The McMyth of the McPoverty Calculator

posted at 7:01 pm on August 3, 2013 by Jazz Shaw

The Daily Beast has come up with what they surely must have thought was a brainstorm in the ongoing debate over a “living wage” in the United States, though what the end goal of the experiment is seems to be something of a mystery. In it, they posit a wonderful, sunshine and rainbow filled world where all of the workers at McDonald’s could take home significantly higher wages if only their mean old corporate taskmasters would simply raise the price of their products a bit. And in this offering – called The McPoverty Calculator – you get to join in on the fun and play along by entering an amount (in pennies) that you’d be willing to pay above the current cost for a Big Mac, and the tool helpfully translates that change into how much more the employees could earn. The pitch for it is just heart warming.

Paying cents more for a burger could mean big wage hikes for fast-food workers, many of whom live in poverty. So how much more would you pay for a Big Mac? How much more would you pay for a Big Mac if you knew the person serving it to you would be able to raise her children out of poverty?

This week has seen mass protests and job walk-outs across the fast-food industry, with employees from McDonald’s to Taco Bell demanding higher wages and better treatment. Some labor economists have said that a slight increase in the price of a burger could result in a big jump in wages—enough to raise the fortunes of thousands of $7.25-an-hour employees.

I actually stumbled across this article by way of Dr. Joyner at Outside the Beltway who decided to participate in the game.

The poll tells us that “The average price of a Big Mac is $4.56, and many fast-food workers make $7.25 an hour.” It then asks readers to select how many more cents they’d be willing to pay. According to the calculator, paying an additional 5 cents for the burger would bring workers to $8.03 an hour, or $16,696.79 a year–still below the poverty line. Still, that’s a pretty massive pay hike for a measly nickel a burger. Paying an additional 10 cents brings workers to $9.56 an hour, or $19,885.60–just above the poverty line. My initial answer, 20 cents*, almost doubles their salary to $14.12 an hour, a whopping $29,263.75 a year. That’s actually a decent wage in most of the country.

Joyner then gets to a bit of a caveat which he seems to play off as a lot less significant than I believe it to be.

Now, it’s not a slam dunk that people would really pay an additional 20 cents for the burger in practice, especially if competitors were holding the line on prices. But I suspect they would; for most of us, it’s simply a negligible amount. And, of course, there’s no guarantee that all of the increased revenue would go to the employees.

I’m sorry, but that’s kind of the whole point. Both of those issues would seem pivotal to the discussion, and not in favor of the premise put forward by the poll. (Not to mention missing the larger point entirely.) Let’s leave aside for the moment the problems inherent in having the federal government put its thumb on the scale of wages even further. The prices that McDonald’s (and their competitors) charge are where they are for a reason, and a lot of marketing and research work goes into it. Sure, plenty of sympathetic folks will say that they’d be willing to pay 20 cents more for for any of the products. But what happens to McDonald’s when their dollar menu suddenly becomes their “Dollar Twenty” menu? Joyner’s caveat about other competitors holding the line isn’t theoretical. It’s a given. They’d probably throw a party on the day McDonald’s announced it.

As for the money going to the employees, where to even begin? McDonald’s is charging what they charge because it is the most they can get away with charging without losing trade and delivering the maximum return to their shareholders which can be managed. If there was some magical way under their current business model and conditions to charge 20 cents more and remain competitive, they’d already be charging 20 cents more. And while that may not sound like a lot, they serve 23 million meals per day in the United States alone. If they could bring in another $4.6M dollars per day, their shareholders would be ecstatic. And not because the money was being handed out to the workers.

Finally, the wages they pay follow the same laws as the prices they charge. They pay their workers the least they can, either by law or because paying less would not attract the number of employees they require for operations. Just like every other business in the country. One point which seems to confuse the social justice battalion is this idea they seem to be stuck on that there is some sort of obligation or social contract which states that industry is obligated or intended to create jobs, and good paying ones at that. The fact is, job creation was never one of the driving factors in the evolution of industry. It was only a happy side effect. Business sees employees as expensive, problematic components in the corporate machine. (Sorry to be so harsh.) They get sick, they complain, they want raises, they make mistakes… robots are far preferable. But robots can’t do everything. One of the goals of any modern business model, I’m sad to say, is to reduce the number of employees to the minimum possible. All of these things render the McPoverty calculator pretty much irrelevant.


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Raise wages for all and watch prices rise to match incomes.

Inevitable, any gains are too short lived to measure, and back to square one you go libtards.

Difficultas_Est_Imperium on August 3, 2013 at 7:06 PM

One of the goals of any modern business model, I’m sad to say, is to reduce the number of employees to the minimum possible.

And if McDonald’s raises wage to a “living” level, they’ll reduce the number of jobs to control costs. Smart move, progressives.

irishspy on August 3, 2013 at 7:06 PM

in it, they posit a wonderful, sunshine and rainbow filled world where all of the workers at McDonald’s could take home significantly higher wages if only their mean old corporate taskmasters would simply raise the price of their products a bit.
===============================================

Smacks of McScrewing Sumpins!!
(sarc)

canopfor on August 3, 2013 at 7:08 PM

How much more would you pay for a Big Mac if you knew the person serving it to you would be able to raise her children out of poverty?

She makes more than $7.50 on public assistance.

ladyingray on August 3, 2013 at 7:09 PM

Keep the change

Keep the change is a trig troofer.

