The Huffington Post reports that McDonald’s could double its workers wages by raising the price of a Big Mac by 68 cents. It went large on the Internet on Tuesday.
Unfortunately, what it originally claimed was a study by a University of Kansas researcher turns out to be something—a term paper, maybe?—given to Huffington Post by a KU undergrad. And there are serious problems with it. The correction on its provenance came too late, though: it’s all over the internets:
McDonald’s can afford to pay its workers a living wage without sacrificing any of its low menu prices, according to a new study provided to The Huffington Post by a University of Kansas student.
Doubling the salaries and benefits of all McDonald’s employees — from workers earning the federal minimum wage of $7.25 per hour to CEO Donald Thompson, whose 2012 compensation totaled $8.75 million — would cause the price of a Big Mac to increase just 68 cents, from $3.99 to $4.67, Arnobio Morelix told HuffPost. In addition, every item on the Dollar Menu would go up by 17 cents.
Since the HuffPost doesn’t bother to publish the actual “study,” which wasn’t really a study, we can’t really tell where these numbers are coming from. So let’s back into them.
First of all, 68 cents may not sound like much, but it really means that McDonald’s would have to raise its menu prices across the board by 17 percent. That ain’t peanuts.
Second, the 17 percent number is just incorrect. It’s too low. Here’s the latest McDonald’s 10-K, which gives us a glimpse at the company’s labor costs:
The only way to get the 17 percent-of-revenue labor figure is to divide payroll and benefits at company-operated restaurants by total revenues. But here’s the thing: More than 80 percent of McDonald’s restaurants are franchises, and the company makes scads of money from them in no small part because it has no direct labor expense at those stores. The HuffPost explicitly includes executive compensation in its 17 percent figure, but executive comp and the pay of folks in Chicago who run marketing and the like are housed in “selling, general & administrative expenses,” not under payroll & employee benefits at company-operated stores.
You have to divide company-operated payroll & employee benefits by company-operated sales to get an apples-to-apples measure. That gets you 25 percent. So a Big Mac would, in fact, have to go up by a full dollar, not 68 cents, in order to double wages at McDonald’s. And the Dollar Menu would have to become the Dollar Twenty-Five menu.
It’s harder to get at non-restaurant (ie headquarters) wages because McDonald’s doesn’t break out labor costs in SG&A. Assuming pay is half of the total, it would put the number at 22 percent.
And then there are the franchisees. There are 1.9 million people who work at McDonald’s restaurants, but just 440,000 of those actually work for McDonald’s Corporation. The rest work for franchisees who pay a cut of their sales to Chicago for the rights to the Golden Arches, Ronald McDonald, and standardized coronaries-on-a-plate.
Worldwide, those franchisees took in $70 billion in revenue last year, and US stores took in $31 billion of that. McDonald’s Corporation doesn’t break out similar expense numbers for its franchisees, so the best I can do is research from Janney Capital Markets. It puts labor costs for US franchises at 24 percent of sales, which gibes with McDonald’s company-owned stores. Janney estimates franchisee operating income at just 5 percent.
If Janney is right (and I’m a bit skeptical. Five percent margins seem awfully low), McDonald’s franchisees in the US pay out, very roughly, $7.4 billion in labor costs a year and make about $1.6 billion in operating profit. Doubling pay without dipping into profit would mean menu prices would have to rise 24 percent—and that’s assuming such price increases wouldn’t hurt sales, which they would.
The bottom line is: This “study” and The Huffington Post are both wrong.
Unfortunately, bad information spreads pretty fast these days. The false findings got picked up far and wide. I retweeted a Henry Blodget post at Business Insider before looking into its origins.
Also, the other problem is that everybody assumes the McDonald's executive pay & profit margin must be the same and that labor costs must be passed directly on to the consumer. Lower profit margins and lower executive compensation used to be much more commonplace, and the idea that the highest possible return for the shareholder and executives is what's best for a company is a relatively recent development.
#1 Posted by Evan, CJR on Wed 31 Jul 2013 at 11:44 AM
This reminds me of "Read the fine Print"!
#2 Posted by Robert Ponce, CJR on Wed 31 Jul 2013 at 01:01 PM
Wow, Ryan taking the HuffPo and other rags to task for the crap work they churn out day after day, wonders will never cease! ;) While I don't think there should be any minimum wage, the balance sheet numbers shown here do indicate that McDonalds could probably pay their workers more while still being reasonably profitable and keeping prices in line.
The question is why should they? Nobody forced those workers to accept $8/hour, which means that was probably the best offer they could get. It's all about supply and demand. As long as you get paid by what you produce and have an opportunity to move up, there's no reason for there to be any particular minimum or average wage, as that presumes that they're all producing at $12.50/hour or whatever number you're aiming for, which many likely aren't.
#3 Posted by Ajay, CJR on Wed 31 Jul 2013 at 01:37 PM
Ryan, Excellent work as always.
Ajay, can you spell “Slum Lord?”
#4 Posted by William Du Bois, CJR on Wed 31 Jul 2013 at 02:01 PM
William,
Apparently you can't spell it! Slumlord is one word. And what does that have to do with the price of a Big Mac? Let's keep this simple, raising prices is called "inflation". Inflation is bad. In other words, let's say your pay doubles, but the cost of everything you buy also doubles. Are you any better off?
#5 Posted by EB, CJR on Wed 31 Jul 2013 at 04:56 PM
Good stuff Ryan. Curious if you saw this writeup: http://justoneminute.typepad.com/main/2013/07/mcdonalds-math-or-latest-lib-talking-points-fail.html
#6 Posted by David Cohn, CJR on Wed 31 Jul 2013 at 07:38 PM
William thought readers here could figure out that the long-term costs of "slum lords" supplying substandard housing (for example -- moldy with dangerous electrical work) are greater to us, the taxpayers, than the short-term costs to the "slum lord" of meeting the standards that the rest of us have to.
We, the taxpayers, end up paying for the emergency room treatment of people with upper respiratory diseases like asthma (linked especially to children living in "slum lord"-supplied moldy housing) and the increased likelihood of that housing burning down (fire department costs, medical tx of victims, additional neighboring structures destroyed, etc).
But EB evidently doesn't mind paying higher taxes so "slum lords" can free-ride off the rest of us and doesn't consider those taxes a cost.
