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Ready for the $9 Big Mac, for real?

Stoked said:
lol yes it does. But his point is that the rise in the minimum wage will excelerate inflation.
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That's something everyone should have been begging for over the last 6 years. It's one reason 600 economists sent a letter supporting the $10.10 hike. https://www.epi.org/minimum-wage-statement/

Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front.
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Also from the letter:

he increase to $10.10 would mean that minimum-wage workers who work full time, full year would see a raise from their current salary of roughly $15,000 to roughly $21,000.
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That $6000 hike would reduce a ton of federal welfare spending, and lower the need for federal stimulus. I don't see why any conservative would be against it *in the current environment*.
 
moevillini said:
part of the strategy is that they are overshooting their target

I think something like $10.10 is the actual goal and some within the leadership think that's even a bit unrealistic
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Yes, the group pushing for $15 knows that won't happen. They set their target high just like anyone would do in negotiations.
 
Stoked -- here's a better, although still shaky, calculation update on your numbers from the first page:

McD has 14,267 owned and franchised stores. Assuming the stores average 15 hours/day, 365, and every employee is at minimum wage or will receive an equivalent increase to keep managers competitive, that's $605,366,643 increase in costs for every employee necessary to keep a store operating. Assuming a range of a minimum of 6 employees to a maximum of 12, we're looking at $3.6 - $7.2 billion per year in additional costs. McD's total US revenue in 2013 was $50.22 billion.

Raising the minimum to $15 would cost 7.2 - 14.4 % of current revenue (minus the cost savings from lowered turnover, employee theft, already higher wages in BFE Nevada and high cost of living states, etc.).

But those are shaky numbers.
 
BTW, at one point I calculated the price increase from raising tomato picker wages from something like $8 to $35/hr. It was a fraction of a penny per tomato.
 
franklin said:
Stoked -- here's a better, although still shaky, calculation update on your numbers from the first page:

McD has 14,267 owned and franchised stores. Assuming the stores average 15 hours/day, 365, and every employee is at minimum wage or will receive an equivalent increase to keep managers competitive, that's $605,366,643 increase in costs for every employee necessary to keep a store operating. Assuming a range of a minimum of 6 employees to a maximum of 12, we're looking at $3.6 - $7.2 billion per year in additional costs. McD's total US revenue in 2013 was $50.22 billion.

Raising the minimum to $15 would cost 7.2 - 14.4 % of current revenue (minus the cost savings from lowered turnover, employee theft, already higher wages in BFE Nevada and high cost of living states, etc.).

But those are shaky numbers.
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So it will cut into their revenue, which is a given. But the level it does is less than what I got off of the Huff post.

Also it seems that the increase in wages may increase the prices but not at the same rate. That means more disposable income and that income would increase jobs and demand as a result.

Sound accurate?
 
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Then I see no reason not to raise the minimum wage. I would be in favor of a small adjustments over the next 3-5 years perhaps.

Maybe add a 1.50 to the minimum wage each year for 3 straight years. That way after 3 years people have seen an increase of $4.50 an hour.

Edit: If they are working 32 hours a week that is 32 x 4.50 = 144.00. 144 x 52 = $7,488.00

They would have a gross increase of $7,488.00 by year three.
 
franklin said:
Stoked -- here's a better, although still shaky, calculation update on your numbers from the first page:

McD has 14,267 owned and franchised stores. Assuming the stores average 15 hours/day, 365, and every employee is at minimum wage or will receive an equivalent increase to keep managers competitive, that's $605,366,643 increase in costs for every employee necessary to keep a store operating. Assuming a range of a minimum of 6 employees to a maximum of 12, we're looking at $3.6 - $7.2 billion per year in additional costs. McD's total US revenue in 2013 was $50.22 billion.

Raising the minimum to $15 would cost 7.2 - 14.4 % of current revenue (minus the cost savings from lowered turnover, employee theft, already higher wages in BFE Nevada and high cost of living states, etc.).

But those are shaky numbers.
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This all assumes that the prices of the products they get will not also rise. It's almost sure that the companies that supply them their product will also see some increases due to this.
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I'm going to use housing as it's what I know best.
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A builder only has so many employees and those employees are probably 10-20% of their overall cost.
However they hire sub-Contractors who also have employees and the % those employee's make is much larger as they are doing most of the actual work. So a sub contactors labor force is more like 30-40% of their overall cost.
So the sub contractors will be forced to raise prices. Which the builder is now going to have to pay extra money in non-employee costs.
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In this case the contractors increase in Payroll is probably slight. But they are still feeling a major shift in their prices because the people who supply them with products and labor have increased their prices. The cost to the contractor is far greater than the impact of their payroll alone.
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I used housing but this can be applied to all trades. Including McDonalds who have people who ship their food, Process their burgers, Etc.
 
