The Math Behind Higher Pay at McDonald's - what do you think?

Discussion in 'Off-Topic Discussions' started by Randell1234, Sep 2, 2013.

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  1. Randell1234

    Randell1234 Moderator

    To all of you economics majors - what do you think of paying McDonald's workers $15 an hour and how will that impact the business?

    Can fast food afford to pay $15 an hour and not pass on the cost? Why stop there, force WalMart to pay $15 and hour...

    The Math Behind Higher Pay at McDonald's - WSJ.com!
     
  2. Ian Anderson

    Ian Anderson Active Member

    My favorite burger joint is In-N-Out becuse the crew is so nice, their kitchen is visible to customers, and the facilities are clean and tidy. Many of the emploees serving the public arehigh school and college students. All employees (with two or three corporate employees) must start work in the restaurants but their pay can rise to nice levels as they advance. Salaries are higher than competing burger chains but their food prices are comparable although much better (IMHO).
    In-N-Out Burger Salaries | Glassdoor
    All outlets are corporate owned so no fanchise fees involved.

    [If this was a public company I would be investing in their stock.]
     
    Last edited by a moderator: Sep 2, 2013
  3. Randell1234

    Randell1234 Moderator

    I used to travel (field service for 13 years) and ate at McDonalds one or two times because there was not a vegetarian option. I spent 2-4 weeks a month on the road so that would be about 500 weeks on the road and only ate there one or two times...I guess you know what I think of them. I would go to Burger King or Subway when driving through some remote areas or spending the night.
     
  4. AUTiger00

    AUTiger00 New Member

    We've actually seen this before, but not with a hike this drastic. I believe this occurred in the late 80's or early 90's. Minimum wage was increased and many fast-food franchise owners figured out a way to run the front-end of the business with one fewer employee per shift. This is exactly what will happen if they increase their wages now. Sure, a few employees will be better off because they'll be getting a big pay hike, but a lot of people are going to lose their jobs/see a dramatic decrease in their hours.

    Minimum wage is just a stupid principal from an economic standpoint. When you set an artificial floor on wages employment goes down. It's simple math, if you have to pay your employees more, you hirer fewer employees.

    For the record, I hope to God these franchise owners don't cave. If the fast food industry becomes unionized most people won't be able to afford a damn Whopper or Baconater. Unions will do what they always do, they'll strangle the industry to death. These people are doing a menial job because they have no skills. It's not the restaurant's fault. I heard one of these people on the news saying you can't raise a kid on $8.35 an hour. Well no crap, if all you can do is secure a job paying $8.35 an hour you probably shouldn't be out there procreating. It's not your boss's fault you're stupid. Hell, McDonald's promotes from within. Instead of bitching about your pay rate why don't you go in and bust your ass, prove your worth and get a promotion?
     
  5. Randell1234

    Randell1234 Moderator

    Where does it end? I can't raise a family and drive a new BMW on $50K, I need more....
     
  6. AUTiger00

    AUTiger00 New Member

    Eh, you could probably lease a BMW and still feed your kids on $50k. Seriously though, I heard a great quote recently, "trying to look rich is what keeps most people poor".
     
  7. Randell1234

    Randell1234 Moderator

    That is a great quote. I am the exact opposite. We made a lot last year and I drive an 07 Toyota Corolla!
     
  8. Rich Douglas

    Rich Douglas Well-Known Member

    The minimum wage serves society as a whole. It helps distribute wealth across a wider spectrum, which strengthens opportunities for lower-to-middle class citizens.

    It's simple--and wrong--to think that supply-and-demand forces should rule, that the labor market is a perfect one. It is most certainly not, with employers having huge advantages vs. workers. The minimum wage is a means for off-setting that advantage and giving individual workers a chance.

    Wade, in "Governing the Market" talks about a third way between the unfettered free market and a centralized economy. The minimum wage, although not specifically addressed by Wade, is an example of this, where the government intervenes a bit to ensure a little bit more equity.

    Unrestrained, businesses will act as they did 100 years ago. Read your history.

    The minimum wage has a positive impact on macroeconomic activity. Making the microeconomic argument alone is insufficient.

    If the market was truly free, I'd have no trouble with getting rid of the minimum wage. Then, workers would earn what they were truly worth--in both directions. But you know that isn't the case. Just look at the last 10 years, where wages have been flat, but businesses have seen increasing profits. Where does that money go? Not to the worker, that's for sure. But the wealthy have seen their wealth increase fantastically, even during this recession. And businesses are sitting on a whole lot of cash.

    If you're making the argument that these conditions are okay, that it's fine for working class citizens to earn less than a living wage, that it's just fine for the wealthiest in our society to take an increasingly greater proportion, then okay. But that isn't a macroeconomic argument. It's one about values. What are yours?
     
