McDonald’s CA franchisee on new minimum wage: "The sheer scale of the impact is just breathtaking"

[candycorn]

Don't be surprised I don't play with gotcha setups.

A simple yes or no question is hardly a “gotcha”.... Nobody forces you to say that a manager is going to get $20 of production per hour out of an employee...but you said it.

If the State made the minimum wage $2,000 an hour, you’re on the hook (logically) of stating that an employee can do $2,000 worth of labor.

Clearly they cannot attain that output.

As an economic unit, the work will be “valued” at whatever monies can be derived from it but it doesn’t address that there is an inflection point to where labor cannot reach the artificially set wage floor.

 

[hadit]

Yeah...its terrible being a millionaire...

View attachment 932439
If this keeps up, they may only have one house in Malibu before too much longer.

Yeah, they should have just kept it all to themselves instead of hiring and paying teenagers trying to start a job history and some older people looking for something to keep themselves busy and get a little pocket money in retirement. The cads.

 

[martybegan]

A simple yes or no question is hardly a “gotcha”.... Nobody forces you to say that a manager is going to get $20 of production per hour out of an employee...but you said it.

If the State made the minimum wage $2,000 an hour, you’re on the hook (logically) of stating that an employee can do $2,000 worth of labor.

Clearly they cannot attain that output.

As an economic unit, the work will be “valued” at whatever monies can be derived from it but it doesn’t address that there is an inflection point to where labor cannot reach the artificially set wage floor.

That you think you can pay someone $2k to flip a burger shows your lack of understanding of economics.

I said it, and what they will do is hire someone that gives them the $20. or replace them with a machine that costs far less an hour in upkeep but with an initial capital cost.

 

[hadit]

That you think you can pay someone $2k to flip a burger shows your lack of understanding of economics.

I said it, and what they will do is hire someone that gives them the $20. or replace them with a machine that costs far less an hour in upkeep but with an initial capital cost.

It won't be long before the average McDonalds will have two people in the store, a security guard and someone to monitor the machines.

 

[leftwinger]

Its no ones business what White Castle decides to pay its staff. But Obiden types think they know better. Micro managers w/o any stake in the game.

 

[Andylusion]

Yeah...its terrible being a millionaire...

View attachment 932439
If this keeps up, they may only have one house in Malibu before too much longer.

Nothing of what you posted is irrelevant.
That's the problem.

Franchise fees have no effect on how much value the worker creates, and thus no effect on how much the worker is paid.

The worker is paid out of the value they create. The franchise fee has nothing to do with it.

Further, the $2.3 Million is the cost of the franchise. The CEO of McDonald's is not getting $2.3 Million. That's the cost of the property, the building, the equipment, the ovens, the whole thing.

I hope you are not foolish enough to believe that the building, the property, the parking lot, the entire thing just magically Harry Potter style pops out of the ground, built, wired, and equipped to operating, and that the $2.3 Million is pocketed by the CEO or something.

That $2.3 Million pays the workers that builds the store. The money McDonald's corporate gets, is the $45,000 franchise fee.

And again, this has nothing to do with the pay of the employees. The employees are paid out of the value they create.

A simple example is if I'm running a lawn mowing service. If a customer is willing to pay $30 to have their lawn mowed, I can't pay you the employee $35 to mow the lawn. I can't even pay you $30, because then I have no profit, why would I even run the business? I can't even pay you $25 because I have to pay for gas and repairs on the mower, and to replace the mower eventually. I can't even pay you $20, because I have to pay social security taxes, and payroll taxes, and you want benefits like Obama Care mandates and PTO.

So you get paid $15. And that's out of the value you created.
Doesn't matter if I have a franchise fee or not. I can't pay you more, unless the customer pays me more. If they don't.... then I can't. And if the government mandates I have to pay you $25 or $30 to mow the lawn, then I lay you off and you earn nothing.

So the franchise fees are absolutely irrelevant to employee wages.

 

[candycorn]

Yeah, they should have just kept it all to themselves instead of hiring and paying teenagers trying to start a job history and some older people looking for something to keep themselves busy and get a little pocket money in retirement. The cads.

The State was crazy to implement the increase all at once. Liberals Gone Crazy--it should be a TMZ show.

 

[candycorn]

Nothing of what you posted is irrelevant.

I know. Thanks.

 

[candycorn]

That you think you can pay someone $2k to flip a burger shows your lack of understanding of economics.

It was an example.

I said it, and what they will do is hire someone that gives them the $20. or replace them with a machine that costs far less an hour in upkeep but with an initial capital cost.

Yep...as always...you’ve proven yourself to be a waste of carbon.

 

[Andylusion]

I know. Thanks.

Then why are you talking? The point of a discussion is to have relevant dialogue about the problems in our country, and effects of policies.

If you are going to make relevant comments, then you are burden to society. Please stop.

 

[candycorn]

Then why are you talking? The point of a discussion is to have relevant dialogue about the problems in our country, and effects of policies.

If you are going to make relevant comments, then you are burden to society. Please stop.

Yeah, you said that nothing I posted was irrelevant.

I thanked you.

Wake up on the wrong side of the cage this morning?

 

[martybegan]

It was an example.

Yep...as always...you’ve proven yourself to be a waste of carbon.

A dumb one.

Non answer is seen as non answer.

 

[Andylusion]

Yeah, you said that nothing I posted was irrelevant.

I thanked you.

Wake up on the wrong side of the cage this morning?

If you knew that what your saying didn't make any difference to the topic, why say it?

 

[candycorn]

If you knew that what your saying didn't make any difference to the topic, why say it?

