Biden Wants 15/Hour Min Wage

[CJD]

(01-16-2021, 02:32 AM)BFritz21 Wrote: (2) Inflation: to compensate for the lowest wage being paid being nearly doubled, jobs that currently pay $15 per hour will have to up their pay for employees as well. This simply just leads to the dollar being worth less. (Say hello to $10 for a gallon of milk & $12 for a McDonald’s cheeseburger combo!)

The McDonald's cheeseburger combo example is interesting. Let's explore that a little bit.

Let's say the average staffing is 6 people working minimum wage or near minimum wage on any given shift. That means that you're paying ~44 dollars an hour for your daily operation (I know that they may amp it up to 8 or even 10 people during busy periods, but I think 6 people is your standard staffing, with skeleton staffs of 3 or 4 operating in non-peak hours assuming it didn't change drastically from when I worked in fast food ~15 years ago.)

Let's also say that a Big Mac combo costs about 7 dollars (that's how much it is per their app at my local McDonalds, this number obviously changes based on where you live to some extent.).

In order to break even on the cost of labor, at least 6.2 Big Mac combos must be sold per hour. This is not counting the cost of the ingredients and machinery to make those big macs, but we're going to be doing a cost delta here soon, so those costs will, for the most part, cancel out.

Now, let's say that the minimum wage is increased to 15 dollars an hour. The cost of wages for those 6 people will then increase to 90 dollars per hour. 

So, in order to break even on the cost of labor, that means that 12.86 Big Macs must be sold. Or, alternatively, those same 6.2 Big Macs must be sold at 14.52 rather than 7 dollars.

Now, this is assuming that the business only sells enough big macs to break even on the labor they employ, which is obviously silly. No McDonalds would staff 6 people per hour if they only sold 6 Big Macs and no McDonalds that only sold 6 big macs per hour would functionally operate today, regardless of the wages they pay their workers.

The more you increase the number of big macs sold per hour, the less you'd have to increase the cost of the Big Mac to account for the increase in wages of the workers. For example, if a McDonalds existed that sold, on average, 20 Big Macs per hour, they're currently raking in 140 dollars per hour in Big Mac sales. Subtract the current $43.50 for the minimum workers' wages and you have $96.50 in profits (disregarding the cost of ingredients). In order to make that same exact profit margin with a 15 dollar per hour minimum wage, the cost of those 20 Big Macs would only need to increase to $9.32 from $7.00.

If they average 30 Big Macs per hour, the increase would only need to be to $8.55. 40 Big Macs = $8.16 and so on.

Since the cost of labor has increased on a static level, the cost of the food will not increase at a proportional rate. No matter how many Big Macs those employees sell, they will only ever make 90 dollars per hour. So the more successful a McDonald's is, the lower they can price their food and remain mostly unaffected. Alternatively, they could make the food fractionally smaller to account for this change in wages (I don't know about you, but I know for a fact that Cadbury cream eggs have gotten smaller over the years but the price hasn't followed the same trendline. Hmmm....)

This article, published in 2015, estimates that increasing the minimum wage to 15 dollars per hour would increase the cost of a Big Mac by approximately 17 cents. 

Now, the interesting part of this whole thing is that when this article was written, a Big Mac cost $3.99 (this study examined only the Big Mac itself rather than the combo). They estimated that increasing the minimum wage increase would only increase it to $4.16.

Well, I just checked McDonald's app and, surprise surprise, the cost of a Big Mac right now is $4.19! And that's without the minimum wage increase!

These ***** are increasing the cost of their food to account for the inflation that has occurred in 5 years, but they have not had to increase the cost of the labor that generates those Big Macs! This is the utter absurdity of Capitalism. Prices will continue to go up and up and if you try to fight for higher wages for the poorest people, they'll threaten you with the increase in cost of goods that they're already doing anyway.


Don't let the corporations brain wash you into fighting your common man. People deserve a living wage. If it raises the price of a burger by a dollar, we'll survive. And, in the case that we do raise the minimum wage, the workers will too.