$20 minimum wage for Fast-Food workers in California [LOCKED DUE TO POLITICS / COVID]

[infinitekidM2C]

If you're an adult making minimum wage and with any family you are truly living on the edge of society. These should be temporary jobs for teenagers and retired folk (and some new immigrants). If they are trying to live on this money they need to be frugal as hell, no iphones, no home internet or cable. Old cheap phone on limited service, broadcast tv and no car loans. Eating out only for special occasions. etc.

[Car-Addicted]

The same folks whining about minimum wage being too low are most likely reading this on a phone or parts of a phone manufactured in a Uyghur "re-education camp".

[Chick Webb]

When starting/growing a business management needs to decide how much of the pie to allocate to capital (equipment, etc.) and how much to labor. If labor is cheap, there's little incentive to invest in capital. Witness, for example, the building of the Union Pacific railway. I'm sure we've all seen the photos of the swarms of chinese labor they used to do it. Do you see that today? Hell no. Now, they have a great big machine that does it faster, safer, and cheaper. It cost millions, but it's still a better use of the money.

As labor becomes more expensive, businesses naturally invest more in capital goods to perform the work. One of my staff was relating to me just yesterday his experience with the AI-based auto-attendant at the Carl's Jr ordering window. He said it worked really good; it was pleasant, effective, and didn't forget the upsell. We mused that soon they'll take your money via a kiosk and the food will slide out of the service window on an automated conveyor belt. It's probably happening already. Also, there's Flippy, from Miso Robotics. Many more Flippies are in our future.

The recent changes to the minimum wage here in CA have already started to bite. The two largest Pizza Hut franchisees in the state have laid off 2000 delivery drivers because of it. Maybe they'll go to work for DoorDash, who knows? We're already hearing of other restaurants cutting back on expansion plans here.

And though the law "only" applies to large franchise restaurants, of course that's ridiculous, because restaurants (in fact, all businesses) are competing for the same labor. So it's going to raise costs for every business, and the smaller, less-capitalized ones will probably not be able to compete as their larger competitors invest in capital-based solutions to replace thier more expensive labor. Ultimately, they'll go under.

Meanwhile, economic activity in CA declines because nobody can afford anything in this state any longer, so the virtual signallers in Sacramento raise taxes to pay for all of the ridiculous programs they spun up with temporary COVID cash, causing more people to leave, further decreasing economic activity, resulting in more tax hikes... you see where this is going.

I've lived here for 44 years now; basically all of my adult life. It's been sad to watch, really. In part because of policies like this (and many, many, many others) California's transition from "The Golden State" to "The Golden Shower State" will not only continue, but accelerate. If only the weather weren't so stinkin' good, and the ocean so magical.

[Alfisti]

What if I told you Wyoming, Utah and Nevada all had worse inflation over the past year than California. And if they feel like oddball states, Florida has had worse inflation than California too.

https://finance.yahoo.com/news/25-st...xzT8CHLGfLEzPi

[2000cs]

Originally Posted by Alfisti

What if I told you Wyoming, Utah and Nevada all had worse inflation over the past year than California. And if they feel like oddball states, Florida has had worse inflation than California too.

https://finance.yahoo.com/news/25-st...xzT8CHLGfLEzPi

Here is the methodology behind that report (the data can also be downloaded). There are some serious problems with this but that is a topic for another thread. https://www.jec.senate.gov/public/_c...ethodology.pdf

Clearly there is an issue, nation-wide, in income disparity. This tends to happen when the economy is growing, and it corrects somewhat when there is a recession. Our policy of avoiding recessions seems to have prevented some of the correction, and the disparity is becoming more of a political problem now in addition to an economic one.

That said, I don’t see minimum wage increases as a solution. If they were, the past increases should have done the job. The solution lies in becoming a more valuable employee so that efficiency gains and capital improvements don’t put one on the chopping block. Mechanical innovation has cut into low skilled and repetitive jobs; AI and other technologies are coming for the middle-class white collar jobs very soon. Minimum wage increases and union representation are not likely to save these jobs or incomes. One just has to become more valuable and skilled than other employees. My concern is for the social, economic and political effects of the numbers of people who don’t upskill and are left unemployed or underemployed.

[Llarry]

Quote from Robert Reich, former U.S. Secretary of Labor:
"Why are we talking about whether paying fast food workers a better wage will drive up the cost of a Big Mac instead of asking how much McDonald's CEOs $17.8 million salary is driving up the cost?"

