Author Topic: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles  (Read 10755 times)

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Offline jmyrlefuller

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https://abcnews.go.com/blogs/business/2013/07/price-of-big-mac-could-rise-by-68-cents-if-minimum-wage-doubles/

by Susanna Kim
July 31, 2013

As fast-food workers strike and protest in seven cities across the country this week for higher pay,  one estimate suggests that raising the minimum wage from $7.25  to $15 an hour could increase the cost of a  Big Mac by 68 cents.

Economists have long debated the economic effects of raising the minimum wage, but Arnobio Morelix, an undergraduate student at the University of Kansas School of Business, estimated how increasing pay to $15 an hour would affect prices at the most popular fast-food restaurant in the country, McDonald’s.

Morelix created financial models based on McDonald’s annual reports and investor data. He estimated that paying workers $15 an hour could raise the price of a Big Mac to $4.67 from $3.99, as first reported by Forbes. A Big Mac meal would jump to $6.66 from $5.69, and McDonald’s Dollar Menu would go to $1.17, Forbes reported.

Morelix could not be reached for comment.

(excerpt)

Oceander

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #1 on: August 01, 2013, 08:09:22 AM »
'Course, with the loss in sales McD's training costs and real estate management/maintenance costs would go down as well.

BTW, I don't buy this $0.68 bullsh*t.  What's the next step if you buy that?  This:  "what's a measly 68 cents compared to giving someone a 'living wage'?  Certainly you can't be opposed to doubling the minimum wage if it's only going to cost you an extra 68 cents to buy your favorite fast food, right?"


The proof is, in fact, right there in that same article from agit-prop mouthpiece ABC:
Quote
Another estimate suggests the price of a Big Mac would jump 5 cents, or 1 percent, if the minimum wage was raised to $10.50, according to a letter signed by 100 economists in favor of raising the U.S.  minimum wage.

“McDonald’s could cover fully half of the cost increase by raising the price of a Big Mac, on average, from $4  to $4.05,” the letter said. “The remaining half of the adjustment could come through small productivity gains or a slightly more equal distribution of companies’ total revenues.”

(Emphasis mine)


Aww, c'mon,it won't hurt a bit (but you may feel a little sick).

That this story is simply carrying water for the liberal/progressive political agenda is further buttressed by this mouthwash:
Quote
Amy Traub, senior policy analyst with progressive public policy organization Demos, favors raising the minimum wage for larger economic reasons, explaining that when low-wage workers have more money in their pockets, they tend to spend it immediately.

That smacks of the same b.s. the democrat party ran up as an excuse for increasing unemployment welfare benefits:  if you give them the money they'll spend it and create an economic "miracle" recovery.

What Ms. Traub - who clearly got her degrees (if she has any) from We Dun Edukamated U. - is indulging herself in, without being honest about it, is the functional equivalent of single-entry bookkeeping.  Ms. Traub, where, pray tell, have you accounted for the lost economic activity caused by the forcible reallocation of spending from other economic activities to fast food?  There are free lunches out there, Ms. Traub, and money doesn't grow on trees, so if people who buy fast food are forced to spend more of their money buying fast food, they necessarily have less money to spend on other goods and services, which necessarily means that those other businesses will suffer, they will earn less, and their employees will earn less, and they will have to start firing staff.

That's correct, Ms. Traub:  what you've conveniently ignored, or covered up, is the fact that there would be little or no net economic gain once all of the effects are taken into account because raising the minimum wage would put people out of work, to cut right down to the nub of it.  It is one thing entirely to establish a very low minimum wage as an outer limit on the otherwise unfettered bargaining positions of employer and employee - that usually has only small negative economic effects, principally because the losses occasioned by fewer hired people are generally offset by the additional transaction costs saved by taking off the table any negotiation over just how low an employee is willing to go to be an employee.  It is another thing entirely to establish a minimum wage that cuts so far up into the current pay scale that the foregone transaction costs - which are marginal costs, not fixed costs - can no longer offset the massive economic damage caused by the number of people who would no longer be employed as a result of that too-high minimum wage.
« Last Edit: August 01, 2013, 08:29:41 AM by Oceander »

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #2 on: August 01, 2013, 08:13:21 AM »
I have zero problem with paying 68 cents more for a Big Mac.

Provided they make it taste of something.  :whistle:
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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #3 on: August 01, 2013, 08:33:38 AM »
I have zero problem with paying 68 cents more for a Big Mac.

