Ready for the $9 Big Mac, for real?

[AlaskanAssassin]

Let's do some fun math:

A McDonalds Franchise costs between $1.2 and $2 million in initial franchise fees, signage, rent, etc. This is the store owner(s) initial investment. The average McDonalds in 2013 had $2.3 million in net sales, with a 10% profit margin pre-tax. That means that the average McDonalds owner walked away with $230,000 pre-tax for one franchise. I know this seams like quite a bit for many of us, that ROI isn't necessarily that high considering what they paid to purchase the franchise. Drastically raising minimum wage DOES make a major difference in the franchise owner's net profit. Adding $5-$7 per hour for each employee throughout the year is going to cost AT LEAST $230,000 for the year. So yeah, I think major price hikes would be in store.

 

[gregbroncs]

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.



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



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?

It did, as has been said, end up going to the consumer. Which increases the cost of stuff. Which eventually makes the minimum wage raise pointless. Because in the end they still have a minimum wage job that does not make as much as a real job. So all you have accomplished by raising the minimum wage is devaluing the dollar worldwide. Like I said raising the minimum wage is a band aid and your analysis showed that to be the case, because it did lead to a price increase that their new wages won't cover. Keep this in mind that increase was minimal. The one being discussed is more than a 100% increase from 7.25 to 15. So prices are unlikely to just incrementally rise this time but drastically. And not just for McDonald's labor but for the companies supplying them with their product as well. Meaning that the increase in their cost is not just their employees but also the raise in the price of the stuff they buy as their suppliers raise prices to cover these increases.

 

[Scat]

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)?

You are the last person I expected to make such an awesome argument against unions. There may be hope for you yet.

 

[franklin]

It did, as has been said, end up going to the consumer. Which increases the cost of stuff. Which eventually makes the minimum wage raise pointless. Because in the end they still have a minimum wage job that does not make as much as a real job. So all you have accomplished by raising the minimum wage is devaluing the dollar worldwide. Like I said raising the minimum wage is a band aid and your analysis showed that to be the case, because it did lead to a price increase that their new wages won't cover. Keep this in mind that increase was minimal. The one being discussed is more than a 100% increase from 7.25 to 15. So prices are unlikely to just incrementally rise this time but drastically. And not just for McDonald's labor but for the companies supplying them with their product as well. Meaning that the increase in their cost is not just their employees but also the raise in the price of the stuff they buy as their suppliers raise prices to cover these increases.

Lowering the cost of labor devalues the price of our output. You're making good points in general, but that one you got opposite.

 

[franklin]

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.



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



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?

You seem to be ignoring the labor vs automation angle. At some point, cheap labor is priced out of the market. This will forever be the case and the only way around this inevitable problem is redistribution at the federal level or restrictions on the amount of cheap labor available (i.e. anti-child labor laws). Whether that be jobs training programs or welfare or what have you is where the debate should, and does, lie.

 

[Harambe]

It did, as has been said, end up going to the consumer. Which increases the cost of stuff.

Keep following that thought..

Which people now have money to cover... which leads to more jobs.

 

[Harambe]

You seem to be ignoring the labor vs automation angle. At some point, cheap labor is priced out of the market. This will forever be the case and the only way around this inevitable problem is redistribution at the federal level or restrictions on the amount of cheap labor available (i.e. anti-child labor laws). Whether that be jobs training programs or welfare or what have you is where the debate should, and does, lie.

You kiss your mother with that mouth?

 

[GVC]

It did, as has been said, end up going to the consumer. Which increases the cost of stuff. Which eventually makes the minimum wage raise pointless. Because in the end they still have a minimum wage job that does not make as much as a real job. So all you have accomplished by raising the minimum wage is devaluing the dollar worldwide.

1. Why would raising the wage of a "small" subset of people raise all prices by the same amount? It's far more reasonable to believe that other prices will rise, on average, by less than the increase in the minimum wage, effectively giving those making the minimum wage more purchasing power.

2. How does this devalue the dollar worldwide?

 

[GVC]

You seem to be ignoring the labor vs automation angle. At some point, cheap labor is priced out of the market.

Really? Is there a relationship between automation and long-run unemployment?

The Card and Krueger paper is quite famous, but it doesn't represent the consensus because there isn't one. Still, that it's so difficult to come to a consensus on how minimum wage affects employment (even in the short-run) says something. I have no idea if it's a particularly good way to redistribute wealth (relative to other options), but small increases in the minimum wage does seem to accomplish that goal.