In my opinion, the CEOs and other senior executives of successful corporations should be well-compensated, but I think the numbers have generally gotten way out of hand in the past decade or two.

[2000cs]

Originally Posted by Llarry

Quote from Robert Reich, former U.S. Secretary of Labor:
"Why are we talking about whether paying fast food workers a better wage will drive up the cost of a Big Mac instead of asking how much McDonald's CEOs $17.8 million salary is driving up the cost?"

In my opinion, the CEOs and other senior executives of successful corporations should be well-compensated, but I think the numbers have generally gotten way out of hand in the past decade or two.

Reich, who I’ve always thought more a political hack than quality economist, should know the answer. The CEO oversees the entire corporation. Thus his compensation is considered a fixed cost, overhead. For cost analysis spread that over total units. I can’t get total burgers or meals or something like that quickly, so I used stores worldwide. His salary is equal to about $435 per store, annually. Note that he is hired by the board and responsible for delivering growth in profits, which should be a major driver of his compensation as well. If he delivers growth, his compensation will be spread over fewer and fewer units (locations, burgers, whatever), improving overall financial performance of McDonalds.

The burger flipper is analyzed by looking at the number of burgers or meals served in the location where he works (and really only the one he works at) or the appropriate “unit of production” for his assignments. Thus his cost is evaluated as an input to the cost of the burger, fries or whatever. An increase in his compensation directly impacts the cost of the burger. If his cost increases too much, or is forecast to continue increasing, the location will try to get more efficient (have him or a replacement be more productive), and the corporation will look for technology substitutes (robots, kiosks, etc) so that the cost per unit of production can remain as low, and competitive, as possible.

Reich might as well have asked why we worry about the cost of potatoes (for the fries) instead of the CEO salary.

[RockCrusher]

Originally Posted by Llarry

Quote from Robert Reich, former U.S. Secretary of Labor:
"Why are we talking about whether paying fast food workers a better wage will drive up the cost of a Big Mac instead of asking how much McDonald's CEOs $17.8 million salary is driving up the cost?"

In my opinion, the CEOs and other senior executives of successful corporations should be well-compensated, but I think the numbers have generally gotten way out of hand in the past decade or two.

Well Zippa states there are 1,336,229 McDonald's crew members in the US.

Average wage is $26,648.

$26,648 times 1,336,229 is $35.6B a year in crew members' wages.

McDonald's sells 2.5B hamburgers a year.

The CEO:
$17,800,000 divided by 2,500,000,000 is $0.00712 per burger to pay the CEO's salary.

The crew members:
$35.6B divided by 2.5B is $14.24 per burger to pay the crew members' wages.

Sure that $35.6B (and $17.8M) is amortized over all food/drink items sold at McD's not just burgers and both numbers drop by at least an order of magnitude when all food/drink items sold are factored in.

But it does provide some idea how little the CEO's $17.8M salary affects the cost of a burger (any food/drink item) compared to the $35.6B wages of the crew members.

Might add just bumping the crew members' hourly rate by $1 to $13.81 costs McD's an additional $2.7B a year.

Increasing the crew members' hourly rate to $20 would cost McD's an additional $19.9B a year.

[dradernh]

Originally Posted by 2000cs

Reich, who I’ve always thought more a political hack than quality economist

Reich mailed it in decades ago; there's been nothing new coming from that quarter.

[Car-Addicted]

Originally Posted by dradernh

Reich mailed it in decades ago; there's been nothing new coming from that quarter.

Along with Paul Krugman and Greg Mankiw. New Keynesian economics I loves me some good old Friedrich Hayek.
Ever looking for a fun Economic primer for adult and youngster alike.
Fear the Boom and Bust: Keynes vs. Hayek - The Original Economics Rap Battle!

[ASAP]

I think we are entering dangerous territory in terms of labor cost... this applies to everything and everyone... the more minimum wage or lower wages rise, the more the push to automation becomes obvious... or immigration or illegal hiring. As minimum wage rises, the wages for ALL other workers must also rise... none of this has happened.

I think we are headed towards a dark future that will overall have less jobs for everyone due to automation... what this means all out... who really knows?

[Car-Addicted]

Originally Posted by ASAP

I think we are entering dangerous territory in terms of labor cost... this applies to everything and everyone... the more minimum wage or lower wages rise, the more the push to automation becomes obvious... or immigration or illegal hiring

A very cynical minded person might conclude this is to usher in the era of universal basic income?