One Brow said:
Without minimum wage increases, inflation causes them to fall further behind.
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That's fine. My point was that you did not really address what he was saying. Honestly, I think you knew what he was saying but tried to spin it off into another direction. Something you frequently do (not a bad thing, just an observation).
 
One Brow said:
Without minimum wage increases, inflation causes them to fall further behind.
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True. Inflation occurs due to many things. Obviously not raising the minimum wage to keep up with inflation will cause it to fall behind in regards to buying power.

This calculator shows inflation in the U.S. over the past few years (relatively low)
https://www.usinflationcalculator.com/inflation/current-inflation-rates/

Based on the current minimum wage of $7.25 (in place since July, 2009), if we move minimum wage solely with inflation, it would raise to about $8.21 (It would be slightly lower as I rounded up each calculation).

Raising minimum wage to keep up with inflation would not have a huge impact on inflation. However, if you raise minimum wage to $15, prices will adjust up spurring more inflation.

Traditional economic theory states that companies will respond to an increase in the cost of labor by reducing demand for labor (efficiency) or increasing prices (see Labor Demand by Daniel S. Hamermesh)

While minimum wage increases will cause an increase in prices, the magnitude depends on several factors such as demand elasticity and competition degree. (see https://www.epionline.org/studies/aaronson_06-2006.pdf)

Several studies have found that a 10% minimum wage increase will raise prices between 1 and four percent. (see Macdonald and Arasonson (2000) (10% increase in wages leads to around 1- 4% in prices.)

So a raise to $15 (over 100% increase) could cause prices to increase between 10 and 40% independent of other inflation factors. There will be an adjustment period during which the minimum wage workers will have a slight increase in standard of living in the short-term, (although many will lose federal benefits that provide an even greater benefit).

A large increase in minimum wage is a short-term hidden tax. Right now 12% of federal spending goes towards welfare (another 11% for CHIP and Medicaid). It will artificially raise prices, causing buying power to decrease for 95% of Americans while increasing the buying power for roughly 5%. While the rich tend to be impacted the least as they can generally raise their pricing to adjust while the middle class takes the brunt of the impact.

Another potential is businesses cut back other benefits (profit sharing, 401(k) plans, etc.)

If I was a rich business owner in a low margin industry with the economy in its current state, if I had to raise minimum wage (assuming it was a large part of my workforce) I will cut the number of raises given to these employees and upper level employees to minimize the impact. I'd cut back on bonuses and removing matching from the 401(k) plan. My bottom line would not change. I'd cut even more of my workforce under 30 hours (to avoid having to offer health care or face penalties). Or I would get rid of insurance and pay the penalty (the penalty is cheaper than insurance for 95% of my clients).

The other piece of the puzzle is what about the employee who started out at minimum wage and now makes $10. If an employer has to pay everyone $15, do you really think that person is going to get $18? It won't work that way. So in the long run, when prices adjust, the employee who was making a few bucks over minimum will actually get screwed.
 
Some of you are bit too worried with keeping up with world. I worry about not outpacing it.
How about try working hard and gaining real skill? This is too old fashioned for the 7-11 worker?
I dont have to wallow in misery over price inflation. In fact, I never give a thought about It. If I dont like what the product cost I dont buy. It really is that simple.
You don't have to worry if have not quit improving yourself and become a liberal couch potatoe.
 
franklin said:
Stoked -- here's a better, although still shaky, calculation update on your numbers from the first page:

McD has 14,267 owned and franchised stores. Assuming the stores average 15 hours/day, 365, and every employee is at minimum wage or will receive an equivalent increase to keep managers competitive, that's $605,366,643 increase in costs for every employee necessary to keep a store operating. Assuming a range of a minimum of 6 employees to a maximum of 12, we're looking at $3.6 - $7.2 billion per year in additional costs. McD's total US revenue in 2013 was $50.22 billion.

Raising the minimum to $15 would cost 7.2 - 14.4 % of current revenue (minus the cost savings from lowered turnover, employee theft, already higher wages in BFE Nevada and high cost of living states, etc.).