Provided they make it taste of something.  :whistle:

Then you shouldn't have a problem with increasing the minimum wage to, say, $30, should you?  After all, that would only result in a measly increase of $1.36 in the cost of a big mac - and just imagine how much more economic activity there would be with all those service industry employees flush with all that new-found cash!  It would be a virtuous cycle that lifted all boats!!!

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #4 on: August 01, 2013, 08:41:45 AM »
LOL!.....low information voters will think that buying a Big Mac covers the cost of the DOUBLING of the minimum wage.


Wait until they see the price of fries...breakfast items....drinks. 
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Offline EC

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #5 on: August 01, 2013, 09:11:30 AM »
Then you shouldn't have a problem with increasing the minimum wage to, say, $30, should you?  After all, that would only result in a measly increase of $1.36 in the cost of a big mac - and just imagine how much more economic activity there would be with all those service industry employees flush with all that new-found cash!  It would be a virtuous cycle that lifted all boats!!!

Bit of a jump  :laugh: I just wish they'd make Big Macs taste of something. They have a thing they call a Big Tasty here at the moment. Basically a bacon cheeseburger. I tried one and seriously thought about calling Trading Standards about false advertising.

You know as well as I that raising wages raises prices and you inevitably wind up with less spending power than you had before the wage increase. You are roughly my age - if I recall correctly - and have lived through at least 4 of those cycles so far, with the next one on the horizon.
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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #6 on: August 01, 2013, 09:21:18 AM »
Editorial in Chattanooga newspaper:

President Obama,

Welcome to Chattanooga, one of hundreds of cities throughout this great nation struggling to succeed in spite of your foolish policies that limit job creation, stifle economic growth and suffocate the entrepreneurial spirit.

Forgive us if you are not greeted with the same level of Southern hospitality that our area usually bestows on its distinguished guests. You see, we understand you are in town to share your umpteenth different job creation plan during your time in office. If it works as well as your other job creation programs, then thanks, but no thanks. We’d prefer you keep it to yourself.

That’s because your jobs creation plans so far have included a ridiculous government spending spree and punitive tax increase on job creators that were passed, as well as a minimum wage increase that, thankfully, was not. Economists — and regular folks with a basic understanding of math — understand that these are three of the most damaging policies imaginable when a country is mired in unemployment and starving for job growth. ...

Read the rest of "Take your jobs plan and shove it."  :dx1:
When God wants to judge a nation He gives them wicked rulers. (John Calvin)

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #7 on: August 01, 2013, 09:22:34 AM »
Bit of a jump  :laugh: I just wish they'd make Big Macs taste of something. They have a thing they call a Big Tasty here at the moment. Basically a bacon cheeseburger. I tried one and seriously thought about calling Trading Standards about false advertising.

You know as well as I that raising wages raises prices and you inevitably wind up with less spending power than you had before the wage increase. You are roughly my age - if I recall correctly - and have lived through at least 4 of those cycles so far, with the next one on the horizon.

Plus.....doubling the minimum wage doesn't translate into ALL that increase going into the employee's pocket as additional discretionary spending.

The withholding taxes and FICA taxes and state taxes will grab 'their share'.
"It aint what you don't know that kills you.  It's what you know that aint so!" ...Theodore Sturgeon

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #8 on: August 01, 2013, 09:26:02 AM »
I actually wouldn't mind if the minimum wage was increased.....in specific areas where the cost-of-living is much higher.

Understanding that minimum wage positions are usually for young people entering the workplace....it's not true in this economy.

you cannot survive on $7.25 per hour anyplace in the Washington, DC region.  Not if you're paying for rent, utilities, food, gas, etc..

"rent" becomes "board" because your apartment/house is now just a room or basement.
"It aint what you don't know that kills you.  It's what you know that aint so!" ...Theodore Sturgeon

"Journalism is about covering the news.  With a pillow.  Until it stops moving."    - David Burge (Iowahawk)

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Offline Rapunzel

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #9 on: August 01, 2013, 06:26:34 PM »
Heck, if I could make $15, $20 or $30 an hour flipping burgers why am I putting in the long hours doing something that requires a brain?

Another thing... wait until these entry-level burger-flippers find out their hours are being cut thanks to Obamacare and they will be making LESS money.

