US Fast Food Workers And Minimum Wage Rises

Bloomberg Business week has an interesting article that explores what US$15/hr jobs there are and fast food workers not happy with their current hourly wage rate.

Some fast food workers want $15/hr which according to Bureau of Labour Statistics data would place them on the same compensation level as medical secretaries, slot machine supervisors and animal control workers.

This is interesting:

…raising the hourly wage to $15—about two-thirds more than what the average employee earns now—would likely wipe out profits at these company-owned stores. “If wages are the majority of labor [costs], and it doubled to more than 50 percent of revenue, restaurant operating income would clearly be a loss, assuming static menu prices,” explains Sharon Zackfia, an analyst at William Blair & Co. Assuming all wages double and other expenses don’t decrease, menu prices at McDonald’s would have to go up about 25 percent, which means an extra $1 for a Big Mac and a “Dollar Twenty-Five Menu” in place of the Dollar Menu.

Fast food chains would pass on higher labour costs in the form of higher prices. The $1.25 menu replacing the $1 menu would be fascinating to watch to see how elastic demand is for such cheap fast food with a 25% price rise.

In terms of wage setting and price setting – this is straightforward stuff. If the fast food workers are able to negotiate a $15/hr wage, their employers will raise prices and there could be enough of a negative response to $1.25 cheeseburgers that some fast food workers will lose their jobs.

Read more:
Graeme Wheeler, Policy Pioneer, America’s Cup – Wait, What?

There is an interesting article over at Bloomberg that looks at Graeme Wheeler's first year as Governor of the Reserve...

Making Stuff Is Expensive

Making physical stuff is expensive. Ford in Australia, after decades of protectionism and subsidies, has finally decided that the stuff...