  9. Rich Douglas

    Rich Douglas Well-Known Member

    Even the fries at McDonald's are not a vegetarian option--they're still frying using beef tallow and using the same fryers for fries and meat products.

    Burger King's fries do neither. As long as the individual store follows the guidelines, not cooking the fries in the same oil as the nuggets and other junk, then they fries are vegetarian. Also, Burger King has a Veggie burger. Note to vegans: you have to ask for them to omit the mayo (on a veggie burger!).
     
  10. suelaine

    suelaine Member

    I drive a 2004 Saturn and our home is very modest compared to many of our neighbors who have similar incomes, I believe.

    I did not go to college right out of high school. I got a job at a Plastics factory that paid min. wage + 10 cents (because it was 3rd shift). I got married at age 19, to a truck driver, and left the job at the Plastics factory, but took a job at McDonald's.

    I was 20 years old and did not consider myself stupid or lazy, though I most definitely grew up with a father who told me I was stupid and lazy and would never amount to anything. I guess I didn't really set my sites too high, but I liked working there. McDonald's was easier and more pleasant in many ways than the job at the factory.

    It helped pay the bills and I liked working with the people. We were told to smile and be pleasant, and I took that seriously, though not all my coworkers did. When I worked there, they actually fired you if you screwed up your drawer by more than a few dollars three times, within a month, if I remember correctly.

    Notice I said it helped pay the bills. Even then, I did not see a job like that as a way to fully support a family, but it does fill a niche for some who want to supplement family income, or for college or high school kids, or people who actually want a part-time job with flexible hours to "help pay bills." I don't agree that everyone that works at McDonalds is stupid or lazy, but I do agree that if you are trying to support a family and fully make a living, you should probably look elsewhere unless you have a realistic plan to move up in management. I don't know any rich McDonald's managers but at least in an area like mine where the cost of living is lower, they do okay.

    I am not a McDonald's hater and I don't think I ever will be. I do eat there once or twice a week and I like the fact they have expanded their menu by adding oatmeal, yogurt parfaits, and salads. I love their low fat ice cream cones, 49 cents when they run specials but regularly 99 cents. While I might be able to still afford to eat there on occasion if they pay employees $15 an hour, I probably just wouldn't, since I tend to be on the frugal side, it would no longer be worth the price to me.
     
  11. Rich Douglas

    Rich Douglas Well-Known Member

  12. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    The BK Veggie burger isn't vegan no matter what you do, the burger patty itself has some dairy built in.
     
  13. Rich Douglas

    Rich Douglas Well-Known Member

    Oooh. Quite right.
     
  14. Kizmet

    Kizmet Moderator

    I have been told that the bigger problem is that very few people work for McDonalds on a full-time basis. They hire lots of people but it's difficult to get enough hours to actually make a living. I don't know if that's generally true across the country but I've been told it's true around my neighborhood. It might be part of the reason they're looking for a wage increase.
     
  15. Randell1234

    Randell1234 Moderator

    I know this well Rich and never eat the McD fries. They did not even have a salad without chicken! As far as the BK Veggie Burger, it is not vegan but I remained flexible since I traveled so much.
     
  16. rebel100

    rebel100 New Member

    I need that on a bumper sticker.....for my 06' Corolla! :)
     
  17. Rich Douglas

    Rich Douglas Well-Known Member

    Ah, of course. That's it. The poor have the same economic opportunities you do, they just squander it on profligate spending. How convenient.
     
  18. AUTiger00

    AUTiger00 New Member

    I never claimed the poor had the same opportunities as me growing up, I had a relatively blessed upbringing, but I've seen people go into a Wells Fargo and sign a promissory note with an interest rate of 27% because they just had to have that Cadillac Escalade. So yes, many squander their meager earnings on depreciating assets in an attempt to impress people. Most people remain poor because of piss poor decision making. You don't have to agree with me, doesn't make it any less true.

    You can preach about how wages are "unfair" all you want, but basic economics tells us if their is a mandatory increase in wages, employment is going to go down. Great for a few, but it's going to suck for a lot of those morons on the picket line screaming for more money (in a job that requires next to zero skills).
     
  19. cookderosa

    cookderosa Resident Chef

    Stealing..... brilliant
     
  20. cookderosa

    cookderosa Resident Chef

    Of course, people are ultimately responsible for most of their own trouble. I think life is a series of opportunities to make choices- the "if then" scenario is why some people end up in better places (or worse places). So, though I'm not an economist, I think it's flawed logic that raising the minimum wage is going to save anyone from anything. AUTiger said it a few posts back that you can't raise a kid on $8.50/hr., and that's absolutely right. What choices did that person make years before that led them to today? Not everything can be fixed. Some people will just be poor. I don't get why that's so terrible. FOR THE RECORD, our family is poor, and we have everything we need. You can be poor and still have a high quality of life. You probably can't ALSO have your nails did, but life is about choices.
     

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