Ready for the $9 Big Mac, for real?

[Stoked]

I have nothing to dispute those numbers with, and I already pulled my own calculation out of my rear (the increase from $3 to $4.20 on the first page), which I think covers the change in revenue you referred to.

Fair enough. My math was very loose and estimated as well.

edit: on a side note I would not do anything yet. I'd wait about 6 months or so and keep my eye on Seattle who raised the minimum wage to 15$. I'd study the result and implement, change or refuse to do so based on what I saw and found.

 

[One Brow]

... but if you double the cost of your entire labor pool, which for companies like this is the single largest variable expense and often higher than any fixed costs, ...

Well, back when I was a Burger King manager, labor was about 20% of our costs, higher than any fixed cost, but less than half the cost of the food itself. Later, as a GACCCC manager, that was almost reversed; the dough was only 20% of the costs, and labor was closer to 40%.

I agree there will be price hikes initially, but not many layoffs; historically, unemployment does not increase much after a minimum wage hike, IIRC.

 

[franklin]

Prices =/= profit.

Come on frank, you know better than that. Don't play naive.

I disagree with your premise that McD will make sweeping changes to their highly successful business model based only on wages rising. The minimum wage has been in decline for several years, so if anything I would look back to their success in the 80's and 90's to see what the company would look like. Given their decades of continuous success, I am assuming they could handle a rise just fine. You are assuming they could not buffer a 10% profit hit, and would alter their business model drastically. A decline in profits is Occam's Razor.

 

[Stoked]

Kind of a spin off question. How likely would people be to trade some wage increase for benefits increase? How would that change the effect on the consumer any differently than a straight wage increase?

 

[LogGrad98]

Well, back when I was a Burger King manager, labor was about 20% of our costs, higher than any fixed cost, but less than half the cost of the food itself. Later, as a GACCCC manager, that was almost reversed; the dough was only 20% of the costs, and labor was closer to 40%.

I agree there will be price hikes initially, but not many layoffs; historically, unemployment does not increase much after a minimum wage hike, IIRC.

But how many minimum wage hikes have been nearly 50% increases? That is in another ballpark.

 

[LogGrad98]

I disagree with your premise that McD will make sweeping changes to their highly successful business model based only on wages rising. The minimum wage has been in decline for several years, so if anything I would look back to their success in the 80's and 90's to see what the company would look like. Given their decades of continuous success, I am assuming they could handle a rise just fine. You are assuming they could not buffer a 10% profit hit, and would alter their business model drastically. A decline in profits is Occam's Razor.

Thanks for the response. As I mentioned as a response to OB, we are talking about nearly a 50% increase to wages, not a 5% or even 10% hike. That is a huge fundamental change and would require more than adaptation strategy, IMO.

 

[fishonjazz]

I have no idea who you think is "worrying" about Ronald. It is merely a fact of business. You cannot make a sweeping change this big without repercussions. One of which would likely be higher prices as they try to maintain profits and margins. In fact you may see a fundamental shift to a higher-scale menu of sorts to justify higher prices to help maintain profits with declining revenue. It is a dance every business dances. One difference in small businesses is they have only the owners to answer to. In McDonald's case, being public, they have several million "owners" to answer to, and the last thing they want is a dip in stock value, so they will do what it takes to maintain it, whether that be hiring fewer workers, reworking their model, or raising prices, or a combination. Fact is you would see a change, maybe a drastic one. Funny with your economic knowledge you can't (or won't?) recognize the impact.

So if mcdonalds raises thier prices then dont consumers just go to taco bell arbys del taco zupas carls jr chick fil a etc etc?

How does that help thier stock?

 

[[size/HUGE] fixed [/size]]

Having hired and fired my fair share of factory and warehouse workers over the past 20 years I can tell you that the skillset is definitely higher than most people give credit for. This comment would only come from someone who has never done that kind of work before, or had very limited experience with it. I am not trying to say that everyone is highly skilled craftsmen, but to make a blanket statement that it requires no skill at all is not accurate.

Dude, where the F did I say that factory workers weren't skilled? I was certainly trying to problematize the idea of skilled labor (since we have all kinds of bad assumptions on this point), but I wasn't throwing anybody under the 'dumb bus' like you seemed to think I was.

 

[Stoked]

So if mcdonalds raises thier prices then dont consumers just go to taco bell arbys del taco zupas carls jr chick fil a etc etc?

How does that help thier stock?

If McDonalds raised their prices that way ont heir own then yeah they'd lose, hard. But if everyone else was doing so from a drmatic increase in the minimum wage then what happens?

I still say sit back for 6 months or so and see what happens in Seattle. Then improve on what they have done.

 

[fishonjazz]

I still say sit back for 6 moths or so and see what happens in Seattle. Then improve on what they have done.

