[B767drvr]

Originally Posted by eweissenbach

According to the article I linked from the Seattle Times, the cost of restaurant food rose 2-3% in cities where the minimum wage was raised. Even at 5% the cost of a Happy Meal may go from $4.00 to $4.20. This is Econ 101 stuff.

I LOVE being schooled by learned Econ 101 profs!

So, if we go from $10 per hour to $100 per hour and extrapolate on your cited research… are we to believe we'd only see a 20-30% increase in the price of a Happy Meal following a 1000% increase in labor cost? Gosh I love your mathematics. Life truly is wonderful.

[slipcovers]

Barry, that is a wonderful story....but it sounds like his intention from the beginning was to own a franchise and working from the bottom up...however, there has to be money invested from someone for the purchase of the franchise. He would not get that making minimum wage.

[BarryRX]

Originally Posted by slipcovers

Barry, that is a wonderful story....but it sounds like his intention from the beginning was to own a franchise and working from the bottom up...however, there has to be money invested from someone for the purchase of the franchise. He would not get that making minimum wage.

Hi Slipcovers, he never owned a franchise. He started work in a corporate BK and was always a corporate employee. That's an interesting question though...would he have had the same advancement opportunities if he had worked in a franchise BK? If I would go to work for a Mom and Pop Pharmacy, I would only be able to rise to a certain level. But if I went to work for Walgreens, I could eventually become CEO.

[eweissenbach]

Originally Posted by B767drvr

I LOVE being schooled by learned Econ 101 profs!

So, if we go from $10 per hour to $100 per hour and extrapolate on your cited research… are we to believe we'd only see a 20-30% increase in the price of a Happy Meal following a 1000% increase in labor cost? Gosh I love your mathematics. Life truly is wonderful.

Maybe in beginning Econ you were taught that wages are only one component in the costs of running a business. Read the article. You're welcome.

[buggyone]

Originally Posted by B767drvr

Both of your points are excellent.

Speaking to this one… the "price inelasticity of demand"… is going to be an eye opener for some. Fast-food restaurants typically run on tight margins and high labor costs. Doubling your labor costs (even if phased in) will result in sharply higher food prices. At $12-15 for a "Happy Meal", you can bet demand will fall. This is Econ 101 stuff. Artificially higher wages without a commensurate productivity increase will result in higher costs and higher prices (suppressing demand).

Finally… higher costs and reduced demand (sales) will ultimately lead to reduced demand for labor (job cuts/reduced hours). If that mechanism is insufficient, then the business fails.

You are right to some extent. Remember that other salaries and wages will rise commensurate to that higher minimum wage.

The minimum wage we might have made of $1.25 per hour in 1965 is now $7.50. The McDonald's meal of a burger, fries, and shake cost 45 cents back then. Basically, it was 25 minutes to buy that meal. Now that meal from the dollar menu, it costs $3.50 or takes approximately the same length of time to earn that meal at minimum wage.

As salaries rise, other prices follow. Remember, it is not only fast food restaurants to which the higher minimum wage applies.