SparkPlug on August 3, 2013 at 7:09 PM

This week has seen mass protests and job walk-outs across the fast-food industry
, with employees from McDonald’s to Taco Bell demanding higher wages and better treatment.
============================================

We go back in Political time:

Obama Town Hall Julio’s McDonalds Question
******************************************

Uploaded on Feb 10, 2009

Obama town hall in Ft Myers question from McDonalds 4 year employee
===================================================================

http://www.youtube.com/watch?v=TptsP4ryido

canopfor on August 3, 2013 at 7:14 PM

Good point on the automation part. Just noticed yesterday at a McD’s drivethrough that they have an automated soda machine. Pulls a cup, fills it with the appropriate beverage, and rolls around to the front. Looked like it gets the commands from the register. I’m sure that reduced manpower requirements some.

logdogsmith on August 3, 2013 at 7:14 PM

Put up a tip jar.

Count to 10 on August 3, 2013 at 7:16 PM

I don’t eat McDonald’s so it would take a reduction in price to entice me to change that. Does that mean I get to put in a negative amount and reduce worker’s wages?

Rip Ford on August 3, 2013 at 7:18 PM

Good point on the automation part. Just noticed yesterday at a McD’s drivethrough that they have an automated soda machine. Pulls a cup, fills it with the appropriate beverage, and rolls around to the front. Looked like it gets the commands from the register. I’m sure that reduced manpower requirements some.

logdogsmith on August 3, 2013 at 7:14 PM

Do they have a McD’s ap yet? You know, place your order at the nearest restaurant with your smart phone before you pull up? No more trying to communicate over bad intercoms?

Count to 10 on August 3, 2013 at 7:24 PM

Time to automate the front line into “order kiosks”….pay ‘em once

cthulhu on August 3, 2013 at 7:25 PM

The average price of a Big Mac is $4.56

The last time I got one, which was a few years ago, it was around $2. What are they averaging in, Tokyo and France?

VorDaj on August 3, 2013 at 7:29 PM

Heck, Chipotle has an ap.
Didn’t they used to be owned by McDonald’s?

Count to 10 on August 3, 2013 at 7:30 PM

This week has seen mass protests and job walk-outs across the fast-food industry, with employees from McDonald’s to Taco Bell demanding higher wages and better treatment.

And these huge mass protests occurred where exactly? Didn’t hear about a single one in the entire state of Kentucky.

Johnnyreb on August 3, 2013 at 7:30 PM

Time to automate the front line into “order kiosks”….pay ‘em once

cthulhu on August 3, 2013 at 7:25 PM

At most McDonalds (and probably BK, Wendys, etc) the cash registers are in reality just kiosks that the employee uses to key in your order. My wife worked at McD’s for a couple months between jobs, and she was aghast at this fact: Those machines have pics/names of the food product and not prices, etc. The employee simply presses the touch screen for the requested items, presses any other buttons such as large.small.etc and then hits the total button. Voila! Tells her the amount of your order, you pay and she hands you back the change.

In real life, it would be easier to just turn the machines around to eliminate the actual person taking the order and add a cash slot for bills beside the card reader, and a tray to slide you back your change. The guy who owns three local franchises says that the only reason he doesn’t do that is because folks LIKE talking to a real person.

FWIW, my local grocery store has replaced 4 of it’s check0out aisles with self-check aisles. I use it all the time because it’s easy to use. The only drawback is you have to call a manager/associate type over to key in a release code for alcohol (and tobacco), but other than that, it’s great.

TKindred on August 3, 2013 at 7:38 PM

There are a lot of rich liberals out there. Why don’t they buy these fast food joints and they can pay their employees $20 per hour if they want. You know these kind of jobs were meant for teenagers and such, not for raising a family on. Thanks Obama!

rich8450 on August 3, 2013 at 7:38 PM

Fast food used to be a place where high school and college students used to work for their spending money and to learn to work.

Now it has been taken over by non-skilled older workers.

It wasn’t never meant to be a long term job.

One of the reasons teen unemployment is so high.

Barred on August 3, 2013 at 7:43 PM

McDonald’s restaurants are preparing to replace cashiers with touch screen computers at terminals where customers will be able to order up their hamburgers and fries and pay with credit cards.
About 7,000 of the fast food franchise’s locations in the United Kingdom will be fitted with the touch screen technology, which aims to make the McDonald’s experience more convenient and accommodating.

-2011 article

Keep pushing it. The day is coming.

CW on August 3, 2013 at 7:43 PM

protest walkouts in: St.Louis, Kansas City, Milwaukee, Detroit & Flint MI.

Obviously made a huge impression .. not.
/.

CaveatEmpty on August 3, 2013 at 7:45 PM

One of the reasons teen unemployment is so high.

Barred on August 3, 2013 at 7:43 PM

I will say it is nice sometimes to have an older worker more intent on helping me than texting, flirting, or goofing.

CW on August 3, 2013 at 7:45 PM

Burger King in central Munich had touchscreens with credit card payment already a couple of years ago. It sure helps solve the problem of communication there, where many of the people working there only sort-of have a handle on German (first languages usually being Polish, Turkish, or Arabic) and really have a terrible time with all the tourists who depend on English to get around.

Katja on August 3, 2013 at 7:53 PM

TKindred:
“it would be easier to just turn the machines around to eliminate the actual person taking the order”

That’s what Sheetz does. The machine gives you a receipt and you still have to go to the cashier to pay. They even have the kiosks out at the pumps so you can put your order in while you’re pumping gas.

yongoro on August 3, 2013 at 7:54 PM

CW on August 3, 2013 at 7:45 PM

Oh, I agree you probably get better service. But it was a place to learn work ethics, and they definitly need to learn those skills.