#7 Posted by Ben, CJR on Thu 1 Aug 2013 at 08:03 AM
I'm happy to explain the long-term costs to taxpayers of employers like McDs paying workers a minimum wage that forces their workforce to go on food stamps and Medicaid... and get a second job... and not pay for any heating in the winter in Buffalo, NY. All of which helpful advice is in McDonald's own financial planning guide for its minimum wage workers.
#8 Posted by Ben, CJR on Thu 1 Aug 2013 at 08:14 AM
So paying a dollar more to ensure that millions of people (and their children) can afford to live in better conditions (and not be so dependent on the government) is too much to ask you say??
Nope, I call that dollar a great investment!
#9 Posted by AI Molina, CJR on Thu 1 Aug 2013 at 10:04 AM
Although the paper misses the mark and has been debunked, the Austerity paper by Reinhart & Rogoff is still preached as gospel by some. We cant have it both ways. That is the unfortunate nature of having a news in a connected world.
#10 Posted by Josher, CJR on Thu 1 Aug 2013 at 10:10 AM
Interesting how people think by doubling McDonald's expenses by doubling the employee wages all for less then a $1.00 more for a burger is a great investment that alleviates all the ills suffered by employees working for McDonalds who can't pay for heat, raise children, buy food, even from McDonalds.
Wow, a buck is all it takes for some greedy corporation to solve this problem?
Wait... How many dollars does the Federal government get free, never earned, and yet the people are plagued with all sorts of problems like paying for heat, raising children, buying food, even from McDonalds!
#11 Posted by InformedNow, CJR on Thu 1 Aug 2013 at 03:22 PM
Raise wages, raise prices, demand will go down, and people will lose jobs. Simple economics.
#12 Posted by Mark, CJR on Thu 1 Aug 2013 at 04:30 PM
My objection is working an $8 per hour job then expecting to make a career out of it. It's a stepping stone while your young and going to school. You know going into the job that unless you get promoted you will still make around $8 per hour after 10 years
#13 Posted by Steve, CJR on Thu 1 Aug 2013 at 04:33 PM
Double wages to $15 and watch how many college grads push high schoolers aside for those jobs. Unintended consequence.
#14 Posted by Mike Soja, CJR on Thu 1 Aug 2013 at 04:34 PM
If you want to open a fast food franchise, follow all regulations, convince people to come to your eatery, and pay people more than McDonalds, you should be able to do so.
If you don't want to, or can't you opinion on the subject is not relevant.
#15 Posted by DonM, CJR on Thu 1 Aug 2013 at 04:34 PM
Another fine example of American education at work.
#16 Posted by Vuil Uil, CJR on Thu 1 Aug 2013 at 04:43 PM
Why doesn't the failed KU undergrand research how many jobs will be lost when Socialized healthcare kicks in next year?
#17 Posted by RexWhopper, CJR on Thu 1 Aug 2013 at 04:46 PM
How many people make a career out of working at Mcdonalds? Seems like people are putting a lot of responsibility on a hamburger joint to supply careers in burger flipping.
#18 Posted by Mark Hillyard, CJR on Thu 1 Aug 2013 at 04:46 PM
I think somewhere between 20% and 30% is the typical wage to salesrevenue ration for fast food stores. Doubling wages would work if all competitors costs went up too and demand stayed the same. Higher prices would be mean less sales, so it would result in less jobs and some stores being closed completely. The solution to low pay is working more or making yourself more productive so you can get paid more per hour. These folks should all just quit and move somewhere where their limited skills and the cost of living is more in line.
#19 Posted by Doug Lynn, CJR on Thu 1 Aug 2013 at 04:50 PM
Why stop there? If all they have to do is raise prices to make more money, why not double, or triple their prices. Then they might be able to pay the guy flipping burgers $50 per hour. There's no reason that won't work. Right?
#20 Posted by John Jones, CJR on Thu 1 Aug 2013 at 05:12 PM
Typical HP research. Obviously, they wanted it to be true. Perhaps we should double everyone's wages in America. Nobody would complain when gas, food, telephone, clothing and haircuts would rise. Sure
#21 Posted by Sal, CJR on Thu 1 Aug 2013 at 05:16 PM
McDonalds provides entry-level jobs for low-skill teenagers just entering the job market. Most employees move on to better jobs. Not many are worth $15 per hour. Cutting the bottom rungs off the working class employment ladder will just exacerbate teenage unemployment.
#22 Posted by Bruce Rheinsein, CJR on Thu 1 Aug 2013 at 05:32 PM
It's how the media spreads disinformation. the lies are told very loud, for very long. When the truth comes out, it is usually not commented on or reported at all.
#23 Posted by Rob H., CJR on Thu 1 Aug 2013 at 05:36 PM
The other big problem is if you raised prices 17%, there is a good chance your total revenue and earnings would actually decrease as people would shop elsewhere. Demand is not fixed regardless of price, to say nothing else in relationship to what you are charging compared to other competitors (or do it yourself at home)
#24 Posted by Rob, CJR on Thu 1 Aug 2013 at 05:40 PM
Fact of life: when you raise the price, unit sales go down. People stay with McDonald's but don't buy that item any more. Or they want free fries to compensate for the price increase. Or they go to Wendy's next door. The real world is never as simple as this "researcher's" brain.
#25 Posted by Gennavette, CJR on Thu 1 Aug 2013 at 05:42 PM
I hadn't seen that, David. thanks for the heads-up
#26 Posted by Ryan Chittum, CJR on Thu 1 Aug 2013 at 05:42 PM
The link on Drudge states that an "error" was made. This implies that there was no malice here. I think we know enough about the Huff Post to know that it is quite likely they knew exactly what they were doing.
#27 Posted by W Sobchak, CJR on Thu 1 Aug 2013 at 05:58 PM
Can Huffpo double wages too? Just wondering if the same logic applies to liberals.
Or perhaps Huffpo employees can take a 50% pay cut without affecting their lifestyle?
#28 Posted by Mickey, CJR on Thu 1 Aug 2013 at 06:09 PM
Ok... Why stop at McDonalds? Why not tell everyone to pay their people double? Why not tell all the suppliers that McDonalds buys from to do the same. The meat guy will now charge 25% more. So will the cup manufacturer and the bread and produce people... Now we have to double it to $2 or maybe $3... This does not make sense. McDonalds just priced themselves out of the market. Them and ALL the people that buy from them are all out of work on the backs of the government.
