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There are problems with what your assumptions. Labor is about 24-26% of cogs in a fast food store. Not all fast food employees are paid the minimum wage, and those who are work the least number of hours. restaurant earns minimum wage, so there will a number of employees whose whose wages will not be raised. This study explains exactly how they reach their conclusion that a 45% increase in the minimum wage would require raising prices 2.7% It's probably easier for you to read it than for me to take the time to explain it. The findings are consistent with the Perdue Study which claims that increasing the minimum wage from $7.25 to $15 would result in a 4.3% price increase.
I have relatives that own several McDonald's, and others that manage fast food restaurants. The problem in the type of study that says it will only raise prices 4.3% are not really accurate.
By people I know that run this type of businesses, and the fact as an Investment/commercial Realtor I had to understand things like this to prepare analysis on businesses. Took some great University courses to learn what is true and what is not true.
There will only be one employee in the restaurant making more than $15 an hour and that will be the general manager. The next two below him, will also be making a fairly decent level of wages. The shift managers which be another maybe 6 will be making under $15 an hour by quite a bit. The other 60 or so employees at a typical McDonald's will be making at or just above minimum wages. To nearly double the minimum wages for 60 employees, saying it will only raise prices 2.7% if crazy as I was told by people that own and manage the restaurants.
They are planning on bringing on self help order and pay stations doing away with counter help, and automatic burger making equipment which at minimum wages, takes 1 year to pay off. When bumped to $15 an hour, it will pay off in 6 months. Also they can automate a lot of other jobs in a restaurant and other businesses. They are already using draw your own soft drink equipment at places like McDonald's. They are already installing the self help order and pay stations instead of counter help.
Instead of about 60 employees at a typical McDonald's it will about 10 to run the automatic robots that take and fill the order.
$15 minimum wage bill, will just do away with millions of jobs, replacing people with robotic equipment which is ready to install now.
When wages go to $15 minimum, it is just going to put a lot of people out of work.
Once they go robotic at a fast food restaurant, they will be able to lower prices to become more competitive and increase the business making the stores more profitable, instead of raising them to cover the higher labor costs.
And it is going into other fields also, to help lower manufacturing costs to keep prices down to what people can afford.
We live in a global economy today, not just a local one. To keep wages to the point you can keep a business profitable, and to manufacturer in the U.S.A. and be able to compete against the rest of the world, they will be using robots, etc., more every year.
The $15 minimum wage, will just force a lot of companies to make changes in how they do business reducing amount of help needed and it will put a lot of people out of work.
In 1950 it took 1/3rd of all working people to produce the food we eat. Today they produce a lot more food, and only need 1.5% of the workforce to feed this country and do a lot of exports. Agriculture was one of the first industries to automate and use labor saving equipment, and the others are following. $15 minimum wage, will greatly accelerate the move to automation.
They are planning on bringing on self help order and pay stations doing away with counter help, and automatic burger making equipment which at minimum wages, takes 1 year to pay off. When bumped to $15 an hour, it will pay off in 6 months.
Why wouldn't they be doing all that anyway, minumum wage increase or not? Automation is going to happen anyway and it's good for society overall. Human labor is too valuable to waste on such meniality. Society will find more productive tasks for that displaced labor.
Studies show a MW of $9 or $10 is not going to have a huge effect. That is not likely to be the case for a MW of $12-15.
No, actually there is plenty of data suggesting that a $15 an hour minimum wage would require a price increase of about 4.3%, that would add 17 cents to the price of a big mac.
Instead of about 60 employees at a typical McDonald's it will about 10 to run the automatic robots that take and fill the order.
I don't buy it. There is absolutely NOTHING online about McDonald's considering automating hamburger flipping, but if they did -they would do it anyway. If you can buy a machine with a 5 year life expectancy and it will pay for itself in one year with a $7.25 minimum wage you are going to make out like a bandit, you certainly aren't going to wait for the wage to reach $15 so you can recover the cost in 6 months.
Do the math yourself and then tell me why they aren't installing these mysterious machines right now.
There is a physical analog to the economic problem we face. It is being on the back side of the power curve in an airplane. When you are flying slower than the point of minimum drag if you want to clime faster or sink slower you push the nose down not up. The debt load is to high, Changing the ratio of debt to income will correct this. More income gets you lower debt to income ratio. less debt gets you less debt to income. Less debt sucks from a macro point of view. More income doesn't suck so bad.
Why bother? It is clear you and I fundamentally disagree with each other. I understand your position, and I disagree with it. I can't tell if you understand my position or not -- let me give you the benefit of the doubt and say you do -- but regardless, you disagree with me.
I understand your position well enough, it is that the market is the best decider of what should and should not be done.
There is a joke about the Vietnam war. do you know why they won and we lost? Because they were playing go and we were playing chess.
There are two concepts in go. Influence and control. I care not for control. But influence that is another thing entirely.
When the FED runs out of tricks then raising the minimum wage will work. Insisting that the US minimum wage apply to all workers engaged in trade with the US will tend to cause enough inflation to get the world's economy going.
I don't have my ego invested in my ideas. Any time I get someone with half a brain to poke holes in them I say thank you.
How much does the labor pool actually contract with a $15hr minimum wage? Vs. How much does the labor pool contract as we write off 90% of total debt as bad? Or what happens if we just turn that debt into monetary base?
I'm not disagreeing with you I just want a job at McD's
Why wouldn't they be doing all that anyway, minumum wage increase or not? Automation is going to happen anyway and it's good for society overall. Human labor is too valuable to waste on such meniality. Society will find more productive tasks for that displaced labor.
When labor costs go up nearly double, it makes any reluctance to automate go away. It makes the time to recover the cost of automation drop to the point, that it is no longer an option but a necessity to automate.
You say that human labor is too valuable to waste on meniality. Problem, there are a lot of people in this country that cannot get the higher pay jobs. Lack of ability or education holds many people down to low paid menial jobs. Take away those jobs, and there is no place for them to go. So the big waste of human labor will be no labor for them to perform, and will be forced into the homeless lifestyle, or on welfare for the rest of their lives. It also takes away the first jobs for teens, and keeps them from learning work discipline and work experience.
There are studies that 1 in 8 people worked at one time in their lives for McDonald's, and when the other fast food and other minimum wage jobs are considered, it takes in most of the workforce. The nearly doubling of the minimum wage, will effect an awful lot of people not having the opportunity to get a minimum wage job when the need it, or are a teen starting into the work world.
When labor costs go up nearly double, it makes any reluctance to automate go away. It makes the time to recover the cost of automation drop to the point, that it is no longer an option but a necessity to automate.
You referred to a start-up that claims to have a robot that will cook 300 + perfect hamburgers an hour, it has NOTHING to do with McDonald's, unless you have some actual proof, McDonald's hasn't even played with the idea of deploying hamburger cooking robots.
And the claim you are making is just silly. Do you really think that this burger machine will cook the burger put mustard on it, wrap it and hand it to the customer? Don't you think there will need to be people there to fix the machine when it quits working, or to quality check the product?
Not to mention, labor costs would NOT double if the minimum wage doubled because not all of the employees, even in McDonald's receive minimum wage.
And the "momentum machines" burger cooker has been around since 2012 and as far as I can tell they have yet to put one in an actual retail store anywhere. Google it yourself if you don't believe me
.... It is being on the back side of the power curve in an airplane. .....
Ok, I think I understand.
If wages go up, employers will want to hire more employees.
If prices go up, customers will want to buy more products.
If we pay more for those who have limited skills, we will get more productivity.
Everything works just opposite of what common sense and logic would indicate.
Meanwhile back in the real world......
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