A good manager wouldn’t put up with that crap.

Barred on August 3, 2013 at 7:55 PM

If a McMansion is a cheaper version of a mansion, why shouldn’t a McWage be a cheaper version of a wage? The very existence of the ‘Mc-’ meme should be a huge clue to these people.

Stop trying to raise a family at a job that was never intended to support more than one person.

James on August 3, 2013 at 7:57 PM

If a McMansion is a cheaper version of a mansion, why shouldn’t a McWage be a cheaper version of a wage? The very existence of the ‘Mc-’ meme should be a huge clue to these people.

Stop trying to raise a family at a job that was never intended to support more than one person.

James on August 3, 2013 at 7:57 PM

The problem is Obama’s economy is made of McJobs.

CW on August 3, 2013 at 8:03 PM

“You want fries with that” … prompted a thought — seems there’s an inordinate number of MA & PhDs working those registers already.

Perhaps borrow a page from the Education Industry; teachers with advanced degrees tend to collect better benefits — why not burger-flippers? Call it an *Incentive Program*. WIN!!

/Better Educated Workers indeed, eh OBarky ?
/.

CaveatEmpty on August 3, 2013 at 8:04 PM

This is a little OT, but man that burger in the pic looks good. I love burgers.

Jules: Hamburgers! The cornerstone of any nutritious breakfast. What kind of hamburgers?

Brett: Ch-cheeseburgers.

Jules: No, no no, where’d you get ‘em? McDonalds? Wendy’s? Jack in the Box? Where?

Brett: Big Kahuna Burger.

Jules: Big Kahuna Burger. That’s that Hawaiian burger joint. I hear they got some tasty burgers. I ain’t never had one myself. How are they?

Brett: They’re good.

Jules: Mind if I try one of yours? This is yours here, right?

Jules: Mmm-mmmm. That is a tasty burger. Vincent, ever have a Big Kahuna Burger?

Jules: Wanna bite? They’re real tasty.

Vincent: Ain’t hungry.

Jules: Well, if you like burgers give ‘em a try sometime. I can’t usually get ‘em myself because my girlfriend’s a vegitarian which pretty much makes me a vegitarian. But I do love the taste of a good burger. Mm-mm-mm. You know what they call a Quarter Pounder with cheese in France?

Brett: No.

Jules: Tell ‘em, Vincent.

Vincent: A Royale with cheese.

Jules: A Royale with cheese! You know why they call it that?

Brett: Because of the metric system?

Jules: Check out the big brain on Brett! You’re a smart mother***ker. That’s right. The metric system. What’s in this?

Brett: Sprite.

Jules: Sprite, good. You mind if I have some of your tasty beverage to wash this down?

Brett: Go right ahead.

Jules: Ah, hit the spot.

WhatSlushfund on August 3, 2013 at 8:06 PM

For You Hot Air Crew Members in HarmsWay in Colorado:

Tornado sirens are sounding in Erie, Colorado, for a tornado warning – @BoulderOEM

1 min ago by editor
=======================

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canopfor on August 3, 2013 at 8:08 PM

I think they should quit being cheap and raise the minimum wage to $100 hour. (with 1 month a year paid vacations)

It’s fun spending other people’s money, ain’t it?

myiq2xu on August 3, 2013 at 8:15 PM

It isn’t about a “living wage” but about “being for the little people” perception propaganda.

They know it doesn’t do squadoosh, but it plays well in political theater.

That’s all it is. Manipulation of those that have weak economic educations.

ProfShadow on August 3, 2013 at 8:16 PM

How much more would I be willing to pay for striking burger flippers to get wages above the going market rate: $0.00000000000.

Employees don’t get to set their wages. Employers do. Employees get to leave for a higher paying job.

Prosperity comes from competitive labor markets within free enterprise.

petefrt on August 3, 2013 at 8:17 PM

Brett: Sprite.

Jules: Sprite, good. You mind if I have some of your tasty beverage to wash this down?

Brett: Go right ahead.

Jules: Ah, hit the spot.

WhatSlushfund on August 3, 2013 at 8:06 PM

WhatSlushfund:

Otay,it didn’t ring any bells,so I googled it,LOL,Pulp Fiction,
haha,great catch!————-:O
================================

Pulp Fiction Scene – “Hamburgers”
*********************************

Uploaded on Jan 7, 2007

Jules and Vincent in the infamous Pulp Fiction scene – Hamburger’s
==================================================================

http://www.youtube.com/watch?v=PE9Qm8mShik

canopfor on August 3, 2013 at 8:18 PM

The amount extra I would pay is a negative number. Seriously, the grocery store is cheaper and easier and much better. But for some reason people would rather drive and wait in line than wash dishes.

Fenris on August 3, 2013 at 8:22 PM

canopfor on August 3, 2013 at 8:18 PM

Thanks for hunting that out!!

:)

Scrumpy on August 3, 2013 at 8:27 PM

many of whom live in poverty

My family and I lived in poverty for about 8.5 years. My first stint,4 years,in the Air Force followed by 4.5 in college to get my science degrees. If they use these jobs to better themselves then the poverty will get them focused on what really matters. Getting out of it. Fast food jobs don’t exist for you to make a career out of. They should be entry level jobs to teach you basic job skills like coming to work on time and how to interact well with those outside your peer group. We shouldn’t even be having this conversation except that the “recovery” is producing mostly part time jobs now.

chemman on August 3, 2013 at 8:29 PM

But for some reason people would rather drive and wait in line than wash dishes.