At any rate, this is all about the unions finally (they hope) getting a foothold in the food industry.. they need this because their numbers keep dropping as more and more of their former jobs are being sent overseas for cheaper labor.
�The time is now near at hand which must probably determine, whether Americans are to be, Freemen, or Slaves.� G Washington July 2, 1776

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #10 on: August 01, 2013, 06:57:31 PM »
At any rate, this is all about the unions finally (they hope) getting a foothold in the food industry.. they need this because their numbers keep dropping as more and more of their former jobs are being sent overseas for cheaper labor.
Obama pretty much has crapped out heavy industry, so the unions representing coal miners, steelworkers, and the like are SOL. All that's left is SEIU, which already has a toehold on certain segments of the food service industry. I worked for one company where most of the cooks were SEIU-represented. What they got out of it was a top wage of $10 per hour (for people with many years' experience), some of which they then had to fork over for union dues. Thanks for nuttin'!
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Offline jmyrlefuller

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #11 on: August 02, 2013, 11:30:51 AM »
UPDATE:

https://www.huffingtonpost.com/2013/07/29/mcdonalds-salaries_n_3672006.html?utm_hp_ref=tw

On Monday, The Huffington Post published a story entitled "Doubling McDonald's Salaries Would Cause Your Big Mac To Cost Just 68¢ More." HuffPost has since learned that the research used as the basis of the story contains significant errors that cast doubts on its claims. This story has replaced the one originally published in this space.

The story drew on data presented by Arnobio Morelix, an undergraduate student from The University Of Kansas who identified himself as a researcher for the school. In an interview, Morelix told the HuffPost that only 17.1 percent of McDonald's revenue goes toward salaries and benefits, meaning that for every dollar McDonald's earns, a little more than 17 cents goes toward the income and benefits of its employees.

However, as the Columbia Journalism Review subsequently noted, Morelix's analysis only takes into account the payroll and employee benefits of McDonald's company-operated stores while excluding franchise businesses. Prior to publication, HuffPost asked Morelix if his analysis included franchises and he said it did. He later conceded it did not. McDonald's franchises make up more than 80 percent of McDonald's restaurants worldwide. This means that a majority of the payroll and employee benefits of McDonald's workers are not included in Morelix's findings.

A typical fast-food restaurant spends 30 to 35 percent of its income on labor, according to a recent release from the Employment Policies Institute, a research organization whose work is often cited by those who argue against increasing the minimum wage. The institute estimates that small-business owners who run McDonald's franchises spend about a third of their income on wages, which would mean the price of a Big Mac would go up by $1.28 to $5.27.

A doubling of wages at McDonald's would almost certainly involve some layoffs, asserts Dean Baker, co-director of the Center for Economic and Policy Research and a HuffPost blogger. At the same time, more workers would stay in their jobs longer, Baker added.

Experts generally assume that roughly one-third of the cost of increased wages gets passed on to consumers, with much of the rest of cutting into profits, Baker said. Regardless, McDonald’s is so vast and lucrative that it could easily survive a major wage increase, Baker added.

“The idea that it’d put McDonald’s out of business, there’d be no way,” said Baker.

By the reckoning of Bonnie Riggs, a restaurant industry analyst at market information and advisory firm the NPD Group, a doubling of wages for all McDonald's workers is "not even in the realm of feasibility." With fewer and fewer Americans eating out at restaurants due to factors like the payroll tax hike and increases in gas prices, Riggs said restaurants like McDonald's are trying to discount prices as much as possible to get customers through the door. This means the company's profit margins could not withstand a labor cost increase of this magnitude, she added.

Offline Scottftlc

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #12 on: August 02, 2013, 11:33:02 AM »
“The idea that it’d put McDonald’s out of business, there’d be no way,” said Baker."

Yeah, Detroit died overnight too.
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Offline jmyrlefuller

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #13 on: August 02, 2013, 12:32:37 PM »
The other thing I notice about this "study" is that it assumes everything in the supply chain stays the same as well, which I doubt is the case. The meatpackers and farm hands that process the food before it gets sent to McD's and other fast-food chains are also relatively low-wage labor who would also be affected, thus driving prices upward even further.
« Last Edit: August 02, 2013, 12:32:59 PM by jmyrlefuller »

Offline SouthTexas

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #14 on: August 02, 2013, 12:48:27 PM »
I have zero problem with paying 68 cents more for a Big Mac.