This has to be the dumbest comment ever!
"$1.00 more for a burger is a great investment that alleviates all the ills suffered by employees working for McDonalds who can't pay for heat, raise children, buy food, even from McDonalds."
There s no way you would go to Mcdonalds for their new $8 Big Mac? But... Dont forget about the "free" health care that they "should" have as well. This madness!
These people flip burgers!!! Instead of giving them more money let's start an education fund for them to go to school and get a better job. No Education and No Skills= No $$ period! Get them some skills not more money. This is AMERICA!!!
#29 Posted by Franklin Peck, CJR on Thu 1 Aug 2013 at 06:12 PM
When has it EVER been necessary for something to be correct or even almost correct to end up on Huffpo? Grownups don't read Huffpo...and if they happen to, they don't trust Huffpo...only dim bulbs trust Huffpo.
#30 Posted by phocus, CJR on Thu 1 Aug 2013 at 06:15 PM
HUFFPO is a bunch of hypocrites. They had all kind of people working for free that they refused to pay.
#31 Posted by Barn Cat, CJR on Thu 1 Aug 2013 at 06:23 PM
Having managed restaurants before, the 5% profit margin jives with reality. The chain I worked for cleared .04 on every dollar-and that was if every number (food cost, labor, sales, etc etc) were made. If you were off on any of them, then there wasn't any profit.
While I feel the pain of the workers, doubling the pay would do nothing but close companies and raise prices where no one can afford it. However, given Obama's agenda (And that of the SEIU who is pushing this massive wage increase) that's what they want to happen.
Just one more way that our loving Federal Government wants to control what we do.
#32 Posted by former manager, CJR on Thu 1 Aug 2013 at 06:32 PM
Why not just give people the option. Ask them if they would like to pay one more dollar so they can increase the pay of those working in the store? See how many people REALLY care about how much the employees of McDonald's make. My bet, no one would give the extra dollar. If liberals care so much about how much the cashier at Mickey D's is making why don't they just hand the person the dollar as they get their big mac. Problem solved.
#33 Posted by Joe, CJR on Thu 1 Aug 2013 at 06:33 PM
Don't forget that payroll taxes will also increase.
#34 Posted by orofthepress, CJR on Thu 1 Aug 2013 at 06:33 PM
P&L statement analysis, cost of goods sold accounting, price elasticity, diminishing marginal returns, direct and overhead cost calculations, profit forecasting – the very basics of accounting, finance, economics and business management, in other words - are impediments to a good, emotionally based argument.
The HuffPo isn’t unique; many “journalists” commit similar infractions regularly because too many have been trained to set aside analysis when solutions to soothe emotion jump forward. (e.g. the Zimmerman trial; how many journalists analyzed why the prosecution could not convince its jury?)
The HuffPo is a good example of free speech overwhelming objective analysis to favor feelings. There is nothing wrong with that – a free press requires no guarantee of accuracy, nor should it – but this same sloppy, slipshod journalism is the first to vigorously defend its fallen star, often through accusations, denunciations, name calling and attacks.
It’s evolution and development, front & center; I offer 3 suggestions to the HuffPo business experts who suggested a BigMac price increase: 1) Pick just one news organization you dislike and cease all thought and comment about it, then take that mental energy and use it to 2) research & reconcile regular Liberal-favored “reporting” about good diet, obesity and health with continued &/or increased sales by McDonalds to justify the price thus wage increase, and lastly, 3) take a few courses in financial & managerial accounting and microeconomics, ensuring foot growth beyond jawbone insertion at widest opening.
This will lead to the credibility higher profits follow.
#35 Posted by Joe Skeptical, CJR on Thu 1 Aug 2013 at 06:41 PM
First of all, fast food is already too expensive. We should be trying to lower the cost of food not raise it! I'm sorry but 3.99 for a Big Mac is already too much. Telling me I have to pay even more so that the guy behind the counter can earn $16 an hour is ridiculous. How about focusing on lowering the cost of living so that we don't need to pay people higher salaries. Simple logic tells you that if you double the cost of labor then you can only employ half as many people. Instead of a Living Wage they ought to call it the Cannibal Wage, since the only way to get it is to sacrifice your co-workers.
#36 Posted by Todd Parsons, CJR on Thu 1 Aug 2013 at 06:46 PM
Why does anyone think they are getting news from Huffington. This is a woman was a staunch conservative until her husband left he for another man and now she is a died in the wool liberal. Really Think about it.
#37 Posted by mewp12, CJR on Thu 1 Aug 2013 at 06:50 PM
I'd hate to break it to people, but fast food workers SHOULD be making minimum wage. It's mainly a job for high school'ers and college students who need extra money. If you're 27, and you're a single parent trying to pay rent and support a kid and you have an entry level job at a fast food place, then you've seriously made some mistakes along the way, and that's your problem. We should be putting more publicity on the fact that people who work at nursing homes and assisted living homes have gone to college or at least had extra education out of high school and make 10 bucks an hour or less, and they are responsible for making sure that elderly demented patients are safe. Thanks to Obama, if those elderly patients aren't safe and wind up in the hospital, we'll all be paying for it.
#38 Posted by DrFistington, CJR on Thu 1 Aug 2013 at 06:52 PM
This living wage garbage is spreading all over the place. I guess 9 million jobs disappearing during the obama reign of terror isn't enough job loss. We got to put a death lock on this before it spreads further.
#39 Posted by MaliciousDisorder, CJR on Thu 1 Aug 2013 at 06:56 PM
If making hamburgers is so profitable why doesn't Huffington Post start making them. They could pay their workers $50 per hour if they wanted to.
#40 Posted by Tom, CJR on Thu 1 Aug 2013 at 07:00 PM
i see this error alot in liberal undergraduate papels; if you raise the price of your flagship product 68 cents in a extremely competitive business, you are not going to sell the same
amount of product as many consumers will switch to other competitors or simply not purchase at all. businesses do not operate in a vacuum!
so in reality adding 68 cents to the price of a Big Mac would decrease jobs and benefits at McDonalds restaurants, the opposite of what the author intended
#41 Posted by JGower, CJR on Thu 1 Aug 2013 at 07:00 PM
An interesting aspects that no one is discussing in this scenario is that, if there is a double in the pay (above min wage) is::
If the wages are doubled, then the competition for that job increases. Now the people that are working there today, may LOSE their job to someone who is more qualified, more responsible, etc.