For most of my adult life I depended on $.99/Dollar/Value menus at fast food joints for lunch and/or dinner while I was working or going to school. Lunch at Jack was $2.13 for 2 tacos and a Jr. Bacon Cheeseburger. That includes tax.

Ever come home tired from a full day at work to a houseful of hungry kids? Fast food is quick, easy and cheap.

myiq2xu on August 3, 2013 at 8:31 PM

I can think of only a few people who make a career of flipping burgers.

http://www.youtube.com/watch?v=guQzlA86BJA

http://www.metacafe.com/watch/hl-4961154/saturday_night_live_the_olympia_restaurant_season_3/

BuckeyeSam on August 3, 2013 at 8:34 PM

delivering the maximum return to their shareholders which can be managed.

This is what they willingly ignore – where this money goes. This is where pensions are parked and investments are made and the economy grows. It all doesn’t go into Scrooge McDuck’s wallet.

Whenever some liberal bozo starts whining at me about those greedy corporations I always immediately ask “where’s your pension parked”?

It’s fun! I’d recommend trying it to the next halfwit that trots out this BS.

kim roy on August 3, 2013 at 8:34 PM

How does it work for the employees if I’m willing to pay double the price for a Big Mac but cut back to 10% of my usual visits?

I still want to know why kids (up to age 26 per insurance tables) who have almost no experience of value to an employer and are a dime a dozen in the labor market should be making upwards of $30k a year.

Dusty on August 3, 2013 at 8:38 PM

myiq2xu on August 3, 2013 at 8:31 PM

A can of baked beans is quicker easier cheaper and generally more nutritious. Canned fruit is cheap. Rice is cheap. Spaghetti is cheap. These things require, at the most, boiling water or microwaving in the same dish you’ll be serving it in. And less time than driving to a fast food joint.

Fenris on August 3, 2013 at 8:39 PM

The problem is Obama’s economy is made of McJobs.

CW on August 3, 2013 at 8:03 PM

I’d move these thoughts a little further and say the Obama’s intent is to turn people into McPeople where there is no incentive or desire to do anything more than “just survive”, whether it be on the government teat or some cr*p job.

kim roy on August 3, 2013 at 8:39 PM

The great thing about this theory is that, unlike say global warming theory, it can be tested relatively easily. All these wage doubling hacks have to do is find one franchisee, who typically operate multiple restaurants, to pledge to raise all their employees pay to $15/hr and let’s see what happens. You don’t have to convince McDonald’s to do it across the whole corporation everywhere. Even better would be for a bunch of these ‘do gooders’ to band together and buy some franchises and run them the way they think they should be run. Come on geniuses, show the world how it’s done.

mdavt on August 3, 2013 at 8:44 PM

WhatSlushfund on August 3, 2013 at 8:06 PM

“English, m****rf****r! Do you speak it?”

Bang!

Solaratov on August 3, 2013 at 8:57 PM

Excuse the O/T interruption, but I think that there is too much salsa in the scrambled eggs that Nancy Pelosi calls her brain. Laugh at her gibberish about the debt ceiling, for example.
http://dailycaller.com/2013/08/02/pelosi-obama-one-of-the-most-practically-non-partisan-presidents/

onlineanalyst on August 3, 2013 at 8:58 PM

McDonalds served Kangaroo meat in third world nations back in the 1970′s. I do not buy their food anyways. So no point in calculating what more I would be willing to pay.

But let us look at the calculator…
add one penny and they gain 6 cents on the hour.
Add two pennies and now they are getting 18 cents an hour extra.
add three pennies and they get 35 cents an hour more…

It should go 6, 12, 18, but it is using some exponential calculation that is not reality.

astonerii on August 3, 2013 at 9:07 PM

Frankly, most McD employees i have interacted with appear to be overpaid as it is.

TexAz on August 3, 2013 at 9:10 PM

Now according to the numbers. McDonalds claims it sells 47 million meals a day. It has 47,000 restaurants. It has 1.6 million employees covering lets say a 24 hour period. So, about 11 employees for each 8 hour shift.
Each restaurant sells an average 1000 meals a day, so lets break that down to 350 meals a shift.
350 times a penny is an extra $3.50 extra for 11 employees for 8 hours work. Or 4 cents extra per hour per penny increase in price. Neglecting that anyone would actually cut back on buying any meals costing likely more than the gained wages. So $.20 extra per meal works out to a pay increase of… 80 cents an hour.
I make much higher than median wages and I watch my pennies. Poor people are the predominant customer of McDonalds.
Now, this is for the average McDonalds by the way. If you work at a sub optimal McDonalds you might not sell 300 meals in a whole day and if you worked at an optimal one you might sell 3000 in a shift.

astonerii on August 3, 2013 at 9:19 PM

I think their argument goes something like this:

We who personally despise McDonalds; believe it’s destroying the rain forest; believe it’s nothing but chemically engineered poison; who believe in holistic, organic, whole foods; who believe such fast food restaurants are a major cause of obesity and diabetes in poor communities; who believe such fast food places should be banned in poor neighborhoods; and wouldn’t eat that crap if you paid them a thousand dollars, are willing to pay more (for the hamburgers they never actually buy) so that employees (they never actually come face-to-face with) might be able to eek out a living wage.

