers in the hospitality industry. Different stakeholders in the industry have argued about the effects of the policies on the employees and the businesses but most of the arguments are based on assumptions. The purpose of this report is to highlight the results obtained from an analysis of 387 Fast food chain stores to establish the effect of the policy on employment, food prices and business operations. The fast food chains were surveyed using a simple random sampling and the responses were documented and analysed and tested using hypothesis testing at 5% significance level and confidence intervals were obtained at 95%
Analysis of US Fast food Data
1.Extent of the Impact of New Policy on Employees in the US Fast Food Industry
a. Almost half of the employees were affected by the Penalty rate cuts that was implemented in 2005. The data shows that 48.12% is the average amount of staffs that were affected by the penalty rate cuts.
b. New Jersey and Pennsylvania are different states in the country. There were 312 branches in New Jersey and 75 states in Pennsylvania. From the analysis, it was clear that there was no significant difference between the average percentages of the staff affected between the two states at 5% significance. It is interesting to note that despite the difference in sample size, the difference in percentage of the staff affected is negligible. This shows that indeed the Penalty rate cuts affected the employees in an equal level in New Jersey and Pennsylvania.
c. KFC and Burger King are dominant Fast food chains in the industry. There are 241 branches of KFC surveyed and 136 of Burger King surveyed. From the analysis, it is clear that there is a significant difference between the average percentages of staff affected by the new policy across both of the fast food chain stores. At 95% confidence, the difference in percentage of the average staff affected by the Penalty rate cuts for Burger King and KFC range from a lower limit of 0.18% to highs of 14%. The statistic could however be affected by the difference in number of the stores that were surveyed. Also, his difference may be attributed to the differentiated product and clientele targeted by the different fast food chains.
2. Bonus Policy across the US Fast Food Industry
a. The cash bounty is a way of substituting the effect of the Penalty Rate cut. It may therefore ensure that the company maintains a similar wage budget. On the other hand, it may be costly to implement such a policy. The WAC had a hypothesis that nearly 30% of all fast food companies compensated workers with the use of a cash bounty. From the data analysis, the hypothesis is disproved which means that the proportion of fast food chain stores that offer the employees a cash bounty is less than 30% at a 5% significance level.
b. Using a 1% significance level, we accept the assumption. This is because a 1% significance level is wider than at 5% significance level. This is to mean that it can accommodate more values compared to the latter. The WAC findings were therefore not wrong rather they might have used a wider sample in their analysis and a less accurate estimation (Hair and Lukas, 2014).
c. KFC and Burger King are dominant players in the industry. it is therefore assumed that they have tighter employment policies compared to Wendy’s and Roy Rodgers since they are already established. From the analysis, it is clear that it is indeed a false assumption. At a 5% significance level, there is no significant difference between the proportion of the employees who are offered a cash bounty at the more dominant chain stores and at the less dominant ones. This situation may indicate that both of the chain stores are facing economic similar circumstances and might be able to accommodate that much cash bounty in compensation.
3. Employment Status across the US Fast Food Industry Prior to Rate Cut
a. The average number of full time employees working in the sector is 8.33 approximately 9 employees per sector. The average number of part time employees working in the sector is 18.71. This shows that there is a higher number of part time employees working in the fast food chain industry compared to those working in a full time capacity. This is an expected figure since the Fast food industry is more or less a 24 hour working zone, it may therefore be difficult to get full time employees especially those who are waiters and servers. A shift working policy works best in the fast food industry hence the larger number of employees being part time workers (Worse, 2017).
b. Burger King and KFC may have different operational systems that allow for one of them to have a larger number of part time employees compared to the other. In this case, 162 burger king stores were surveyed and 79 KFC stores were surveyed. From the analysis, it was clear that indeed the Burger King stores have a greater true average number of the part time employees employed compared to that of KFC. This means that in case KFC have a larger number of full time employees, they might be more affected by the policy compared to Burger King. Also, the results may have been impacted by the sample size of the stores in those two branches. According to the data, the amount of employees at burger king may be greater than those at KFC at 8.57 to 12.65 employees at a 95% confidence level.
4. Penalty rate cuts on Operations and Employment in the US Fast Food Industry
a. In order to understand the effect of the Penalty rate cuts, it is important to consider the statistical data from before the implementation to after the implementation of the policy. This is to understand the full effect of the policy based on the perspective of the unionists and the advocates.
b. Across the 387 branches that were surveyed, the data shows that the Average amount of time that the staff had to work for the first food before coming eligible for the pay rise became shorter compared to prior the policy. This means that advocates of the policy were right since the Penalty Rate cuts allowed the employers to reimburse workers using alternative means in this case an early pay rise at 5% significance. At 95% confidence, the length for which the workers were given a first time rise reduced ranging from 2 months and 5 months.
c. According to the data, it is evident that the average amount of pay rise ranged from 0.21 dollars to 0.22 dollars. On testing the assumption at 5% significance it was found that there is no significant difference between the amount of first pay rise from before the implementation of the policy to after the change of the policy. This situation indicates that the employees do not benefit in monetary terms with regard to the policy since they do not experience any change in real income. However the only benefit accrued to them is the speed at which they are able to get the first pay rise. This might be because of the operational costs experienced by the fast food chain that it only makes sense for them to maintain the costs.