Yep.
The legalization of marijuana will show us the way

 

[LogGrad98]

So if mcdonalds raises thier prices then dont consumers just go to taco bell arbys del taco zupas carls jr chick fil a etc etc?

How does that help thier stock?

All of those guys will also be affected by this kind of change really at some point too. It won't be isolated.

 

[fishonjazz]

All of those guys will also be affected by this kind of change really at some point too. It won't be isolated.

I see

 

[LogGrad98]

lol

What kind of "skills" do you think the average factory worker has had (if you take some kind of average over the past 400 years)? Most of what defines this kind of work is playing a simple role in a much larger assemblage of production. I'd even say that fast food establishments resemble the factory more than any other institution that is ubiquitous in our lives.

Which brings me to my point. What sort of entitlements have factory workers felt over the generations? How did their skills justify these entitlements (most of whom were very replaceable)?

Dude, where the F did I say that factory workers weren't skilled? I was certainly trying to problematize the idea of skilled labor (since we have all kinds of bad assumptions on this point), but I wasn't throwing anybody under the 'dumb bus' like you seemed to think I was.

Come again?

 

[LogGrad98]

So if mcdonalds raises thier prices then dont consumers just go to taco bell arbys del taco zupas carls jr chick fil a etc etc?

How does that help thier stock?

Also generally you may be right, but those are not all perfect substitute goods. Maybe the burger places, but the others often don't view themselves in direct competition with non-similar fast food chains. Indirect competition sure. But if you really want that burger, a taco just won't always cut it. In short, Taco Bell goes up against Del Taco way more than they would McDonald's. But that is getting into a whole other discussion of consumer economics.

 

[[size/HUGE] fixed [/size]]

Come again?

Those are honest questions. You have answers? Do they go beyond your own personal, anecdotal experience?

Here's an alternative way to read my posts (which you don't quote in their entirety):
It's hard to generalize and say what workers' skills really are. Mostly, these exercises are distractions ... since the real issue is about the fair distribution of profits. So, do you think the fast food industry checks out in terms of fair distribution? Why? Why not?





But, for fun's sake, let's try to generalize the skill base that accumulates in a society engaged in heavily capitalized, factory-based labor. Is this a method for "coaching up" the skills of everybody concerned? If not everybody, then what percentage of the people involved in this kind of aggregate acquire skills that are applicable outside the factory? What about inside a different factory? Difficult questions, but history shows that the system survives because the majority of people work in positions where they remain replaceable... and it also suggests that this system needs organized workers and regulations in order to check its parasitic tendencies. There's plenty of "coaching down."

I'd say that people are given a highly specific skill (even if that skill is, at worst, mostly just a willingness to work in highly repetitive and thankless roles). If they can find a way to organize, and use these skills as leverage for better pay, then I applaud them. I'm certainly not going to judge the legitimacy of their organization/claims while either aggrandizing or ****ting on their skills -- especially while their bosses are making killer profits and they're in poverty. I prefer a simpler approach. I'm mostly just happy that people are organizing around labor rather than around empty ideological buzz statements.

(BTW, I also liked your total hipshot assumption that I have no personal exposure to factory-based labor. How did you come by that assumption?)

 

[LogGrad98]

Those are honest questions. You have answers? Do they go beyond your own personal, anecdotal experience?

Here's an alternative way to read my posts (which you don't quote in their entirety):
It's hard to generalize and say what workers' skills really are. Mostly, these exercises are distractions ... since the real issue is about the fair distribution of profits. So, do you think the fast food industry checks out in terms of fair distribution? Why? Why not?





But, for fun's sake, let's try to generalize the skill base that accumulates in a society engaged in heavily capitalized, factory-based labor. Is this a method for "coaching up" the skills of everybody concerned? If not everybody, then what percentage of the people involved in this kind of aggregate acquire skills that are applicable outside the factory? What about inside a different factory? Difficult questions, but history shows that the system survives because the majority of people work in positions where they remain replaceable... and it also suggests that this system needs organized workers and regulations in order to check its parasitic tendencies. There's plenty of "coaching down."

I'd say that people are given a highly specific skill (even if that skill is, at worst, mostly just a willingness to work in highly repetitive and thankless roles). If they can find a way to organize, and use these skills as leverage for better pay, then I applaud them. I'm certainly not going to judge the legitimacy of their organization/claims while either aggrandizing or ****ting on their skills -- especially while their bosses are making killer profits and they're in poverty. I prefer a simpler approach. I'm mostly just happy that people are organizing around labor rather than around empty ideological buzz statements.

(BTW, I also liked your total hipshot assumption that I have no personal exposure to factory-based labor. How did you come by that assumption?)

Much better response than your over-generalization from earlier. As for your last point, if you tend to make over-generalized statements about groups of people expect to be over-generalized yourself since that is how it comes across.