Yeah. That’ll work.

HakerA on August 3, 2013 at 9:23 PM

I don’t accept the analysis/speculation that paying 20 cents more per Big Mac more would enable McD double wages paid even assuming it is all passed on the employees.

I think the analysis is almost certainly very flawed. Show me the numbers, in detail.

farsighted on August 3, 2013 at 9:59 PM

Of course those idiot statists never figure out that if employee wages go up; unemployment insurance and Social Security payments FROM THE EMPLOYER also go up.

So that 20 cent bump is going to be a lot more to cover the added costs.

Looks like the 20 cent bump will be more like a 30-40 cent bump.

GarandFan on August 3, 2013 at 10:02 PM

farsighted on August 3, 2013 at 9:59 PM

Read my above argument about the numbers.
They use chained increases.
1 cent = 6 cents
2 cents = 18 cents, which is 3 times the ~6 cent base. 1+2
3 cents = 35 cents, which is 5 times the ~6 cent base. 1+2+3

1+2+3+4+5+6+7+8+9+10+11+12+13+14+15+16+17+18+19+20+21+22=253
They may have changed the multiplier, but they used this type of calculation.

astonerii on August 3, 2013 at 10:04 PM

Even better would be for a bunch of these ‘do gooders’ to band together and buy some franchises and run them the way they think they should be run. Come on geniuses, show the world how it’s done.

mdavt on August 3, 2013 at 8:44 PM

Economic hypotheses on trial.
The scientific method at work!

AesopFan on August 3, 2013 at 10:11 PM

Time to automate the front line into “order kiosks”….pay ‘em once

cthulhu on August 3, 2013 at 7:25 PM

Wawa does that with their sammiches.

FWIW, my local grocery store has replaced 4 of it’s check0out aisles with self-check aisles.

TKindred on August 3, 2013 at 7:38 PM

I love using self-checkout at my local Wal-Mart! (And the Home Depot.) It’s faster.

Canned fruit is cheap.

Fenris on August 3, 2013 at 8:39 PM

You bought canned fruit lately?

McDonalds served Kangaroo meat in third world nations back in the 1970′s.

astonerii on August 3, 2013 at 9:07 PM

You say that like it’s a bad thing. I love roo meat. It’s tasty.

GWB on August 3, 2013 at 10:16 PM

The economic ignorance on the left is staggering.

I worked at McD when I was 16… It wasn’t a career goal.

mankai on August 3, 2013 at 10:27 PM

McDonald’s should just automate it’s entire restaurant. The technology is there. Robots make our cars, they can flip burgers, too. They could have touch screen kiosks to place your order. A small team of 4 or 5 electrical engineers could run all the McDonald’s in an entire state. As a bonus, they would dodge Obamacare. If the stupid lefties find some way to force McDonald’s to pay non-skilled employees $15 an hour that is exactly what will happen.

bitsy on August 3, 2013 at 10:27 PM

The calculater is a big rip. There’s no minus sign.

unclesmrgol on August 3, 2013 at 10:45 PM

It would be fine if only the price of big macs was to go up.

What did they originally suggest? 68 cents?

Now look in your grocery cart, what if every item went up by that much, and electricity and gasoline? What if everything you purchase or every service you pay for went up?

That’s how this so called “living wage” crap works in the real world. And there’d be a lot more people unable to afford to make ends meet or feed their families if this sort of crap came to pass.

Starter jobs were never meant to feed families. They’re meant to teach work ethics and responsibility, and give KIDS a few extra dollars in their pocket.

The fact that many aren’t qualified for real family providing jobs is largely their own fault for making babies and dropping out of school.

Oxymoron on August 3, 2013 at 10:49 PM

That’s odd-I thought prices and wages were determined by market forces, not sentiment?

Dr. ZhivBlago on August 3, 2013 at 11:01 PM

The doubling of the minimum wage at McDonald increases the prices of the food/dink by 18%-20% not 20 cents… That is a substantial increase…

mnjg on August 3, 2013 at 11:20 PM

The other problem with that horse manure of a calculator – it uses total McDonald’s revenue (including franchises, which make up virtually all of the McDonald’s empire), but it uses only McDonald’s-owned restaurants’ costs.

It “just kind of” skews the math.

Steve Eggleston on August 3, 2013 at 11:25 PM

The poll tells us that “The average price of a Big Mac is $4.56, and many fast-food workers make $7.25 an hour.” It then asks readers to select how many more cents they’d be willing to pay.

Whazza?!

A McDouble is $1. Lettuce, onions, sauce, another slice of cheese and a soggy slice of bread is not worth an extra $3.56. I am willing to pay $1.39. Better start cutting some wages then…

Gingotts on August 3, 2013 at 11:35 PM

McDonald’s has 1.8 millions employees around the world. Assume that half a million of them in the US are paid minimum wage of $ 7.25. Also assume that each of them works 1500 hours a year.

Cost of wages = (500000) x (1500) x (7.25) = 5.4375 Billion dollars.

Doubling their wages will cost McDonald’s another $ 5.4375 Billions.

McDonald’s sales revenues in 2012 was $ 27.56 Billions. Therefore an increase of $ 5.4375 billions in wages a year means an increase of 19.73% ((5.4375/27.56)*100= 19.73 %) in cost for McDonald’s. This 19.73% will go as an increase in food/drink cost for the customers…

PS: The number of minimum wage workers at McDonald’s US may be more than half a million and each of them may work more than 1500 hours a year therefore the cost of doubling the minimum wage will be even higher than what I showed above and hence higher cost of food/drink for the the customers…

mnjg on August 3, 2013 at 11:36 PM

I was wondering when this story would float over to HA.

