Low-wage workers in Long Beach and San Jose turning to voters for pay raises (Fontana: buying, minimum wage)

[never-more]

You do have a significant fraction of low wage/skill workers (generally illegal aliens) paid under the table with absurdly low wages. Min. Wage change won't do anything for them.

[user_id]

Originally Posted by oldtrader

Labor cost average 30% of gross sales for a fast food restaurant, and this is not a pretty small component for a restaurant. Raise labor cost 25%, and prices are going to have to go up.

Your number is made up and the average total labor costs don't matter, we are talking about one class of employees.

Your typical fast food place can serve around 60 customers an hour with a staff 5~6. Assuming an average sale of $10, that's $600/hour gross. If the employees are getting paid $9/hour, that is around $12/hour out of pocket for the restaurant. So wages would be $60~$72...or 10~12%. So what happens if you increase their wage to $12, out of pocket is around $15.50 and wages become 13%~15% of gross.

[adam405]

Originally Posted by user_id

Your number is made up and the average total labor costs don't matter, we are talking about one class of employees.

Your typical fast food place can serve around 60 customers an hour with a staff 5~6. Assuming an average sale of $10, that's $600/hour gross. If the employees are getting paid $9/hour, that is around $12/hour out of pocket for the restaurant. So wages would be $60~$72...or 10~12%. So what happens if you increase their wage to $12, out of pocket is around $15.50 and wages become 13%~15% of gross.

I have run fast food franchies and your #s are a little low. You would likely have a minimum of 7 people (maybe more) on staff for a busy location that could net $600/hour at peak times. Only the entry level worker makes $9/hour, remember that senior people and managers make more. Real cost to the business of a $9/hour worker is probably closer to $13-$14/hour (taxes, insurance, subsidies, benefits). Also when minimum wage goes up, it puts upwards pressure on the entire wage scale. So the cashier who made $12 before, now wants a raise to $14-$15, and the shift manager now wants a raise also.

It varies per franchise but 25-30% is in the ballpark for labor costs (15% is way too low). There's a reason that the #1 focus of franchises is employee automation and it's not because people are cheap.

[user_id]

Originally Posted by adam405

I have run fast food franchies and your #s are a little low. You would likely have a minimum of 7 people (maybe more) on staff for a busy location that could net $600/hour at peak times. Only the entry level worker makes $9/hour, remember that senior people and managers make more.

I wasn't talking about the total staff, just the non-managing stuff and that is just the point. Hikes in minimum wage only effect one class of employees. The managers, assistant managers, etc aren't a factor because they wouldn't be effected by a heck in minimum, they would already be making significantly more. My numbers were not for total labor, just the lowest skill labor that would be impacted by a minimum wage hike. In fast food restaurants that's a significant portion, but they are also the lowest paid portion.

Managers, etc can ask for more all they wish, but that isn't how labor markets work. Nor do businesses get to magically push cost increases to customers, again, not how the markets work. The most you can say is that an increase in the minimum wage would put upward pressure on prices charged by the business, but the pressure isn't that large. Let's take the 33% figure for total labor and assume that the restaurant nets 10% profit. Let's take the increase from $9->$12, which would be a huge increase in the minimum wage, this would push wages up to ~38% of gross (that is a high estimate, assuming that some senior employees would get some increase as well). So how much would the restaurant have to increase prices to maintain the same profitability assuming equivalent sales volume? 5% of course....very far removed from the dramatic statements you usually hear. Oh no, people will have to pay 5% more for their greasy junk food so that the people making it can have a reasonable wage. Of course, in the real world, the increase would likely shared between the ownership and customers....unless the business had sub-optimal prices to began with (if you can increase prices by 5% without a reduction in volume...you're prices were too low).

[Gentoo]

Originally Posted by NewToCA

When I began working, in 1968, federal minimum wage was $1.60 per hour.

According to the Bureau of Labor Statistics Inflation Calculator, that hourly rate today, just to keep pace with inflation, should be $10.59 in the current economy.

San Francisco's is near that.

[Gentoo]

Originally Posted by adam405

I have run fast food franchies and your #s are a little low. You would likely have a minimum of 7 people (maybe more) on staff for a busy location that could net $600/hour at peak times. Only the entry level worker makes $9/hour, remember that senior people and managers make more. Real cost to the business of a $9/hour worker is probably closer to $13-$14/hour (taxes, insurance, subsidies, benefits). Also when minimum wage goes up, it puts upwards pressure on the entire wage scale. So the cashier who made $12 before, now wants a raise to $14-$15, and the shift manager now wants a raise also.

It varies per franchise but 25-30% is in the ballpark for labor costs (15% is way too low). There's a reason that the #1 focus of franchises is employee automation and it's not because people are cheap.

You could just do what Sea World does, compression. That place simply doesn't adjust those above minimum wage.

[Fontucky]

For a sample of the results when low-skill workers are paid a high wage, look at restaurant (and food prices in general) in Australia.

[nullgeo]

Originally Posted by Fontucky

For a sample of the results when low-skill workers are paid a high wage, look at restaurant (and food prices in general) in Australia.

You know, bub, if you were half the guy as a certain regular poster here from another state (state name rhymes with "Fontana" by the way) you would look up the wages and food prices in Australia for us and publish a full page report we could all skip reading and wonder why he couldn't just make a simple summary declaration. So, anyhow, since you're not going with the full page report -- how about at least the summary declaration ... I am feeling too lazy to go Googling and I'll take your word for it.

[Gentoo]

[Fontucky]

I'll leave the in-depth research to those who are interested. I'm much too lazy and I have some actual work to do today.