Why do you think raising the minimum wage is a bad idea?

[Dissolution]

Australia minmum wage is something like $15 an hour I think, I may be wrong, but I think it's close to that at least

$16.37 which is $14.67 US.

 

[s4zando]

McD's could make a start by selling food instead of something resembling it...

If what you mean by 'food' is something with sufficient nutrients to sustain human life without negative heath consequences, you can't sell that at a dollar and still remain profitable.* Once you're not profitable, you need to cut jobs, or reduce expenses elsewhere. Rent and 'cost of doing business' usually stays the same.

This assumes they can't produce their food at less cost. Of couse they can! But don't expect that to translate to edibility, health benfits, or wage increases for workers.

*We are not talking about eating oranges, apples and tomatoes from the grocer's, here. All which can be done within those parameters, of course.

 

[Dr. Imago]

<derail_alert>

McDonald's invested a large stake in "Chipotle" before divesting, which IMHO is far more sustainable long-term fast-food business model than the current 'burger-in-a-box' one that sells cheap food at cheap prices and hires cheap labor.

http://www.businessweek.com/articles/2013-10-03/chipotle-the-one-that-got-away-from-mcdonalds

Adapt or die. Just ask Kodak.

http://www.usatoday.com/story/money/business/2013/09/03/kodak-bankruptcy-emerging-today/2756841/

</derail_alert>

~Dr. Imago

 

[Belz...]

If it gets too high, eventually it'll start increasing inflation.

Is this an argument from someone who doesn't want to lose a bit of precious money, and would rather see people who don't have enough stay that way ?

 

[Dr. Imago]

Was it not Freidmann that cam up with that stonkingly bad idea that the whole purpose of a company was to generate value for stockholders no matter what the companies actual productivity performance was/is as long as the share price holds up, which in practice has led to CEOS more worried about the share price than the real actual health of the company they are supposed to be running?

Publicly traded companies always care more about the share price than anything else. In that regard, Friedman is not incorrect. The "free market" puts profits above everything else. And that's not always a good thing.

Having said that, I'm not sure why the government has to get involved and mandate interfering with that part of the free market. What should happen is that the employees unionize and demand a wage and benefits. This could happen outside of another government interference.

This is the way you balance power and give it to the little guy. The companies employing these workers will agree to pay a higher wage just to keep the unions out. But, the downside is that you're going to pay more for that burger and fries. No matter how you slice it.

~Dr. Imago

 

[Aepervius]

My own guess is that at $15/hour, there probably would not many McDonalds left. Many of them would face the following choice: raise prices beyond what most people are willing to pay for fast food, or sell hamburgers and fries at a loss. Either way, I don't see how they remain profitable.

McDonalds is not as wildly profitable as you might think:

http://www.bloomberg.com/news/2013-...74-outlets-cuts-full-year-profit-outlook.html

You are taking japan tokyo mcdonald as an example of mcdonald non profitability ?

Hu ?

http://www.aboutmcdonalds.com/conte...rs/Investor 2013/2012 Annual Report Final.pdf

MCdonald dividende , earning per share increased at least until 2012 and its margin was 30% in those years previous.

Scroll down to "Consolidated Operating Results" and you will see mcdonald is very very very profitable.

 

[Mitchell314]

Is this an argument from someone who doesn't want to lose a bit of precious money, and would rather see people who don't have enough stay that way ?

A rather meaningless question. There's every argument from every type of someone.

 

[Belz...]

A rather meaningless question. There's every argument from every type of someone.

I was asking about this specific post, as you well know. You took the time to respond, why don't you actually answer ?

 

[Belz...]

Publicly traded companies always care more about the share price than anything else. In that regard, Friedman is not incorrect. The "free market" puts profits above everything else. And that's not always a good thing.

Isn't that in fact always a bad thing ? Of course making money is important, but I don't think it should come at the expense of everything else.

 

[Aepervius]

OK, I may have to make a mea culpa now it appears. If the information in this article is correct, then what I wrote above:



Isn't right. According to the article, it appears that McDonalds could afford to pay its employees even $15/hour without raising prices and still remain profitable as a whole (but less profitable than now). A caveat is that some of its more marginal stores might become unprofitable and close as a result, costing jobs.

I'm also not 100% confident that the information in the article is completely accurate. It has a "back-of-the-envelope" feel to it. It also has a left-wing agenda.

The place where raising the minimum wage would hurt most is businesses that are barely profitable to begin with. Some of those businesses would have to close, and that would cost the jobs of the employees that work there. Maybe it's not McDonalds, but somewhere else.

Saw this after posting my reply. If you read the report they have a margin of 30% roughly. If I read the report correctlky they had 27 billion$ of revenue and out of it had about 5.5 billion $ income after tax.