5. Effect of the Policy Implementation of the Food Prices, Service Improvement and Competitive
a. From the data, the average price of a meal ranged from 11.3 to 11.09 before and after the implementation of the policy. On further analysis, it was discovered that with 5% significance, there was indeed a reduction in the average price of a meal after the implementation of the policy. From the data, it could be interpreted to mean that in actual sense the Penalty Rate cuts revealed the businesses of some level of operational cost and therefore they could afford to set lower food prices in order to attract more customers. There was a slight significant reduction in the prices charged for the services rendered in the Fast food stores. Using 95% confidence, the food prices reduced by 0.28 to 0.64 dollars after implementation of the policy.
b. From the analysis, it is clear that at 5% significance, there was no increase experienced in the average number of hours the Fast food stores opened. It shows that the Penalty Rate cuts have not had such a high effect on the day to day operations of the Fast food stores given that they have remained the same. This indicates that people working on Sundays and public holidays still work the same number of hours but with a lower pay attached to it. In general, it is clear while the food prices were slightly decreased; there was no direct benefit to the service that the fast food chains provided. It is therefore difficult to establish the effect of the Penalty rate cuts on the competitive nature of the businesses of the Fast Food outlets other than a slight decline in the food prices. It is along these lines that the Penalty rate cuts have made it more able for the fast food chains to expand their amount of intensity by diminishing the cost for which they offer their meals. (James, 2017)
6. Reflection
It is important to note that the real effect of the Penalty rates cut may not have been instituted until the data is looked at more closely. For some analysis, it was necessary to compare the behaviour between two samples while in other analyses, it was necessary to consider an independent sample on its own.
The Penalty Rate affected nearly half of the employees in the US fast food industry. It therefore reveals that it had an impact on nearly half the incomes of individuals working in the US Fast food industry. It was evident that this effect was similar across the states and also across the Fast food chains (Kearney, 2017). Interestingly only less than 30% of the fast food chains offer cash bonuses as compensation, this is quite low compared to the 50% affected by the policy. There is therefore insufficient compensation that faces the workers in the fast food industry. Regardless of the market position of the company. Both dominant and less dominant firms do not actively consider cash bonuses as options for compensation. Most of the employees work in the US fast food industry are part time workers. It is therefore expected that the part time workers are most affected by the Penalty rates cut. With regard to employment, the positive outcome of the Penalty Rate cut is the reduced period for which one can get a raise but the amount of the raise remains the same. It is true that the policy may reduce the operational costs available to the fast food chains. On the other hand, the employees are exposed to similar operational hours at lesser costs. This means that the businesses are the ones that are able to gain most from the policy compared to the individuals who work in this firms. The policy will therefore not be a good fit for Australia especially since it lowers the employee’s incomes. It may therefore increase the overall burden the employees may have compared to the incomes they earn. Since the amount by which the businesses are affected is quite small it is not economically feasible to implement such a policy.
7.Sampling and Limitations
Random sampling methods are beneficial in obtaining data for unbiased inferences. Random sampling is able to account for a large range of the population. Also, it is a simple way of obtaining data for analysis purposes. It is also a less costly way of obtaining data with little errors due to the variability of the data. However, the investigator has little control of the data that he is analysing and therefore the random sample may not give a proper overall view of the represented data. This may limit the level of generalizability that the inferences of the data have (Sullivan and Verhoosel, 2013). One limitation of random sampling is that the amount of units considered for the sample should be a considerable number in order for the sample to be representative. In some instances, it is not possible to access a large number of sample sizes due to the wider dispersion of the population. In this case it may be limiting to use random sampling.
Conclusion
The use of data is significant in making economical decisions. It may assess the effect of a policy chance before and after its implementation. In this case, the assessment of the penalty rate cut was done to establish its feasibility. Evidently, The Penalty rate cuts have more negative effects than they are positive. First, it affects the amount of money available to employees in the fast food industry with no increase in the cash bonuses offered to them or a reduction in the hours of work. It may therefore demoralize the workers due to the low remuneration. Also, while it reduces the food prices for the fast food chains, it does not influence any aspect of their operations. It should therefore be done away with since it has little significance to the economy.
References
Hair Jr, J.F. and Lukas, B., 2014. Marketing research (Vol. 2). McGraw-Hill Education Australia.
James, D., 2017. Penalty rate cuts are the result of thinking small. Eureka Street, 27(4), p.12.
Kearney, G., 2017. Billions to be lost if penalty rate cut spreads. Lamp, The, 74(5), p.24.
Kenny, P., 2014. Better Business Decisions from Data: Statistical Analysis for Professional Success. Apress.
Sullivan, M. and Verhoosel, J.C.M., 2013. Statistics: Informed decisions using data. Pearson.
Tadikonda, V. and Rosca, D., 2016. Informed and Timely Business Decisions-A Data-driven Approach. In SEKE (pp. 24-30).
WORSE, G., 2017. Penalty rate cuts hit women, young people. LAMP, p.17.