[ezaircon4jc]

Why does no one ever blame the stockholders for the rise in prices? Sure, upper, upper management gets well compensated, but stockholders demand a high return (a good number are in Congress).

[dreamingat30fps]

Originally Posted by RockCrusher

Well Zippa states there are 1,336,229 McDonald's crew members in the US.

Average wage is $26,648.

$26,648 times 1,336,229 is $35.6B a year in crew members' wages.

McDonald's sells 2.5B hamburgers a year.

The CEO:
$17,800,000 divided by 2,500,000,000 is $0.00712 per burger to pay the CEO's salary.

The crew members:
$35.6B divided by 2.5B is $14.24 per burger to pay the crew members' wages.

Sure that $35.6B (and $17.8M) is amortized over all food/drink items sold at McD's not just burgers and both numbers drop by at least an order of magnitude when all food/drink items sold are factored in.

But it does provide some idea how little the CEO's $17.8M salary affects the cost of a burger (any food/drink item) compared to the $35.6B wages of the crew members.

Might add just bumping the crew members' hourly rate by $1 to $13.81 costs McD's an additional $2.7B a year.

Increasing the crew members' hourly rate to $20 would cost McD's an additional $19.9B a year.

And if those number are correct if the CEO were to give up his entire salary that's a whole $13.32/year, $1.11/mo, $0.25/week, $0.006/hour extra for each employee.

[bagekko]

You know the CEO of McDonalds has nothing to do with what the restaurant pays it's employees right? Over 90% of the locations are franchisee owned. Heard the average pay of corp locations is better than franchised, but don't know if there's any data to support that. So get mad at the rich guy in your area that owns 4 McDonalds not the corp CEO.

Originally Posted by RockCrusher

Well Zippa states there are 1,336,229 McDonald's crew members in the US.

Average wage is $26,648.

$26,648 times 1,336,229 is $35.6B a year in crew members' wages.

McDonald's sells 2.5B hamburgers a year.

The CEO:
$17,800,000 divided by 2,500,000,000 is $0.00712 per burger to pay the CEO's salary.

The crew members:
$35.6B divided by 2.5B is $14.24 per burger to pay the crew members' wages.

Sure that $35.6B (and $17.8M) is amortized over all food/drink items sold at McD's not just burgers and both numbers drop by at least an order of magnitude when all food/drink items sold are factored in.

But it does provide some idea how little the CEO's $17.8M salary affects the cost of a burger (any food/drink item) compared to the $35.6B wages of the crew members.

Might add just bumping the crew members' hourly rate by $1 to $13.81 costs McD's an additional $2.7B a year.

Increasing the crew members' hourly rate to $20 would cost McD's an additional $19.9B a year.

[RockCrusher]

Originally Posted by bagekko

You know the CEO of McDonalds has nothing to do with what the restaurant pays it's employees right? Over 90% of the locations are franchisee owned. Heard the average pay of corp locations is better than franchised, but don't know if there's any data to support that. So get mad at the rich guy in your area that owns 4 McDonalds not the corp CEO.

I'm not hating the McD's CEO for his salary. While he doesn't directly control franchise owned restaurants his hand is on the tiller of all restaurants. If he plots a bad course, all suffer.

[Car-Addicted]

Now California has gone too far! California the crash test dummy for bad policy.

Calif. fast food minimum wage law will cost you $200 more a year for your Starbucks habit
The Seattle-based coffee giant increased already-inflated menu prices in its Golden State stores this week, after the state’s $20 minimum wage mandate for fast-food workers went into effect Monday, Business Insider reported.
Comparing previous receipts to current prices, items at Starbucks, where each store is corporately owned, have been jacked up by $0.50 to as much as $1.00, BI found.
A spokesperson for the coffee chain confirmed to the outlet that the rising prices in California stores are a response to the higher minimum wage — but declined to reveal the average item increase.
For example, if your typical order increases by $0.80 and you get Starbucks every workday, multiply that by 260 drinks, and you’re paying an additional $208 a year for your daily treat — and that’s only if you get one menu item five times a week.
https://www.msn.com/en-us/foodanddri...it/ar-BB1l15LE

Lets see about that Gavin Newsom recall now that Starbucks inflation hits.