Therefore, the increase in salary again may allow for the ones who were at McD's to begin with, be forced to go find another place to work, again, at a lower minimum wage.
#42 Posted by davidlamb, CJR on Thu 1 Aug 2013 at 07:02 PM
STOP RUNING EVERYTHING BY MALICIOUSLY PRINTING TRUTH!
#43 Posted by Paul Revere, CJR on Thu 1 Aug 2013 at 07:08 PM
It seems hard to believe, for me, that if McDonald's could put up its prices by 17% and make correspondingly more profit, that it wouldn't. I'm pretty sure they spend a bundle on making sure they are pricing where they need to be in each market, and that they are generating all the operating profit that they can. To do otherwise would be dereliction of the duty of the officers of the company.
So, assuming that both increasing and decreasing prices would reduce operating profit, increasing prices would *not* "pay" for increased wages for workers -- just the opposite: less money would be available to pay workers. Smaller operating margins would lead to fewer workers.
So who would "pay" for higher wages? Well, under the assumption that price changes would reduce profitability, increasing prices is not a feasible option, and therefore increased wages ultimately have to be paid by the owners of the corporation: retired teachers, firefighters, policemen, factory workers and bus drivers probably comprise quite a number of them.
#44 Posted by Big Mike, CJR on Thu 1 Aug 2013 at 07:14 PM
The article is really funny, coming from Huff Po, who when Adrianna sold out to AOL for $315 Million, they went from paying its news bloggers $100 plus an article to paying them absolutely NOTHING. Now Huff Po bloggers are "volunteers" who get to work for free. I wonder how many burgers just seeing your name in print, as a living wage buys?
#45 Posted by Mikey, CJR on Thu 1 Aug 2013 at 07:24 PM
I understand being young and needing a first job, being disabled or being retired and needing supplemental income but line workers at Mcdonalds are paid minimum wage for a reason. The work requires very little skill. If you are not in one of the groups mentioned above and you work the line you probably didn't educate or apply yourself in your teens and twenties. The work is hard. I know because I've been there as a teen and while in college. But expecting a living wage while not striving for something better is pretty selfish. Don't slack when you're young and you won't suffer in adulthood.
#46 Posted by T Zinser, CJR on Thu 1 Aug 2013 at 07:25 PM
Seriously who relies on huffpo for reliable news in the bloody first place, eh???
#47 Posted by Stan, CJR on Thu 1 Aug 2013 at 07:29 PM
It always bothers me when people get so upset about gas prices and they always blame the oil companies when the federal and state governments make more then ten (10) times as much on each gallon of gas as the oil company. Universal economic ignorance.
#48 Posted by depressionbaby, CJR on Thu 1 Aug 2013 at 07:35 PM
Surprise! Surprise! And how often is the Huffington Post ever right?
#49 Posted by comprof, CJR on Thu 1 Aug 2013 at 07:41 PM
Huffpo has never been a serious publication and has never been deemed reliable information by any responsible, productive adult. If Huffpo had to stop and point out every time they put forth totally inaccurate information, there would be no room for any stories to keep you stupid low information liberals "informed" and manipulated the way the liberal administration wants their useful idiots to be.
#50 Posted by JTerianDeShandreJackson, CJR on Thu 1 Aug 2013 at 07:53 PM
As a price point is forced higher, you also shift the demand curve. Fewer people will eat at McDonalds so less revenue, a few stores close, growth slows, stock price sinks, and total utility in the economy is reduced. Any time regulations force economic changes to a free-market equilibrium point - total utility goes down, and we are generally lessened. This can only work if their labor costs are a small, small percentage of total costs. Which it's not. It's like 25%
#51 Posted by Rick, CJR on Thu 1 Aug 2013 at 07:53 PM
Why is it that liberals can always get away pushing lie after lie? They never have to account for anything. Libs stink like rotting meat,
#52 Posted by Mike Jefferson, CJR on Thu 1 Aug 2013 at 07:54 PM
Lest we forget, scumpo - much like abc/cnn/nyt/cbs/nbc/wapo at al do not concern themselves with facts, they're nothing but cowardly, deceitful, propagandists. They (the media) are unethical, integrity challenged, subversive, lying, hate filled scum who are the enemy of the American people and in no small part responsible for how divided the nation is due to their lies or plain ignoring truth.
Having said that, while I'm sure the minority of American who count themselves liberal read it - no one else does. They have no credibility and have proven over and over again that they're an activist media unit - not a news outlet... well, I guess that describes the rest of the media too doesn't it?
#53 Posted by DJH, CJR on Thu 1 Aug 2013 at 08:14 PM
I will get behind a pay increase when the employees can remember to put my bbq sauce in the bag.
#54 Posted by jim, CJR on Thu 1 Aug 2013 at 08:16 PM
Also overlooked by the KU researcher is the "Rob Peter to pay Paul" aspect of this suggestion. I daresay that the vast majority of McDonalds' customers come from the working- and middle-class. So Joe Walmart and Susan Stop and Shop are supposed to reach into their non-capacious wallets to elevate the lifestyle of John McDonald?
A guy who had been spending $4 a day for lunch at McDonalds will see his tab rise by $1. Over a year, that is $250. That may seem inconsequential to the NY Times reporter who picked up the Huffington Post piece, but here in reality I am not sure that asking other members of the working class to subsidize fast food workers is a plausible path to prosperity.
#55 Posted by Tom Maguire, CJR on Thu 1 Aug 2013 at 08:17 PM
well there goes huffpost's credibility
#56 Posted by Kevin, CJR on Thu 1 Aug 2013 at 08:18 PM
Sorry, but those who earn the minimum wage are almost all *OVER* paid. Just walk in to any McDonald's for PROOF of that FACT.
#57 Posted by beowulfe, CJR on Thu 1 Aug 2013 at 08:25 PM
I learned this years ago, regarding how people are paid in a free enterprise economy. It's as true today, as it was then, yet very few American College students have ever heard it. "In America...You are paid according to 3 factors: A. The demand for what you do B. Your ability to do the job... and C. The difficulty of replacing you. Think about it.