Provided they make it taste of something.  :whistle:

I think it tastes good, I just can't digest it anymore.

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #15 on: August 02, 2013, 12:58:06 PM »
It's not about McDonald's, it's about every restaurant. Labor is usually closer to 30% than 17% for most in the industry. Add food costs (~30%), overhead (utilities, cleaning, pest control, supplies, crockery, rent, maintenance, insurance) of at least 35%, and you're looking at barely a 5% profit - in a good year.
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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #16 on: August 02, 2013, 03:19:40 PM »
Those are pretty solid percentages for any business.
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Offline silverhair

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #17 on: August 04, 2013, 08:41:17 PM »
Plus.....doubling the minimum wage doesn't translate into ALL that increase going into the employee's pocket as additional discretionary spending.

The withholding taxes and FICA taxes and state taxes will grab 'their share'.

That, plus reducing the number of low wage workers who need government assistance to get by, could reduce the debt.

Offline Rapunzel

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #18 on: August 04, 2013, 09:27:30 PM »
Did anyone watch Huckabee tonight?  The entire hour was on jobs.  One segment had a black woman who claimed she used to sell cosmetics and lost the "well-paying" job and had to settle for McDonalds... sooooooo Huckabee asks her. If you get a raise from $7.50 an hour to $8.00 an hour but have to pay union dues won't you actually be going backwards?  She says... nope that will be great.  Then Tamara Holder one of the biggest libs on Fox (lawyer from Chicago Hannity loves to have on his show) goes on about how being unionized will force these companies to pay for health insurance for the workers.

Frankly all I could see was a) total lack of financial clarity on the part of Holder or the black woman and b) a worker spitting in the food (as we've seen all too often) and the company being unable to fire them because they are unionized.

BTW Mike Rowe was on the show and his segment was very, very interesting.
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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #19 on: August 04, 2013, 09:59:04 PM »
Do any of these people realize what unions have done to the automobile industry or Detroit?  Econ 101 should be taught in junior high school -- if such a thing still exists.

Offline Rapunzel

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #20 on: August 04, 2013, 11:02:20 PM »
Do any of these people realize what unions have done to the automobile industry or Detroit?  Econ 101 should be taught in junior high school -- if such a thing still exists.

In "my day" I had to take - and pass - College Econ 101 in order to get my high school diploma.  We also were required to take civics classes.  Today they allow kids to take things like "black studies" instead of American History.... they are teaching Gay ed... etc... our schools are a disgrace..... Home school!!!
�The time is now near at hand which must probably determine, whether Americans are to be, Freemen, or Slaves.� G Washington July 2, 1776

Oceander

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #21 on: August 04, 2013, 11:15:31 PM »
The other thing I notice about this "study" is that it assumes everything in the supply chain stays the same as well, which I doubt is the case. The meatpackers and farm hands that process the food before it gets sent to McD's and other fast-food chains are also relatively low-wage labor who would also be affected, thus driving prices upward even further.

You've now proven that you're more intelligent than at least 99.99% of all liberals!

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #22 on: August 04, 2013, 11:22:57 PM »
Mainly off-tangent, but still slightly relevant:  I saw a clear sign that Obastardcare is already screwing the minimum wage crew:  a "Now Hiring" sign at a Burger King on Long Island that specified they were hiring for "up to 25 hours a week" - meaning that at least this BK in question is putting an iron-clad cap on employees' hours in order to keep part-timers from increasing BK's overhead expenses.  Gone are the days when someone could start with a part-time job and, through initiative and grit wrangle enough extra hours from the managers and other employees who wanted to take time off to patch together 40 (or more) hours a week.

In other words, Obastardcare has just taken another stepping-stone to self-reliance and freedom away from people on the bottom end of the economic ladder, and has permanently locked them into place at the bottom of the economic order.

Offline silverhair

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #23 on: August 04, 2013, 11:51:52 PM »
Do any of these people realize what unions have done to the automobile industry or Detroit?  Econ 101 should be taught in junior high school -- if such a thing still exists.

NUMMI proved otherwise.

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Re: Price of Big Mac Could Rise by 68 Cents If Minimum Wage Doubles
« Reply #24 on: August 04, 2013, 11:59:14 PM »
NUMMI proved otherwise.

I thought the joint venture between Toyota and GM ended when GM pulled out and Toyota realized a unionized work force in California was not going to be successful--ie turn a profit.