When it was first published on the Huff, I commented a “modest proposal” that, instead of raising the wages and have a corresponding increase in food costs, that we institute a federal wage subsidy program for low-income earners, and pay for it with a national sales tax of 17% on all food items.

Based on the responses, I’m not sure the champions of progressive taxation picked up on the underlying point.

The Schaef on August 3, 2013 at 11:40 PM

mnjg on August 3, 2013 at 11:36 PM

That $27.56 billion is worldwide sales. At last check, the US accounted for 30% of that number.

Re-running the numbers reflecting that 30%:

US revenue – $8.27 billion
Cost of wages – 540,000 employees (assuming the same 30% division)x1,500 hours/yearx$7.25/hour = $5.87 billion
Minimum needed increase – $5.87 billion/$8.27 billion) = 71.0%

Who’s ready for a $7.80 Big Mac?

Steve Eggleston on August 3, 2013 at 11:57 PM

Just wait until all those illegals “come out of the shadows” and bring all their unskilled family members here. There will be 100 applicants for every job at McDonald’s. Where do these liberal idiots think all these people are going to work?? A 30-year-old with limited English and an 8th grade education isn’t work $15 an hour.

rockmom on August 4, 2013 at 12:03 AM

Oops – I forgot the 7.65% employer share of the payroll tax in that. That boosts the cost of wages to $6.32 billion (almost enough to round it up to $6.32 billion, the minimum percentage increase to 76.4%, and the cost of a Big Mac to $8.04.

Steve Eggleston on August 4, 2013 at 12:06 AM

That $27.56 billion is worldwide sales. At last check, the US accounted for 30% of that number.

Re-running the numbers reflecting that 30%:

US revenue – $8.27 billion
Cost of wages – 540,000 employees (assuming the same 30% division)x1,500 hours/yearx$7.25/hour = $5.87 billion
Minimum needed increase – $5.87 billion/$8.27 billion) = 71.0%

Who’s ready for a $7.80 Big Mac?

Steve Eggleston on August 3, 2013 at 11:57 PM

Excellent point, I did not consider “US only” sales revenues…

mnjg on August 4, 2013 at 12:06 AM

They wanna play magic math?
Let’s play magic math…

As soon as the price of the big mac goes up 5 cents you gotta add another penny to the sales tax (more if you’re in New York obviously) so take that out of the salary of the workers directly.

Now, same thing happens when their pay increases… for every 5 cents the price goes up (plus one more cent to the government) and into the employee’s paycheck, deduct one penny from their salary to go to the government.

So if these unions really wanted cared about their people, maybe they’d be clamoring to get government off their back?

Naaah… it’s the evil corporations fault for giving them too little money to begin with.

Skywise on August 4, 2013 at 12:14 AM

Excellent point, I did not consider “US only” sales revenues…

mnjg on August 4, 2013 at 12:06 AM

Don’t worry; the Beast didn’t either, though for a different reason than you.

Steve Eggleston on August 4, 2013 at 12:14 AM

That’s odd-I thought prices and wages were determined by market forces, not sentiment?

Dr. ZhivBlago on August 3, 2013 at 11:01 PM

Off to public school re-education camps for you, comrade!

Jazz, if you are interested, I can show you how high minimum wage laws have utterly wrecked most market sectors down in Australia. Minimum wage here is as follows:

National minimum wage for adultsCurrently the full-time minimum wage is $16.37 per hour or $622.20 per week. This means that most employees in the national system shouldn’t get less than this.

Casuals covered by the national minimum wage get an extra 24% ($20.30 per hour).

National minimum wages for apprentices, juniors & trainees
There are special national minimum wages for trainees, apprentices and juniors who don’t have an award or agreement. From 1 July 2013 these are:

Juniors:

Age……% of national minimum wage……Minimum hourly rate
Under 16…………..36.8%……………………………………$6.03
16……………………..47.3%……………………………………$7.74
17……………………..57.8%……………………………………$9.46
18……………………..68.3%…………………………………..$11.18
19……………………..82.5%…………………………………..$13.51
20……………………..97.7%…………………………………..$16.00

Four main effects here:

1. Most service stores that require help focus on hiring the youngest age possible

2. Prices for many goods and services are at least twice what you would pay for them in the US (keeping in mind that the exchange rate is currently hovering around AUD = USD $0.90)

3. Demand for goods and services is depressed due to high wages costs, high regulations costs, and high taxes (last year, my net income tax rate was just over 40%); and

4. An adult facing the job market, outside of the mining industry, has a *lot* of competition (my wife applied to a fast food outlet opening a new store here recently, and found out there were over 700 applicants to 20 open positions)

I’d be willing to bet the situation is much worse in the EU, because at least there are still some opportunities to be found in mining down here.

The goal of leftists here is to destroy income mobility under the pretense of “fairness”. Nothing less.

Wanderlust on August 4, 2013 at 12:19 AM

nothing like live’n in a fantasyy world where we can suspend the laws of economics…..

I know lets raise the price for a burger to $100 and all the employees can drive a Corvette…… cause everyone knows that Mickey D will still sell the same number of burgers..

