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Madness
Can we please stop posting videos of this silly old cow.
Let's break this out for a minute.
The average McDonalds serves 1,584 customers per day at an average meal check of $4.75 (2011 numbers). So $7,524 a day in sales. So the average store does $2.7 million a year in sales, out of which $918,000 is the cost of goods sold. Current crew payroll averages $540,000 a year, and the managers make another $108,000. Warren is talking about trebling crew payroll, which would make the crew average $1,620,000 per year. Managers are going to expect a bump as well, because you can't have fry cooks making more than managers, so let's say their pay doubles to $216,000 a year. Of course payroll taxes (currently $54,000 a year) also triple, so add another $162,000 to the tally.
So that's a total of $2.9 million just in COGS and labor to bring $2.7 million in the door. That's before all other overhead like rent, insurance, utilities, etc etc etc.
So either the Dollar Menu becomes the $5 Menu, or we're all eating a lot more horsemeat.
Source: http://www.burgerbusiness.com/wp-content/uploads/Janney_McD.jpg
Australia has about $18/hr minimum wage. McDonalds still copes by only paying half of it to 14yr olds, as juniors don't fall under the "living wage" category.
I imagine the same exemptions would be proposed.
Couldn't you also make the case that wages in Australia are higher due to the effect of Dutch Disease (not a full blown case)? In addition to COL, natural resources exports have to play a significant role in high wages.
I think that would play a part in explaining why the COL is so high, in that it might explain why the truck drivers at the mines are on $100k a year, and fast food joints near the mines have allegedly paid $50 an hour, but females in the city earning $32/hr in General Mills factories or checkout chicks on $22/hr aren't exactly the target employee of the mining industry, and the COBs and investors making money in the mines aren't necessarily spending it within our borders. And heaven knows the government is failing at taxing it. You've also got the effect of an oligopoly in many of our markets (2 major supermarkets, only 2 petrol refineries, 3 airlines, are immediate examples), and a very small population which means reduced economies of scale driving demands for higher margin.
However, Australia is unique in that part of it comes back to legal requirements (via Ex Parte H.V. McKay 1907 2 CAR 1, the Harvester case) for employees to pay a mandatory living wage (Ie: theoretically one man should be able to support for 2 kids and a wife on one salary). Coming back to the original point that was made however, McDonald's still has a dollar menu, and can still make margins with the higher wages, though Starbucks and Krispy Kremes seemed to struggle (Due to a whole host of other issues).
She can't be serious, right?
Goods have fallen in price. If minimum wages had grown to $22 per hour, the dollar menu would be the $5 menu as you said. You would get price inflation (a lot more than $0.04 on a $7.00 item), and the US would be even less competitive than it is.
She sounds a bit like a socialist - "where has the money gone? not to the workers." No, it has gone to the bourgeois capitalists. The proletariat must liberate the means of production! LOL
Here's the other issue: if MCD workers cost $22 per hour, do you think there would be MCD workers? Hell no. Not sure what it would cost exactly, but they could probably automate the process for a lot less. The value of flipping burgers is not $22 per hour.
That is why you have stagnant wages in some professions. Teaching a classroom of 3rd graders is as valuable today as it was 30 years ago. So is plumbing. And nursing. But not burger flipping - the market for unskilled labor has weakened due to outsourcing and improved automation. As the domestic demand for those jobs has fallen, the supply has not fallen as quickly - maybe even growing due to illegal immigration. So that's why your MCD employee will not see $22 per hour wages anytime soon.
Don't first year associates at the big 4 bill at like 23 bucks an hour? How does it feel to be considered equals of burger flippers?
$22 an hour at 40 hours / week, 50 weeks / year gets you to $44k. Which is about the median income for the US, and well above the average starting salary of a college grad.
People were saying "If $10 per hour is good, why not $20?" as an argument against raising the minimum wage...and here's Warren, acting like $22 is reasonable. Almost as bad as Pelosi. And that's saying something. These people are the reason I can't vote Democrat - they are to the Democrat Party what Santorum is to the GOP.
Massachusetts elected this wacko. I still love how government tells a private business what they have to pay someone. This is just further motivation to not hire Americans and if you have to operate here, to automate.
http://foodbeast.com/content/2012/05/04/will-this-burger-making-robot-c…
A machine that makes hamburgers!!
I can see an LA riot-style luddite rebellion going down because of this. I'm worried.
$22 an hour?
TOTALLY. WORTH. IT.
OMFG it's been way too long.
Okie silly dilly dokie-o, I'm an idiot!
I don't know much about economics (besides what I had to memorize for CFA) so I would appreciate it if you guys would clear this up for me.
Warren reasons that since worker productivity has jumped, the minimum wage should to. But couldn't labor productivity have gone up simply because of decisions that management made (or because of technology improvements)? And since when is pay determined by worker productivity? Isn't that set by the supply and demand for labor?
All kinds of things factor into increased productivity. The thing Warren fails to understand or acknowledge is market pricing. There is a reason low skilled jobs pay what they do. Pay everyone $22.00 an hour and it will drive automation and price increases.
Honestly, it would be the biggest driver of invention you could imagine. And once that genie is out of the bottle you can kiss minimum wage jobs goodbye.
God, can you imagine it? My Cosi order never getting fucked up. Machines effortlessly making that tasty bread with perfection, knowing the freshness and when to remake it. Never talking on their phone, calling in sick, being rude. Heaven!
http://www.dailypaul.com/181800/out-of-work-go-to-north-dakota-theres-a…
McDonalds pays more than the minimum wage in a bunch of areas where you need to pay higher to attract labor. Same with Australia.
Her arguments are specious, she fails to see how this will hurt lower income individuals, more automation, higher costs for labor intensive goods (daycare for example). If you like to go somewhere that is a sit down full service restaurant the cost will be much higher.
No one's posted that she wasn't advocating a $22/hr minimum wage. She was just saying that's what it would be if it had kept up with productivity gains.
She actually said she wants to increase it to $10.10 over the next two years.
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