Are hamburger flippers in great demand? Does being an excellent hamburger flipper DEMAND doubling your wage at some point in your fry cook career? How many people are just waiting in line, filling out applications for your job?
Business is not hard to decipher. Buy low, sell high. It's called, profit. That's a dirty word to Communists, who seek a worker Utopia..with THEM at the top, controlling YOU!
#58 Posted by Phil, CJR on Thu 1 Aug 2013 at 08:28 PM
Anyone making minimum wage or more is in the top 2% of wage earners in the world. There aren't many places in the world where one can find any job paying our minimum wage, much less one you can get after ignoring a free education and refusing to acquire any marketable skill. Anyone who has to settle with a career as a burger-flipper is already being paid more than their worth.
#59 Posted by Jtom, CJR on Thu 1 Aug 2013 at 08:40 PM
I got a HuffPo one day, and she wasn't worth the extra 68 cents.
#60 Posted by Liberalsaresofingstupid, CJR on Thu 1 Aug 2013 at 08:42 PM
Wow. HuffPo blew a story with rampant inaccuracies... Stop the presses!
#61 Posted by ah so, CJR on Thu 1 Aug 2013 at 08:45 PM
one other little thing...... If you raise prices by 17% you WILL lose some customers, ie. sales volume would go down.
They missed that totally
#62 Posted by racercoup, CJR on Thu 1 Aug 2013 at 08:55 PM
It's not about the facts, it's about the agenda... that's what matters...
#63 Posted by juan doe, CJR on Thu 1 Aug 2013 at 08:56 PM
As most have stated, fast food is the stepping stone to the real world. It is a high school/college pregraduate job. Plain and simple. I worked at a burger king in high school and it sucked so much it made me want to do something with my life. I cant imagine anyone being over 25 thinking they can do such a crappy job for the rest of your life, even if it paid 25 bucks it wouldn't be worth it, im telling you its a dead end job, the clock goes backwards there. Im glad it was soo sucky. Did i mention its a horrible job?
#64 Posted by nate, CJR on Thu 1 Aug 2013 at 09:00 PM
Regardless of the honesty of the numbers, the same basic fact remains. Nobody is forcing anybody to work at MickeyDees. If the pay is too low, nobody will apply. We have here what is known as a "market economy", the most efficient system ever devised.
#65 Posted by Roger Henry, CJR on Thu 1 Aug 2013 at 09:03 PM
What is stopping "progressive" companies from paying a living wage? The answer will explain what is in their hearts.
#66 Posted by John, CJR on Thu 1 Aug 2013 at 09:04 PM
The easy way to debunk this story: Every company prices their product to maximize profit. McDonald's charges $3.99 for a Big Mac because that is the most they can get for it. Raise prices by 25% and McDonald's customers eat elsewhere. No customers means no employees, or put another way instead of $16/hr they will earn $0/hr.
#67 Posted by Mark Schwartz, CJR on Thu 1 Aug 2013 at 09:09 PM
Actually, student Arnobio Morelix may be the twin to that TV intern who provided name of Asiana pilot Hung Way Lo.
More-lix?
Okay...
#68 Posted by Holycowgirl, CJR on Thu 1 Aug 2013 at 09:10 PM
Actually, student Arnobio Morelix may be the twin to that TV intern who provided name of Asiana pilot Hung Way Lo.
More-lix?
Okay...
#69 Posted by Holycowgirl, CJR on Thu 1 Aug 2013 at 09:11 PM
Another factor I bet they failed to think of, will they continue to sell the BigMac at the same rate they are selling at the lower price? Economic continues to prove when you increase price, you decrease demand. Take cigarettes for example, every time states increase the tax/price, more and more people quit smoking. Now states are finding the tax money they are getting of cigarettes is actually lower than what they were getting when the tax was lower. And quitting smoking is a lot more difficult than ordering another item off the McDonalds menu.
This entire "study"or whatever you call it, is flawed. Then again, what liberal "study" isnt?
#70 Posted by NotaLibturd, CJR on Thu 1 Aug 2013 at 09:26 PM
Folks always notice the wording.
Could instead of would.
Might instead of shall.
Possibly instead of must.
That always tells the tale right there.
#71 Posted by Mune Shadowe, CJR on Thu 1 Aug 2013 at 09:34 PM
Figures can lie and lairs can figure. HuffPo is taking a lesson for our beloved leader and pushing half truths.
#72 Posted by stagecoachdriver, CJR on Thu 1 Aug 2013 at 09:35 PM
Don't like that $8.00 an hour job? Go get a better one.
What? You don't have the skills to get a better job?
#73 Posted by MrLogical, CJR on Thu 1 Aug 2013 at 09:36 PM
There's deeper problem with the article: It assumes that McDonalds could increase revenue by increasing its prices. That additional revenue is where it gets the money to give those big wages.
The problem, though, is that if McDonalds could raise revenue by increasing prices, why hasn't it done so already and just used the increase to pay customers?
But, McDonald's can't raise revenues by increasing prices. Why? Well, because people can go to Burger King or Taco Bell, or they can just stay home and eat spaghetti.
#74 Posted by Chris, CJR on Thu 1 Aug 2013 at 09:38 PM
Raise McDonald's prices? I'm barely affording the value menu as is in this rotten Obama economy... I don't need prices raised for anything. Not 17 cents, not 68 cents.
#75 Posted by frankenfish, CJR on Thu 1 Aug 2013 at 09:38 PM
This undergraduate must have cooked up the ObamaCare numbers.
#76 Posted by Rico, CJR on Thu 1 Aug 2013 at 09:42 PM
Since I hate both HuffPo and McDonalds I don't really care too much about this.
#77 Posted by msmsry, CJR on Thu 1 Aug 2013 at 09:47 PM
Sounds like the person who formulated this study has a future in government work.
#78 Posted by mbg, CJR on Thu 1 Aug 2013 at 09:49 PM
why not put a tip jar for the low paid workers on the counter.
#79 Posted by ben, CJR on Thu 1 Aug 2013 at 09:49 PM
Well, it isn't the first time.
KU frat boys cooked up the whole Obamacare thing.