Bwahahahahahahahahahahahah

or better yet…. they can lower the price of a burger to a nickle and Mickey D’s will sell a gazillion more burgers and all the employees will be able to drive Lamborghini’s

Then their motto can be “We’re 95 cents on each burger but we’re make’n up for it in volume”

Bwahahahahahahaha

Sure hope da Beast ain’t deciding medical treatments for ObumbleCare

roflmmfao

donabernathy on August 4, 2013 at 12:33 AM

Then their motto can be “We’re LOSE 95 cents on each burger but we’re make’n up for it in volume”

roflmmfao

donabernathy on August 4, 2013 at 12:35 AM

How much more would you pay for a Big Mac if you knew the person serving it to you would be able to raise her children out of poverty?

If you’re a liberal, I’m guessing not a penny. Study after study shows that liberals are the cheapest misers around. They only believe in compassion when it’s with other people’s money.

Burke on August 4, 2013 at 1:17 AM

Maybe it’s because I am getting older but I don’t think I would pay much more for fast food than it costs right now. As it is, for just a few more bucks you can go to a medium priced restaurant that is much better quality than what you will get a Burger King or Wendys. What they need to do is figure out a way to make tips standard practice for these workers if they want them to make more.

Dollayo on August 4, 2013 at 1:29 AM

Taranto already got to this one, notes that their cost numbers do not include the majority of McDs that are franchise-operated.

He doesn’t take it any further than that, but if you wanted a real picture of the impact you then have to look at the potential cost increases passed on by suppliers whose labor gets less than their $10-and-change target minimum wage, etc.

JEM on August 4, 2013 at 1:53 AM

TOTALLY misses the fact that raising THOSE wages will like result in the SUPPLIERS of the components will have to raise THEIR employee salaries as well, adding MORE to the cost.

michaelo on August 4, 2013 at 2:19 AM

Yeah, let’s not bother to implement sound economic and other policies that create long-term real living-wage-paying full-time jobs. Just raise fast-food prices to feed the obsessive entitlement morons so other minimum wage workers won’t be able to afford the burgers and along with the people who are just pissed that the prices went up for really stupid-bad “economic” reasons then McD’s gets less business, franchises close and the entitlement morons lose their jobs. Then what happens–do we end up with a 1/3-pound quarter pounder for a much higher price? Have you noticed the 59oz “half gallon” of orange juice or the 14oz “pint” of half’n’half in your local grocery store? Let’s just go back to squeezing blood from turnips.

stukinIL4now on August 4, 2013 at 2:24 AM

I put in one penny, and got a response that they were not happy with me.

blue13326 on August 4, 2013 at 3:48 AM

And those poor McDonald’s employees have to drive to and from work while paying exorbitant gas fees which eats up junior’s college money–but that evil keystone pipeline and those evil fracking people are just not able to reduce their expenses–thanks to our benevolent government, which taxes them to hand out their money to pay off those Detroit union folks (for their party donations and votes)that drives up the cost of those cars, new and used , that the poor employee has to buy–along with Obamacare which will steal more money than all those evil profit makers could ever hope for.

Don L on August 4, 2013 at 5:39 AM

This isn’t about wages, or whether progressives understand math. This is about shaping the battlefield. You can’t have a revolution without discontent. The workers are pawns.

the_moll on August 4, 2013 at 6:05 AM

If we do see the trend continue of liberals FORCING wages for fry chefs higher, we will see more of those fry chefs become robotic fry chefs and those minimum wage jobs will pay ZERO! The cost of producing and “employing” robots will become cheaper than human labor.

MJBrutus on August 4, 2013 at 6:45 AM

How about if all the people that are worried about this just start tipping when they eat at McDonald’s?

Or volunteering some time at a center that helps adults with literacy and job skills?

bitsy on August 4, 2013 at 6:57 AM

I haven’t been to a McDonald’s in years (nothing against them, just don’t need to eat out often), but this week I traveled and had to grab a quick bite. This was my experience in the McDonald’s I chose:

1. Two employees were eating in the restaurant (immediate bad impression), having a very loud conversation about politics, “rednecks,” and other obnoxious talk.

2. One employee had some sort of mocha liquid in a bag that she was trying to insert into a container, spread out on the sales counter.

3. One male employee behind the counter was wearing a black t-shirt emblazoned with a rock band’s name and artwork, baggy black shorts showing off his leg tattoos, a large silver chain, and a backward baseball cap. He looked like a complete degenerate. Minutes later, he and a female employee were outside smoking in the parking lot.

The negative impression left by this experience was strong. Are these the people who believe McDonald’s owes them a “living wage”?

DrMagnolias on August 4, 2013 at 7:10 AM

wasn’t this the study that was done by an undergrad who missed the basics of economics in what he produced

http://www.newsmax.com/thewire/mcdonalds-wages-research-undergrad/2013/07/31/id/518054

wakey74 on August 4, 2013 at 7:39 AM

Poverty pre-1970: not having indoor plumbing, not having telephone service, not having electrical power, not having enough food.

Poverty 2013: having a microwave, dishwasher, HDTV, cellphone, car, and being obese.

There is poverty in America and it has nothing to do with material goods but in the spirit and soul. Those that are deficient whine about the current Golden Age and wish it to end with good intentions and malice aforethought. Then you will get the real poverty of hunger, starvation, poor sanitary conditions and subsistence level society and we will call that Iron Times.