In fact if you read the link I provided from Mcdoof themselves, scroll to Consolidated Statement of Income they have a cost of 4.7 billion $ per year worldwide for employee.
They have 13.000 rstaurant in the US , 34000 worldwide, even if you counted that's 40% of the cost was coming US restaurents, that's still about 2.3 billion$ per year from US restaurants, about. And that count also manager and people paid more than minimum wage.

So yeah I think that contrary to what you think, they could pay their employee more, rather than tell them how to get benefit and make the whole tax population pay.

 

[Dr. Imago]

Isn't that in fact always a bad thing ? Of course making money is important, but I don't think it should come at the expense of everything else.

No, because if a company doesn't turn and adequate profit and keep the shareholders happy, it won't be a company anymore. Then, everyone loses. (See my Kodak link.)

~Dr. Imago

 

[dann]

Australia minmum wage is something like $15 an hour I think, I may be wrong, but I think it's close to that at least

In Denmark McD seems to pay a minimum wage of 110 dkr (20 US-$) an hour.
15, 16 and 17-year-olds get 67 dkr (12 US-$).
Horesta.dk

 

[Belz...]

No, because if a company doesn't turn and adequate profit and keep the shareholders happy, it won't be a company anymore. Then, everyone loses. (See my Kodak link.)

~Dr. Imago

Did you even read my post ? Or did you stop at the first sentence ?

 

[Mitchell314]

I was asking about this specific post, as you well know. You took the time to respond, why don't you actually answer ?

Because it's a pointless question? There are many, many, many people. Naturally there would be somebody in the world who meets your criteria. And that there exists such a person has nothing to do with my original point.

 

[Dr. Imago]

Did you even read my post ? Or did you stop at the first sentence ?

You mean your two-sentence post?

I think you're trying to make a value-judgment on profit. You can't. There is no "expense at everything else". A business's - a publicly-traded company - purpose and primary responsibility is to its shareholders, not its employees. That's just the way it is. So, a "conscientious" company that drives the stock price down by not maximizing its profits will either have its board replaced by those who do, or will cease to exist. I think you're mistaking greed with fiduciary responsibility to the owners, in this case the shareholders, which is to maximize profits and keep shareholder value high thus keeping the company competitive and maximally fit.

Now, if you're talking about a privately-held company, then they can do whatever they want. If they pay their people crappy wages while filling their pockets, then they're doing exactly what you describe.

There. Is that a sufficient answer?

~Dr. Imago

 

[uke2se]

In Denmark McD seems to pay a minimum wage of 110 dkr (20 US-$) an hour.
15, 16 and 17-year-olds get 67 dkr (12 US-$).
Horesta.dk

This must mean that McDonalds is going under in Denmark. Otherwise the whole "McDonalds would go under if forced to pay $15 an hour" deal just isn't true.

 

[AlBell]

Yes, but the question is, why would they? You don't want to hire somebody who's over-qualified, because they're likely to move on to a better job. That's true no matter what the minimum wage is.



So, why wouldn't Joe's market value go up to $14, and Samantha's go up to $21?

Assume your business and your money; see why not?

 

[Darat]

Often the argument against a minimum wage is that it prevents "the market" from working. I hold that having a minimum wage in fact does the opposite - it rectifies a situation in which "the market" fails.

Minimum wage should be set so that companies are not benefiting from benefits paid to in-work workers because the workers are not paid enough. For example the UK minimum wage for over 21s is £6.31 per hour. Someone working a full working week i.e. 40 hours a week would still be in receipt of state benefits, in other words state benefits are being paid to employers that allows them to underpay the actual "market" value of workers labour.

 

[AlBell]

OK, I may have to make a mea culpa now it appears. If the information in this article is correct, then what I wrote above:



Isn't right. According to the article, it appears that McDonalds could afford to pay its employees even $15/hour without raising prices and still remain profitable as a whole (but less profitable than now). A caveat is that some of its more marginal stores might become unprofitable and close as a result, costing jobs.

I'm also not 100% confident that the information in the article is completely accurate. It has a "back-of-the-envelope" feel to it. It also has a left-wing agenda.

The place where raising the minimum wage would hurt most is businesses that are barely profitable to begin with. Some of those businesses would have to close, and that would cost the jobs of the employees that work there. Maybe it's not McDonalds, but somewhere else.

IMO, the bolded mirrors reality and is not a caveat and is the reason not to raise minimum wage, which in essence is a number unions use to bargain.

Payroll is a store by store Profit & Loss, not a major company corporate level concern per se.

 

[Mitchell314]

For those with dark humor, the benefit of raising min wage is that it also increases the wages of folks in the business of automation.