Just look at THOSE numbers!
#80 Posted by Journolista, CJR on Thu 1 Aug 2013 at 09:53 PM
What the minimum wage did to the restaurant where I worked for far too long was, it gave the hard workers the same pay as the slackers and the dummies -- workers too dumb to be given any significant responsibility.
If there were no MW the workers with the highest marginal productivity at the place, in other words, the ones doing the lion's share of the work, would be so compensated, and the less productive ones would be paid less. Where I worked, that would have meant about 10-15% of the workers would have been paid a decent wage and the rest -- high school punks and dummies, would have gotten below the MW somewhere. But the dummies vote, so politicians have gotten in the way.
#81 Posted by Brandon, CJR on Thu 1 Aug 2013 at 09:56 PM
here's an idea: don't eat that crap
#82 Posted by civisisus, CJR on Thu 1 Aug 2013 at 10:09 PM
Another example of redistribution of the wealth the Marxist way of doing things. Thank you I would love to pay more so some unskilled laborer can make twelve dollars an hour. What else do you want from us besides everything?
#83 Posted by stoptouchingthatmabel, CJR on Thu 1 Aug 2013 at 10:23 PM
You cannot arbitrarily increase an expense without a ripple effect. Raise a $1.00, isn't just raise prices, it is raise prices in the context of sales lost when prices are increased, changing menu items that no longer fit the pricing scheme, that changes vendor purchasing, advertising, etc.
The same people that think you can flip a switch without a multitude of unintended consequences are the same that think Obamacare will reduce costs.
No one ever talks about decreasing the cost of living to increase standard of living - develop local energy, which decreases cost of fuel, electricity, food products etc. Really about what you have left over. If you make $20,000/yr and have $10,000 left over (after necessities) how is that not better than making $27,500 only having $8,000 left over?
Standard of living is not just income, it is also cost of living which is artificially high. Not just about what you make, also about what you have left over. Look at every country where government manages wages and you do not find more people with more, you find a few with a shit load and most with nothing.
#84 Posted by RD, CJR on Thu 1 Aug 2013 at 10:25 PM
Seems what the "study", the HP, and you ignored was the elasticity of pricing and the diminishing returns on raising the price by 17 OR 25%. Believe me if they thought they could raise the prices that much and stay competitive and not loose volume, they would do it in a heartbeat. Pricing is determined by a balance of cost-up and market down.
#85 Posted by S Holman, CJR on Thu 1 Aug 2013 at 11:07 PM
political statistics is the norm for burgers and global warming. Also when wages go up so do indirect costs and benefits so even this correction is low. Anyone in business knows cost walks in on two feet.
And woe to the person who actually thinks flipping burgers or dropping frys is a career job. That's what is really wrong with the study. It tried to support something that is totally wrong. We need to push people up not make them content with menial positions.
#86 Posted by busseja, CJR on Thu 1 Aug 2013 at 11:08 PM
So let me get this straight. Some of you believe that the entire labor force should be labeled as equal? So i guess then, if all things considered, there would be no reason for secondary education since everyone should be treated equally. COME ON! There's a reason that McD's only hires high school students in my community and an even more obvious reason they only get paid $8 bucks an hour. THEY HAVE NO LIFE EXPERIENCE, NO COLLEGE DEGREE, NO BUSINESS EXPERIENCE, NO RESPECT FOR ELDERS, NO PASSION, NO DREAMS, NO DRIVE, NO GOALS, NO EXPECTATIONS, NO RESPONSIBILITY, NO CLUE and NO CLASS. ITS FREAKIN MCDONALD'S NOT INVESTMENT BANKING!!!!!
#87 Posted by TC, CJR on Thu 1 Aug 2013 at 11:26 PM
I just hate when the facts get in the way of a good progressive story...
#88 Posted by Anonymous, CJR on Thu 1 Aug 2013 at 11:43 PM
I do not eat now or ever expect to eat at McDonald so let them raise their wages by 3 times or even 4 times
How at Joe Slap House I want them to pay just 1 dollars a day
#89 Posted by Mike, CJR on Thu 1 Aug 2013 at 11:55 PM
KU is the Berkley of the Midwest you can't sling a dead cat without hitting an indoctrinated Marxist.
Were it not for all the hot women here the place would be unbearable,
#90 Posted by albert, CJR on Fri 2 Aug 2013 at 12:41 AM
What makes you think huffpo wasn't aware of their error? Liberals have no compunction about lying.
#91 Posted by mrsharfer, CJR on Fri 2 Aug 2013 at 12:54 AM
.
As always, liberals calculate such things using a static model, which never works.
They fail to realize that people will order fewer burgers, eat out less, eat elsewhere, etc., and that means fewer McDonalds employees are needed.
In other words, customers will make adjustments due to the higher prices.
Considering such factors apparently makes the heads of liberals explode, so they refuse to do it.
.
#92 Posted by nosemore, CJR on Fri 2 Aug 2013 at 01:25 AM
Does the Huffington post plan to raise the salaries of its employes or increase the amount it pays to rent the buildings iit occupies so that the landlord can pay its janitors a living raise.
#93 Posted by Jerry, CJR on Fri 2 Aug 2013 at 01:35 AM
My son recently worked for McDs for 3 years starting at minimum (of course). After 3 years he got a 25 cent raise. Never got promoted. He worked very hard and did all the menial jobs as expected including cleaning toilets etc.. When he was due for another raise, they decided to fire him for some cockeye'd reason avoiding the raise. I was glad and so was he when he left. He's working now in another well known fast food restaurant where the pay is much better and he is treated with respect. McDonald's has to be one of the worse companies to work for anywhere.
#94 Posted by George, CJR on Fri 2 Aug 2013 at 02:12 AM
I am happy you pointed this out. Honestly, I wouldn't mind paying an extra dollar in order to double their wages. I started working at McDonald's at age 15. Then went on to do other hard labor/low wage jobs, luckily moved up and on! But they deserve to earn more - besides, I have a hard time trusting what they do with our food on such a low wage.
#95 Posted by Sandraday, CJR on Fri 2 Aug 2013 at 02:16 AM
"and that’s assuming such price increases wouldn’t hurt sales, which they would."