But those are shaky numbers.
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FWIW, McDonalds probably average more like 18 hours a day. At least here on the east coast.
 
gregbroncs said:
This all assumes that the prices of the products they get will not also rise. It's almost sure that the companies that supply them their product will also see some increases due to this.
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See post 125. Thanks.

https://jazzfanz.com/showthread.php...g-Mac-for-real&p=883087&viewfull=1#post883087


QuinSnydersHair said:
FWIW, McDonalds probably average more like 18 hours a day. At least here on the east coast.
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I didn't pull the # completely out my ***. There's a tracking website that had 14.7 or something... Either way, it's a good foundation to adjust up or down from as you see fit.

Also, the average employee per hour is way more assumptive.
 
franklin said:
That's something everyone should have been begging for over the last 6 years. It's one reason 600 economists sent a letter supporting the $10.10 hike. https://www.epi.org/minimum-wage-statement/



Also from the letter:



That $6000 hike would reduce a ton of federal welfare spending, and lower the need for federal stimulus. I don't see why any conservative would be against it *in the current environment*.
Click to expand...

franklin said:
See post 125. Thanks.

https://jazzfanz.com/showthread.php...g-Mac-for-real&p=883087&viewfull=1#post883087




I didn't pull the # completely out my ***. There's a tracking website that had 14.7 or something... Either way, it's a good foundation to adjust up or down from as you see fit.

Also, the average employee per hour is way more assumptive.
Click to expand...

Post #125 is inaccurate. Multiple studies have shown that a 10% raise will lead to 1-4% inflation. Doubling minimum wage have an even bigger impact (see my last post for source materials).

Paying tomato workers alone may have a small impact. But what about the increase for cost of seed, fertilizer, materials, transportation, grocer, etc. Why hire a tomato picker at $15/hr when you can use a machine anyway?
https://www.google.com/search?q=tom...rodotti.php%3FCOD_ANA%3D7825%26APP%3D;460;306
 
JAZZGASM said:
Post #125 is inaccurate. Multiple studies have shown that a 10% raise will lead to 1-4% inflation. Doubling minimum wage have an even bigger impact (see my last post for source materials).

Paying tomato workers alone may have a small impact. But what about the increase for cost of seed, fertilizer, materials, transportation, grocer, etc. Why hire a tomato picker at $15/hr when you can use a machine anyway?
https://www.google.com/search?q=tom...rodotti.php%3FCOD_ANA%3D7825%26APP%3D;460;306
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1. Your Macdonald and Arasonson study is good old fashioned cherry picking. Many other studies have found much lower to negligible impact. These studies have been criticized for using faulty or biased modeling inputs, disregarding the raises that would occur regardless, etc. See https://ftp.iza.org/dp1072.pdf

Here's one snippet:

More recently, Wilson (1998) reported estimates
developed by The Heritage Foundation using
the 11 US macro model of the US economy.
The proposed 19.4% 1999-2000 increase in the
minimum wage was estimated to increase overall prices by 0.2% in the first year and by an additional
0.1% in the second year.
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2. Who is suggesting raising the minimum wage to $15? You're burning down a straw man.

3. The rest of your comments are leaps in logic that avoid so many inputs that it would be hard to find a good place to start. You're fear mongering teh middle classez.
 
franklin said:
1. Your Macdonald and Arasonson study is good old fashioned cherry picking. Many other studies have found much lower to negligible impact. These studies have been criticized for using faulty or biased modeling inputs, disregarding the raises that would occur regardless, etc. See https://ftp.iza.org/dp1072.pdf

Here's one snippet:




2. Who is suggesting raising the minimum wage to $15? You're burning down a straw man.

3. The rest of your comments are leaps in logic that avoid so many inputs that it would be hard to find a good place to start. You're fear mongering teh middle classez.
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Haha. I'll have to go find the list of studies I reviewed tonight, but the ones I listed were middle of the field. Some suggested MUCH higher inflation. I would say using your 0.2% increase for a 19.4% increase is cherry picking.

Ans as far as $15/hr, do a google search. Here is one of the first links I found:
https://www.huffingtonpost.com/robert-reich/minimum-wage-should-really-be-raised_b_5114747.html

There are many pushing for $15/hr minimum wage, and they also use the faulty logic that it will have no impact on inflation, and the workers "deserve" it. It is simply b.s. I have already stated that small increases to keep up with inflation would have a negligible impact on inflation, and it should be done. I would be ecstatic with a federal law that keeps minimum wage tied to inflation permanently. My biggest issue is with the people wanting this huge increase to $15/hr that would have a major impact to middle class spending.

Time and time again we see the negative impacts of government interference in a free market economy.

The federal government has more oversight and control over education (student loans) and health care than any other field. It is no coincidence that the costs in these two areas are rising so much faster than inflation or any other field.
 
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