It does...you said it wasn’t irrelevant. Meaning it was relevant. What more do you want?

My point was that there is a place on the graph where labor cannot equal the monetary outlay and the payor is simply having to pay for work not done.
So either the price charged to the end user--the fat guy named Walt eating the Big Mac has to be higher or the payor--a slim guy named Duncan has to accept a lower profit margin.

This was the idiocy of the State to raise the MW to $20 an hour without planned step increases to avoid the sticker shock to Walt or the reality of the situation to Duncan.

 

[Andylusion]

It does...you said it wasn’t irrelevant. Meaning it was relevant. What more do you want?

My point was that there is a place on the graph where labor cannot equal the monetary outlay and the payor is simply having to pay for work not done.
So either the price charged to the end user--the fat guy named Walt eating the Big Mac has to be higher or the payor--a slim guy named Duncan has to accept a lower profit margin.

This was the idiocy of the State to raise the MW to $20 an hour without planned step increases to avoid the sticker shock to Walt or the reality of the situation to Duncan.

Yeah I see the double negative now. Nice one. Neener neener. You got me.

So... are you suggesting that if they had merely increased the minimum wage over a period of time, that somehow it wouldn't have a negative impact?

Because at some point, no amount of phasing in an increase in cost, will stop the negative effects from happening. Phasing in the increase in cost over a period of years, only phases in the negative economic consequences over a period of years.

It doesn't matter how long you phase in a burrito that costs $20, people are not likely to buy that. Doesn't matter over how many years you phase in that price hike.

UNLESS... you phase in the minimum wage hike over so many decades, that the increase in the minimum wage is LESS than inflation, which means the minimum wage is having zero effect. But then if it has zero effect, might as well not have it.

And "Duncan" your fictional store owner is not going to accept a lower profit margin. That will never happen. So the only options are, whether you phase in the minimum wage hike or not, that you increase prices on customers, replace workers with automation, or close the business and lay everyone off.

The only difference between phasing in the minimum wage hike, or having it increase at once, is that people can see the effects clearly with it being jacked up at once. But phasing it in, has the same effects, just over a longer time frame.

 

[Dadoalex]

A little less profit? The average profit margin of a McD's franchise is between 5% and 10%. There's not a lot of wiggle room in there. And if you think jacking the labor costs that high means just a "little less profit", you're not paying attention.

McDonalds
Franchise fees 4% of gross sales
Ad fees 4% of gross sales...

The franchise owner isn't the only one making money.

MCD could reduce their dividends $2 by rolling down their fees which would free about $1.5B, yeah, billion with a B to increase employee salaries.

 

[Andylusion]

McDonalds
Franchise fees 4% of gross sales
Ad fees 4% of gross sales...

The franchise owner isn't the only one making money.

MCD could reduce their dividends $2 by rolling down their fees which would free about $1.5B, yeah, billion with a B to increase employee salaries.

Ad fees generate business for the stores. You decrease that, you decrease sales, and then there is no money to pay employees more wages.

Now as far as the reducing dividends by $2.... if you owned a store, would you just accept being told you couldn't profit as much from it? You can't really force the people who own the business, to just accept getting less for it.

If you own a car, can I just demand you sell it, and give the profits to others? No. Because you own it. It's yours. You don't take people dictating how you use your property. Why do you think you can dictate how others use their property?

But let us even live in your world, where you reduce dividends by $1.5 Billion.
How much would that be to employees?

McDonald's has roughly 1.9 Million crew members world wide.
$1.5 Billion divided by 1.9 million, that would be $790 per person, or $15 a week, or a 37¢ raise per hour.

Is that what you want? A 37¢ raise? That's going to fix everything?

And here's the kickers. Every single store is still going to adjust their prices up, to account for that 37¢ raise. So prices will go up, customer will end up paying more, and the dividends will go back to what they were before.

And by the way, who are you taking that $1.5 Billion from? The shareholders who are? Us. We're the shareholders. I own stock in McDonald's. The public owns most of the stocks. That's something you people never seem to gasp.

IRAs, 401ks, Pensions, Non-profits, Life insurance, Annuities, and endowments.

More stocks are owned by the public, than by the rich. Taxable accounts of the rich and wealthy, make up only a bit more than 20% of the stocks on the market. More than 1/3 of all stocks are owned by the public. Retirees.

So you are taking that $1.5 Billion from people who invested in their retirements. Why do you want to harm elderly and retired people?

 

[braalian]

Given the high cost of living situation in California, wasn’t $20/hr already considered a pretty crappy wage there?

I can’t imagine living off that much here in the Midwest, let alone in California

 

[Batcat]

If they’re laying off people, who’s going to do the work?

The cost of a burger meal will likely be so high that the fast food joints will not need as many workers. In fact, a good number may go out of business.

With all the inflation people may not be able to splurge on a Big Mac.

 

[Andylusion]

If they’re laying off people, who’s going to do the work?

Last time I went to Chipotle, they charged me $10 for a burrito.
I'm not paying $10 for a tortilla, some rice, and some chunks of chicken. For the cost of three burritos, I can buy enough chicken, tortillas and rice, to make a dozen burritos, or more.

So if the price is too high, not very many people are going to be going out to eat.

And if not very many people go out to eat, you won't need workers to do the work, because there won't be any work for them to do.

People will just eat at home. That's what I'm doing now. I hardly go out to eat at all. Too expensive.

Now for those workers who don't have skills to qualify them for better jobs, that's going to suck because they'll be unemployed But... that's what the public voted for, was to make people unemployed and homeless. Voting has consequences. People need to learn.