 

[One Brow]

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

https://www.dol.gov/whd/minwage/chart.htm

Going from $3.35 in 1989 to $4.25 in 1991 was a 26% jump. By comparison, going from $7.25 to $10.10 would be a 39% jump. It would probably be better to do this in stages.

 

[franklin]

I just read back through Richard Sutch's working paper where he suggested that higher minimum wages force teenagers out of the market (he cites a survey of 18 papers, all with negative measurements on teen employment) and encourages them to stay in school, thus increasing human capital.

I'm guessing the loss is more from lawn mowing type jobs since it doesn't take higher skills to work fast food, and yard care seems more sensitive to price changes both mentally (what we used to do it for seems to be a sticking point) and realistically (if you want $10 you can mow my lawn all you want but if you want $30/week then I'll buy a riding mower instead).

https://www.nber.org/papers/w16355.pdf

 

[franklin]

As to your reputation, ElRoach -- everyone knows redistribution in one form or another is absolutely necessary. If the economy isn't doing enough on its own then the govt. will. Socialism and capitalism lie on a spectrum and are not black or white absolutes. I wouldn't consider you a socialist, at least not from what I've read.

As soon as we squash the recent uprising of the Ayn Rand brainwashed ideologues we can get back to discussing how to redistribute by incentivizing the poor into working to better themselves. This get your government off my lawn so I can send them onto everyone elses overseas but refuse to pay for it mantra is running out of steam.

 

[LogGrad98]

As to your reputation, ElRoach -- everyone knows redistribution in one form or another is absolutely necessary. If the economy isn't doing enough on its own then the govt. will. Socialism and capitalism lie on a spectrum and are not black or white absolutes. I wouldn't consider you a socialist, at least not from what I've read.

As soon as we squash the recent uprising of the Ayn Rand brainwashed ideologues we can get back to discussing how to redistribute by incentivizing the poor into working to better themselves. This get your government off my lawn so I can send them onto everyone elses overseas but refuse to pay for it mantra is running out of steam.

But...but...objectivism... laissez-faire capitalism...self-regulating...Howard Roark.

 

[jope]

Either way, I think paying kids a "living wage" is a dumb idea. For one thing, it will disincetivize them from going to school or otherwise gaining higher skills. $15/hr will trap a lot of people in poverty.

definitely saw a lot of this at the grocery store i was a manager at (cashiers, and many other employees capped-out at ~$14)

 

[JAZZGASM]

It is all pretty simple. Raising minimum wage will in turn cause businesses to pass on increased costs to the consumer. Business owners will not be hurt. Prices will increase.

So who gets hurt? The middle class. Our wages will not increase, so our buying power will decrease. So all that work the middle class did to get a college degree, etc., will now be worth less as someone who did not graduate from high school just doubled their wage and makes close to what you do because they are "entitled" to it.

The super rich will stay rich, prices will increase keeping the minimum wagers in the same state, and the middle class will be hurt. How is this a solution?

 

[AlaskanAssassin]

It is all pretty simple. Raising minimum wage will in turn cause businesses to pass on increased costs to the consumer. Business owners will not be hurt. Prices will increase.

So who gets hurt? The middle class. Our wages will not increase, so our buying power will decrease. So all that work the middle class did to get a college degree, etc., will now be worth less as someone who did not graduate from high school just doubled their wage and makes close to what you do because they are "entitled" to it.

The super rich will stay rich, prices will increase keeping the minimum wagers in the same state, and the middle class will be hurt. How is this a solution?

Yup.

 

[fishonjazz]

It is all pretty simple. Raising minimum wage will in turn cause businesses to pass on increased costs to the consumer. Business owners will not be hurt. Prices will increase.

So who gets hurt? The middle class. Our wages will not increase, so our buying power will decrease. So all that work the middle class did to get a college degree, etc., will now be worth less as someone who did not graduate from high school just doubled their wage and makes close to what you do because they are "entitled" to it.

The super rich will stay rich, prices will increase keeping the minimum wagers in the same state, and the middle class will be hurt. How is this a solution?

Good post

 

[Saint Cy of JFC]

Y'all have some kind of labor economics degree or are you just spouting ******** out of your *******?

 

[Hantlers]

Maybe we should put in a maximum wage too.

 

[Stoked]

Y'all have some kind of labor economics degree or are you just spouting ******** out of your *******?

I tried to learn as I suck at this crap and got no real responses so I gave up on it.