 

[gregbroncs]

I'll be the first to say that the gap between the ultra-rich and everyone else has got to stop. But I have a problem with this on two fronts. First, companies need to make a profit. And for many that means a healthy profit. If said companies are forced to pay many of their employees this proposed rate, we will see their prices either rise (and very possibly steeply) and/or these companies go under because they can no longer make a profit. My bigger problem is with the idea of paying uneducated, unskilled people what they think they deserve to do the most basic tasks. It reeks of the sense of entitlement that has run rampant through this country. I firmly believe that the minimum wage rate needs to go up, a lot even. But this increase is so beyond ridiculous.

All increasing minimum wage does in the long run is ruin the value of the dollar world wide. If you raise minimum wage then everything goes up in price. And the people making the new minimum wage start complaining again about not having enough money.

 

[[size/HUGE] fixed [/size]]

Much better response than your over-generalization from earlier. As for your last point, if you tend to make over-generalized statements about groups of people expect to be over-generalized yourself since that is how it comes across.

I asked questions and then gave a little context for the question. It's the nature of questions to touch on the general. Sorry you got carried away.

 

[gregbroncs]

https://www.dailykos.com/story/2012...alk-about-the-bottom-50-percent-for-a-minute#

"Between 1989 and 2010, the top 1 percent of the population went from holding 30.1 percent of the wealth to 34.5 percent, while the bottom 50 percent went from having 3 percent of the wealth to having just 1.1 percent. That's right: In 2010, 50 percent of Americans had 1.1 percent of the total net worth (PDF), according to the Congressional Research Service. The share of wealth held by the next 40 percent of people, up to the 90th percentile, had also dropped, from 29.9 percent to 24.3 percent. Put another way (and it's stunning however you look at it), 10 percent of people have 74.5 percent of the wealth."

Every year the rich get richer. Why not take some of that money and give it to the less fortunate? I think one way to do it is to increase the minimum wage.

Increasing minimum wage is not a fix. It's a temporary band aid. Companies will increase the price of products and services if they have to give more money to employees.

 

[Harambe]

Increasing minimum wage is not a fix. It's a temporary band aid. Companies will increase the price of products and services if they have to give more money to employees.

https://www.uh.edu/~adkugler/Card%26Krueger.pdf

Ahem.

Where there's more money, there's more money to be spent, which increases demand for product, which grows the need for more jobs. The above is a case study of fast food workers that proves it's good for business.

Don't want to read the whole study? I'm not surprised. Why would you bother doing that when you think you know the answer without research and case studies?

I'll just paste for you the findings and bold a couple parts.

Contrary to the central prediction of the textbook model of the minimum wage, but consistent witha number of recent studies based on cross-sectional time-series comparisons of affected and unaffected markets or employers, we find no evidence that the rise in New Jersey's minimum wage reduced employment at fast-food restaurants in the state. Regardless of whether we compare stores in New Jersey that were affected by the $5.05 minimum to stores in eastern Pennsylvania(where the minimum wage was constant at 4.25) or to stores in New Jersey that were initially paying $5.00/hour or more(and were largely unaffected by the new law), we find that the increase in minimum wage increased employment. ]We present a wide variety of alternative specifications to probe the robustness of this conclusion. None of the alternatives shows a negative employment effect. We also check our findings for the fast-food industry by comparing changes in teenage employment rates in New Jersey, Pennsylvania, and New York in the year following the increase in minimum wage. Again, these results point toward a relative increase in employment of low-wage workers in New Jersey. We also find no evidence that minimum-wage increases negatively affect the the number of McDonald's outlets opened in a state.

Finally, we find that prices of fast-food meals increased in New Jersey relative to Pennsylvania, suggesting that much of the burden of the minimum-wage rise was passed on to the consumers. Within New Jersey, however, we find no evidence that prices increased more in stores that were most affected by the minimum-wage rise. Taken as a whole, these findings are difficult to explain with the standard competitive model or with models in which employers face supply constraints(e.g., monopsony or equilibrium search models).

This part, too, helps to understand the economic climate of New Jersey:

A bill signed into law in November 1989 raised the federal minimum wage from $3.35/hour to $3.80 effective April 1 1990, with a further increase to $4.25/hour on April 1 1991. In early 1990 the New Jersey Legislature went one step further, enacting parallel increases in the state minimum wage for 1990 and 1991 and an increase to $5.05 per hour effective April 1 1992. The scheduled 1992 increase gave New Jersey the highest state minimum wage in the country and was strongly opposed by business leaders in the state.

So, in a nutshell, Jersey business owners **** themselves over an increase. Worried, scared, blah blah blah. But then it all happened.. 1992 went by... then 1993, and 1994.

Did it hurt their business?

F*** NO.

Did they cut back on labor?

F*** NO.

Did it stop them from expanding?

F*** NO.


So why the f*** are we arguing this?