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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (919412)	2/5/2016 9:35:27 PM
From: TimF	Respond to of 1575517

With price increases and the knowledge that servers are recieving much more. (A 281% increase for that waitress you linked to, a smaller increase in wages for non-tipped employees since they already have to be paid more.) That would mean a McDonald’s Big Mac, which currently goes for $3.99, would cost about 17 cents more, or $4.16." thinkprogress.org The waitress you liked to isn't working at McDs. They don't get tip credit. She does. Her increase would be much larger (since she proposes getting rid of the lower minimum wage for tipped employees). A 281 percent increase in wages (or more if your going to $15) would result in a higher amount of extra cost for the restaurant. Also the study doesn't make a lot of sense. "According to a 2010 study by the National Restaurant association, the typical full-service restaurant spends about a third of its sales revenue on labor, including front- and back-of house-positions. Limited-service restaurants such as fast-food outfits have lower average labor cost percentages, spending less than 30 percent of their income on payroll." yourbusiness.azcentral.com So assume limited service restaurants (which are more favorable for your arguments as the labor cost percentage is lower, and also the employees don't get tips, and so have to get the full national minimum wage. An increase from $7.25 to $15 is about is about a 107 percent increase in labor costs. Multiply that by .3 (since labor costs are about a third) and you get about a 32 percent increase in total costs. Assuming your not cutting back on labor hours (remember your arguing this is good for workers, and doesn't increase unemployment), then you would have to increase prices by about 32 percent. But that assumes no reduction in demand from the higher prices which isn't likely, so you would probably have to increase prices even more. OTOH fast food workers don't always make minimum wage, that would bring the increase back down a bit, but it would still have to be a lot more than 17 cents on a big mac. Maybe McDs is particuarly labor efficent and labor is only 20 percent of their costs. Maybe they also pay an average of $9/hour (I have my doubts about both but I'll go with it. OK at 20 percent labor costs that $3.99 big mac would have 79.8 cents of labor costs associated with it. If the employees currently make $9/hour rather then minimum wage the increase would only be two thirds so the extra cost for the big mac would only be 53.2 cents, but that's using favorable assumptions and its still a hell of a lot more than 17 cents. If instead you have a $7.25 worker going to $15 (a 107 percent increase) and 30 percent labor costs, to keep everything equal (other then the price) the price would have to go up $1.28. Of course there are ways to reduce that price increase but they pretty much amount to using less labor (so fewer jobs, or less hours for those who have jobs). Also at higher labor rates the employers could be a bit more selective. There is some good in that, but its not so good for the marginal worker who gets squeezed out even if total employment doesn't drop (and employment is likely to at least not grow as fast).