Absolute NONSENSE. The poor -- who would receive the biggest share from any minimum wage increase -- tend to eat more at such fast food joints than the rich. Increasing dollars to the poor, therefore, will certainly result in increased spending at places where the poor spend their money. In other words -- at the very restaurants that will be paying the higher wages.
The author above appears to think that the poor will fill their mattresses with that extra money they earn, rather than spend it right back into the economy. Another bunch of hogwash -- the poor are the LEAST likely to save.
This is another hit piece on the poor.
#96 Posted by Shane, CJR on Fri 2 Aug 2013 at 02:33 AM
Didn't Winston Churchill say something to the effect that the lie goes around the world before the truth even gets its pants on?
#97 Posted by El Gato, CJR on Fri 2 Aug 2013 at 03:21 AM
Perhaps the Huffington Post should double it's employees salaries. Then they could just charge their advertisers a little more. Let's see how that works for them.
Get out of fantasy land people. No company is going to jack up their prices to pay their employees more. It doesn't work that way.
Every restaurant has a small profit margin. Some don't and go out of business.
No one asked any of you to go work at McDonalds. Don't apply and be happy.
#98 Posted by Dannyvice, CJR on Fri 2 Aug 2013 at 03:35 AM
Looking at their sales to labor cost ratio, McDonalds has a pretty high labor cost in comparison to a lot of other restaurants. And I don't think all of McDonalds corporate costs are itemized in that list. Those are fixed operation expenses plus food and paper. Lawsuits, charities, workman's comp and a lot of other things take a big part of that profit.
In the end, the profit margin gets pretty narrow...
But go ahead and just double those wages like it won't matter.
#99 Posted by Danny Vice, CJR on Fri 2 Aug 2013 at 03:50 AM
Liberals are the people who have NEVER taken an economics class. Elasticity of demand? What's that? (Btw, republicans are the ones who have never taken a philosophy course.)
#100 Posted by SteveZ, CJR on Fri 2 Aug 2013 at 03:54 AM
There have been too many journalist, pundits and other non-finance people commenting. Now for some real world analysis. Here is a sample store financial statement.
http://www.bluemaumau.org/sites/default/files/Janney-McDonalds%20Income%20Statement%20mock.pdf
If you double the crew payroll, the store will go bankrupt without increasing the prices by 22%. And that's before adjusting for lost sales due to this obscene price increase.
Also, not all stores are profitable. Sometimes Franchisees with multiple stores are paired with unprofitable stores.
All this babble reminds me of Rodney Dangerfield's First Economics Class in the movie Back To School, a humorous example of the gap between the "real world" and school.
https://www.youtube.com/watch?v=YlVDGmjz7eM
#101 Posted by Accountant, CJR on Fri 2 Aug 2013 at 04:04 AM
Need I remind our liberal uhmmm, "progressive" friends that a job at McD's is not intended to support a family or pay rent. It is indeed an entry level job for young people to gain experience in the work force. Claims of so called "protesters" that allege that minimum wages can't cover all their bills are nonsense...if you have no education and cannot get a better than minimum wage job, you have no business starting a family or renting an apartment. This is all manufactured anti-business fertilizer.
#102 Posted by T, CJR on Fri 2 Aug 2013 at 04:23 AM
Not a surprise. HUFFPO and others who seem to be on a leash leading to the left are fast to publish subjects and purported data if cohesive with their agendas.
All that is left to know is the actual mechanism of the distribution of the points and the hierarchy of ascension should an outlet actually beat the central machine to a story, even if it ends up being the equivalent of an undergrad composition class submission.
#103 Posted by asc, CJR on Fri 2 Aug 2013 at 05:27 AM
I haven't ate at McDonalds in a long time. I like the Bk Whoppers. The pickles, mustard and toasted buns at Whataburger are pretty unique. The only thing halfway decent at McD's are the fries. They could just use a paintbrush and swab some special sauce on the face at the drive through. The meat looks like it is about to crawl off the bun.
#104 Posted by Trudge1, CJR on Fri 2 Aug 2013 at 05:36 AM
You can always depend on good ol' HuffPo to throw out some unverified leftist propaganda and have un-professionals such as MSNBC and CNN to grab hold and repeat it enough that it becomes the "truth". Just part of the Democrats and Obama schemes to defraud the public. With the present day low- informed public it is highly effective and the crooked Democrats are able to thrive from it.
#105 Posted by glenthompson, CJR on Fri 2 Aug 2013 at 05:37 AM
You don't really expect liberal children to understand finances or the real world do you?
#106 Posted by Mike, CJR on Fri 2 Aug 2013 at 06:14 AM
Took this study on during my radio show this past Wed. It smelled from the get-go. Myopia rules the world of internet reporting, and the public seems to encourage anything that supports their opinion, whether or not that opinion has any basis in fact. It proves one thing: hard core politics and objective reporting make lousy bedfellows.
#107 Posted by Lenny Palmer, CJR on Fri 2 Aug 2013 at 06:27 AM
I knew it would be an extra dollar or more for a big mac. All these libs have been saying for years to just raise prices 50 cents. Problem is McDonald's priced me out of their market years ago and new local taxes didn't help. I'm not paying more than three dollars for a Big Mac with the reduced size, so-so quality and bad service. Lots of people have priced me away from their products. I'm not paying 5 dollars for a small can of WD-40 or bottle of armor all either. So go ahead and strike. I rarely eat overpriced fast food.
#108 Posted by Chuck, CJR on Fri 2 Aug 2013 at 06:34 AM
Liberal Math. Always amusing...
#109 Posted by Digital Dan, CJR on Fri 2 Aug 2013 at 06:35 AM
Not surprising, most of what that communist rag prints is either distorted or an outright lie.
#110 Posted by Mendoza, CJR on Fri 2 Aug 2013 at 06:43 AM
Seems propaganda that is known to be false still works on the Huntington drones.
#111 Posted by Zippy, CJR on Fri 2 Aug 2013 at 06:50 AM
The context of the original HuffPo article was raising the minimum wage They and you also left out the fact that food and supplies would also cost more since employees of the suppliers would be getting a raise. The higher cost of supplies would be passed to McDonalds. No hard numbers here, but the cost increase would be closer to $2 for a Big Mac than it would be to $1.