Remember the people who will cause such things: those wanting a minimum ‘living’ wage when people already have enough to live with and need a work ethic. Those who encourage this system will speak of good intentions, but their results can be foreseen, foretold, and then when they happen they will say ‘but no one could have seen this coming’. They deserve no hand-outs nor help. Remind them that you could and did see this coming and that these idiots would not listen in their moral superiority complex. I really do want to avoid such outcomes, but that requires those who push this stuff actually listen and stop screaming at how evils others are and ignore the evil within themselves that sees the rest of the world as lackluster as they are.

ajacksonian on August 4, 2013 at 7:44 AM

It’s kind of amazing that business pays exactly the min wage. It’s almost as if knowing what the min wag eis makes business offer that rate.

Look if McDonald’s workers want a raise all they have to do is refuse to work for that wage. Mcdonald’s if they can’t find workersw will raise the wage upto and until they can no longer make a profit. At which point if they still can’t find workers at that wage/profit point they will close down. But It is the workers responsibility to not work for a wage they can’t live on or refuse to work.

min wage laws simply give the business community cover to offer jobs at wages that most thinking adults would laugh at.

the most preciousthing I have is a fintie time on this earth it is up to me to set the price I’m willing to sell that time to someone. Not the government and not a business.

If my prospective employee and I can come to an agreement where we both get vaule from my time then so be it. If not I walk.

unseen on August 4, 2013 at 7:59 AM

They forgot the overhead cost of training: McRosettaStone…

hillsoftx on August 4, 2013 at 8:35 AM

Well.. the new Consumer Protection Bureau racket thing will take care of this. They will mandate the burger prices are doubled and the money goes to the workers. And if McDonalds doesn’t bow to their will, they will freeze whatever assets they can freeze.

No way? Just give them time to grow.

JellyToast on August 4, 2013 at 8:35 AM

Poverty pre-1970: not having indoor plumbing, not having telephone service, not having electrical power, not having enough food.

Poverty 2013: having a microwave, dishwasher, HDTV, cellphone, car, and being obese.

ajacksonian on August 4, 2013 at 7:44 AM

Add 2013: Cable, internet piercings and tattoos….seriously, we should rejoice in the NSA database and tap it to adjust all Fed. assist. programs tied to all of these non-essentials that “poor” folks possess…each “perk”, reduce their mo. Fed benefit by $50…

hillsoftx on August 4, 2013 at 8:39 AM

Where did the idea come from that flipping burgers for 30 hours a week should pay enough to support a family? That should be, at best, a supplemental income and not that of a family’s breadwinner.

Pablo on August 4, 2013 at 8:48 AM

I suppose you could agitate for a 20-cent price increase on Big Macs going directly to the employees’ wages. And then try to police McDonalds to make sure it actually works out that way.

Or you could just start tipping your McDonald’s employee a quarter with each order, or 50 cents, or a dollar. Then you know it’s going directly to an employee.

The second way sure does sound simpler and easier.

There Goes the Neighborhood on August 4, 2013 at 9:52 AM

At the beginning of this year, items on Wendy’s Super Value Menu were 99 cents. Yesterday I happened to be there and I noticed they have gone up to $1.49. The same price creep seems to have taken over everything. Now, that’s their prerogative and I’m not criticizing. But so is our spending choices. I skipped the little extra five-piece chicken nuggets I used to get. My wife said hold the fries and drink, and we shared. We wound up paying about what we used to, but just ordered a little less. For me, Wendy’s is not the place where I am willing to spend more than $11 or so for two people. I used to go perhaps once a week, but now it’s down to once every two to three months. Prices go up, I change my spending habits.

Libs live in this lovely fantasy world where everything is theory and human behavior is discounted entirely.

JoseQuinones on August 4, 2013 at 10:29 AM

If liberals were as generous with their OWN money as they are with OTHERS money, they would think of TIPPING McDonald’s workers!

dominigan on August 4, 2013 at 10:48 AM

In the Bush years of 4.5% unemployment McJobs were horrible. In the 0bama years of 11% unemployment McJobs are great and would be greater if they can force them to pay more.

It all makes sense.

jukin3 on August 4, 2013 at 10:53 AM

The supply and demand in the labor force will determine the hourly wage, not some libtard setting the price of goods. Consumers could care less about how much employees are earning: they care about the price of the goods/services they are purchasing. Of course libtards are Communists/Marxists, so they abhor capitalism and think like socialists and communists when it comes to producing goods and services.

I agree with the comments re. letting the libtards purchase some McD franchises and run them as a socialist experiment and see how long they survive in the free market system. If Detroit was not an eye opener for the Communists (AKA DEMS.) then nothing will ever convince them of their ignorance.

they lie on August 4, 2013 at 11:33 AM

End the minimum wage laws, and let the market decide what the labor is worth. Of course then you’d really have to enforce the immigration laws because no American would ever be hired again.

Iblis on August 4, 2013 at 11:54 AM

You know these clods have no education on economics, because they’d realize that the wages are only part of the cost of doing business. If you lowered the employer’s other costs, like for energy, transportation, materials etc, and then also stopped printing money like there’s no tomorrow. The employee’s wages would go farther as the value of his dollar increases.

Iblis on August 4, 2013 at 11:57 AM

There are a number of newer chains that sell better burgers/ sandwiches at higher prices, so this is yet another problem we don’t need liberals to fix.

Make no mistake, McDonalds is on the leftist enemies list, along with WalMart. CostCo is OK because it is owned by liberals.

virgo on August 4, 2013 at 12:02 PM

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