[ezaircon4jc]

Originally Posted by Car-Addicted

Now California has gone too far! California the crash test dummy for bad policy.

Calif. fast food minimum wage law will cost you $200 more a year for your Starbucks habit
The Seattle-based coffee giant increased already-inflated menu prices in its Golden State stores this week, after the state’s $20 minimum wage mandate for fast-food workers went into effect Monday, Business Insider reported.
Comparing previous receipts to current prices, items at Starbucks, where each store is corporately owned, have been jacked up by $0.50 to as much as $1.00, BI found.
A spokesperson for the coffee chain confirmed to the outlet that the rising prices in California stores are a response to the higher minimum wage — but declined to reveal the average item increase.
For example, if your typical order increases by $0.80 and you get Starbucks every workday, multiply that by 260 drinks, and you’re paying an additional $208 a year for your daily treat — and that’s only if you get one menu item five times a week.
https://www.msn.com/en-us/foodanddri...it/ar-BB1l15LE

Lets see about that Gavin Newsom recall now that Starbucks inflation hits.

For crap coffee, too. They burn their beans. There are much better alternatives.

[sygazelle]

Originally Posted by peelerec

There is no winning as others have stated. What I am curious on as I am ignorant with history, is how the minimum wage was a livable wage before the 70's. What has changed?

In the late '60s minimum wage in California was $1.65 an hour. That's what I got working at a grocery store bagging groceries in high school. There's no way that was a livable wage. I lived at home but there was no way I could have lived on my own. When I wanted to make more, I found jobs that paid more with more skill required and more responsibility. At the time we thought of it as entry level employment to get some experience working. You've got to start somewhere.

I don't have a suggested solution to the current situation. I'm just saying that people have to start somewhere if they don't have experience and/or work skills.

[Esteban]

^ I remember $1.65 an hour. Worked at a fast food place part time making that. At the time, thought it was great. Just a kid in school. Not even 16yo, which I think was the legal working age back then.

[dradernh]

Originally Posted by sygazelle

In the late '60s minimum wage in California was $1.65 an hour. That's what I got working at a grocery store bagging groceries in high school. There's no way that was a livable wage. I lived at home but there was no way I could have lived on my own. When I wanted to make more, I found jobs that paid more with more skill required and more responsibility. At the time we thought of it as entry level employment to get some experience working. You've got to start somewhere.

I don't have a suggested solution to the current situation. I'm just saying that people have to start somewhere if they don't have experience and/or work skills.

I think $1.65 is what I was making as a postal carrier in San Francisco in late-'66 to mid-'67. IIRC, it worked out to around $400/mo. I shared a house in the Haight with some other people and lived quite well on it. My share of the rent was $35/mo. Food and gasoline were pretty inexpensive then, too. I was able to save a fair bit of that income.

Homes in the Richmond and the Sunset ran $25-30K; a mortgage payment would have run ~$125-150, roughly the same as rent. That's if you could get a mortgage; it was before Fannie Mae and Freddie Mac had nationalized the rates and the market. Today, of course, most of those homes cost well over a million dollars.

I left the P.O. after six months for a job in a computer room that paid closer to $600/mo. That's around $67,500/yr. in today's dollars. Money went just a tad further in San Francisco in those days!

[RockCrusher]

Originally Posted by Car-Addicted

Now California has gone too far! California the crash test dummy for bad policy.

Calif. fast food minimum wage law will cost you $200 more a year for your Starbucks habit
The Seattle-based coffee giant increased already-inflated menu prices in its Golden State stores this week, after the state’s $20 minimum wage mandate for fast-food workers went into effect Monday, Business Insider reported.
Comparing previous receipts to current prices, items at Starbucks, where each store is corporately owned, have been jacked up by $0.50 to as much as $1.00, BI found.
A spokesperson for the coffee chain confirmed to the outlet that the rising prices in California stores are a response to the higher minimum wage — but declined to reveal the average item increase.
For example, if your typical order increases by $0.80 and you get Starbucks every workday, multiply that by 260 drinks, and you’re paying an additional $208 a year for your daily treat — and that’s only if you get one menu item five times a week.
https://www.msn.com/en-us/foodanddri...it/ar-BB1l15LE

Lets see about that Gavin Newsom recall now that Starbucks inflation hits.

For someone buying a Starbucks coffee/drink per day the problem isn't the $0.80 increase of the drink but rather the habit of buying a drink every day.