#112 Posted by Phil, CJR on Fri 2 Aug 2013 at 06:54 AM
This is a ridiculous article on many levels. Both authors (Huff and CJR) have left THE most important factor relating to capitalism: If you raise the price, the demand for that product goes down. Add 64 cents to a hamburger, a product that is often purchased by regular/recurring customers, and they will find a new vender where the hamburgers are 64 cents cheaper. Trust me, if GM or Levi's or Sears raises their price 17%, they don't make more money. That price is arrived at by being the price point that is high enough to make money but low enough to keep customers coming back, which includes being low enough to compete with other company's products. The only product I am aware of for which market research has shown this relationship does not work, is gasoline.
#113 Posted by C. C. Smith, CJR on Fri 2 Aug 2013 at 07:05 AM
Hilarious story about the HuffPo staff's ignorance of business and economic. But this isn't really about McDonalds...it's about trying to open the playing field for a huge increase in the minimum wage.
Beyond the case of McDonalds did anyone consider the impact on other businesses were forced to pay a "living wage" to entry level employees who bring nothing to "day 1" on the job except for a "strong back"?
Unemployment among young black males in the past four years has been worse than at any time in recorded US history. Only 47 percent of working-age American adults now hold full-time jobs...also the worst number in American history. Less than 30 percent of high school students had summer jobs this year. And every monthly BLS jobs report shows more part-time jobs "created" than the number of full-time jobs "created." To those of us who know how to read that report, it means that the US is steadily losing full-time jobs, month-to-month, as employers not only add (net) only part-time jobs, but are converting full-time jobs into part-time jobs. Last month's BLS report showed that 322,000 part time jobs were "added" in the US. More than twice the total "jobs created" in the BLS report. That means every one of the 160,000 net jobs gained were part-time jobs, and that 162,000 jobs that were full-time jobs in May, turned into part-time jobs by June.
Economically, the US is literally consuming itself. There is precious little opportunity for a young American without a college degree anymore. If the federal government mandated any kind of significant increase in the minimum wage that would be the end of opportunity for the vast majority of young blacks in the US. It would be all but impossible for most young, high school-educated blacks...especially males...to every enter the workforce and live a normal, productive life.
This ridiculous "living wage" argument with regard to McDonalds employee pay is the precursor to an economic and social disaster in the making. Unless we want to triple our prison space and condemn the majority of black males to life behind bars, we'd better "wise up" about this situation and stop making it more difficult for a young black to find a job.
#114 Posted by TheRaven, CJR on Fri 2 Aug 2013 at 07:50 AM
Yet more "I can see Russia from my backyard" manipulation lies from the Lefty Media Machine to con the ignorant Liberals.
(wait...those last two words were redundant)
#115 Posted by HTUttle, CJR on Fri 2 Aug 2013 at 10:20 AM
Entry level jobs.
Anyone who doesn't make at least assistant manager after a year or so in a job like that is just incompetent.
#116 Posted by HTuttle, CJR on Fri 2 Aug 2013 at 10:23 AM
- "the idea that the highest possible return for the shareholder and executives is what's best for a company is a relatively recent development"
Uh, no. Maximizing shareholder value has ALWAYS been the primary fiduciary responsibility of corporate leadership.
And all of the people here whining that entry-level jobs dumping french fries into hot oil...which are generally filled by school kids with no work experience...are supposed to pay wages that will support a family are clear indicators that the public school system fails miserably at teaching even the most fundamental of basic economics concepts.
#117 Posted by WuzYoungOnceToo, CJR on Fri 2 Aug 2013 at 12:45 PM
W Sobchak writes: "The link on Drudge states that an "error" was made. This implies that there was no malice here. I think we know enough about the Huff Post to know that it is quite likely they knew exactly what they were doing."
You are way underestimating laziness, lack of understanding and confirmation bias in reporting. The easiest way to get an article is to rewrite a press release. If the reporter hasn't bothered to educate themselves on the topic, they will miss glaring errors. If the information confirms what you already believe to be true, then you accept it as trustworthy.
I do have a big problem with articles "explaining" what a report says without including that report because almost inevitably they have something wrong.Ask the Popehat team about the accuracy of legal reporting. Do you honestly think it is better in other technical or complicated fields.
Sometimes, I agree with you, reporter leave the data out because they are intentionally spinning it. The latest "IRS scandal" is an example. ' Emails show FEC & IRS are colluding" reads the headlines. An article full of "evidence suggests" and "appears" and "may" . Of course the E Mails aren't in the article. Find the actual E Mails and you see two bureaucrats in paranoid mode making sure they are only discussing legal disclosure. The email shows exactly the opposite of the headline and article.
#118 Posted by InnocentBystander, CJR on Fri 2 Aug 2013 at 04:05 PM
Wait! I would have to pay $1.25 for an ice cream cone instead of $1??? Just so some people could make a living wage. That's totally unreasonable!!!!
#119 Posted by Dan, CJR on Fri 2 Aug 2013 at 05:38 PM
So, they were off by 32 cents.
The good news is that if we double every worker's salary, they'll be able to afford a lot more Big Macs (among other things) even if they did cost $1 more. Heck, they could afford to buy the same number of Big Macs even if they doubled the price. It sounds like a win-win proposition to me.
#120 Posted by Kaleberg, CJR on Fri 2 Aug 2013 at 10:49 PM
This is communists at work. The same mental midgets who think that the government should control every aspect of our lives come up with these idiotic ideas. They don't realize that the minimum wage workers would suffer the most from their proposal. Double the cost of labor then their would be less jobs for those workers. If their idea made sense then we should just make the minimum wage $50 and hour.
#121 Posted by conradca, CJR on Fri 2 Aug 2013 at 11:13 PM
I think that Liberals are in a desperate search for jobs because they can't admit that their ideology (religion) of progressivism is flawed. I remember how starbucks appealed for donations to a charity that was going to be used to make loans to businesses. It was donate for jobs. They were desperate to make Obamunism work.
#122 Posted by conradca, CJR on Fri 2 Aug 2013 at 11:24 PM
Mark Levin on Explosive CNN Benghazi Report: "It's Iran-Contra Times a Thousand"
http://commoncts.blogspot.com/2013/08/mark-levin-on-explosive-cnn-benghazi.html
#123 Posted by Steve, CJR on Sat 3 Aug 2013 at 03:10 AM