An affordable Big Mac and a livable wage can coexist

The iconic burger would cost just 68 cents more if McDonald's doubled salaries for workers.

By Aimee Picchi Jul 30, 2013 10:55AM

A sign outside the fast-food chain McDonald

Updated Aug. 1, 2013.


The Huffington Post on Wednesday corrected its story's earlier financial analysis. Because the researcher didn't include the costs of franchise businesses, some significant payroll and employee benefits had been excluded in the original analysis. The price of a Big Mac would increase by $1.28, based on a doubling of pay and including franchise costs, the Huffington Post concluded. 


One reason corporations say they can't afford to pay above the federally mandated minimum wage is their need to keep prices low and competitive. 


With its Dollar Menu, McDonald's (MCD) definitely aims for the budget-conscious. At the same time, its workers are among those protesting on behalf of a livable wage.


But what would happen to the cost of Big Macs if McDonald's actually paid workers $15 an hour? Not much, according to a study from a University of Kansas researcher provided to The Huffington Post. 


A Big Mac would cost just 68 cents more, while every item on the Dollar Menu would require an additional 17 cents, the study found. That includes a doubling of the salary of all McDonald's employees, from workers earning the base wage of $7.25 per hour to chief executive Donald Thompson, who was paid $8.75 million last year. 


Currently, only 17 cents of every dollar McDonald's earns goes to paying wages and benefits for its 500,000 U.S. employees, according to University of Kansas research assistant Arnobio Morelix. 


Of course, some consumers already think Big Macs are too pricey. The iconic burger, which costs about $4.20 on average in the U.S., has been losing ground to the chain's lower-cost options.


For diners on a budget, it may be a relief to learn that it's unlikely McDonald's -- or any other fast-food chain -- will pay workers a livable wage anytime soon. Many restaurant companies are balking at providing health insurance to full-time workers under Obamacare, prompting them and some fast-food chains to cut workers' hours to part time.


But advocates for a livable wage point to the dark side of those rock-bottom prices. Because people earning minimum wage often struggle to make ends meet, a single Wal-Mart (WMT) Supercenter store may require taxpayers to shell out as much as $1.7 million per year in government benefits, a recent study found.


While that McDonald's Dollar Menu item may feel good to your pocketbook, it may be sucking billions from the U.S. economy. After all, many minimum wage workers receive food stamps, an aid program that has swelled to $75 billion annually and now helps one out of every seven Americans put food on the table. 


Looking at it that way, it may be a bargain to pay 68 cents more for a Big Mac. 


Follow Aimee Picchi on Twitter at @aimeepicchi.


More on moneyNOW

680Comments
Jul 30, 2013 12:18PM
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Article fails to point out the effects of such a wage increase on literally every other business. A person currently making $15 per hour will be thinking, "If a guy flipping burgers is worth $15 per hour, then I am worth more." This will send shock waves through out the economy. These types of jobs were never meant to support a family. The vast majority of them were always part time jobs, for people who needed them.

Just a thought - Our government cannot create jobs. In fact, many of their policies do the opposite. Maybe their support for this idea only stems from their inability to live up to their promises. We should hold government of any type to all  its promises including keeping our economy growing. The key to a good job is education in a field whose long term prospects are bright. A part time job is not the answer nor is increasing the wages for part time jobs.

Jul 30, 2013 12:52PM
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Paying someone flipping burgers $15/hr leads to higher pay for other lines of work, baggers, stockers, janitors, etc. After all, the janitors will quit their jobs to flip burgers. Other employers will have to follow suit and raise wages.

The ripple effect would be increased wages across the board, throughout the entire economy.

If everybody has more money, then the supply of money will drive up prices, negating the benefit of increased wages.
Jul 30, 2013 2:20PM
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Even though this type of job (fast food, walmart, service industry) is considered by many to be Stepping Stone / Part Time / Extra Money work not intended to support a family, the sad truth is they are becoming the only option for far too many displaced adult and well educated entry-level workers. Look through current job postings, and see how many minimum wage dead-end jobs there are compared to the painfully few potential-advancement or even marginally well paying skilled jobs that exist. Automation, downsizing, and off-shoring have killed many of the positions that have been available in the past for those with ambition, brains, education and experience.  
Jul 30, 2013 2:31PM
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Please explain to me why it is the burden of employers to make someone's life as good as it can be. They offer a job. A place to provide work in exchange for a wage. If someone does not like the wage, they have the right to look elsewhere and secure a "better" job. Problem is, that most of these people in question have NO SKILL LEVEL at all to look for the wage level they want. It's a pipe dream for them. People like me, who worked, earned and put themselves through college now have the job that they think they are entitled to.
Jul 30, 2013 2:44PM
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The minimum wage act was NEVER intended to provide a "living" wage for people.  It was intended to prevent beginning workers and kids from being "slaves" and as a base for start up businesses.

 

Jobs at fast food places are not meant to support families, they are to build good working habits and experience for better higher paying jobs.

 

The world doesn't owe you anything; even a living wage.   Build your own.

 

Too high a minimum wage would lead to a country called "Detroit".

Jul 30, 2013 2:02PM
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Some recent college graduates are lucky to make $15 an our for their first entry level job. There is no reason a 16 year old needs to make $15 an hour to work maybe 20 hours a week taking drive thru orders. If they pay the crew $15 an hour (over 30k per year), will the managers be making $100k a year?

 

 

Jul 30, 2013 1:03PM
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When will liberals quit blaming corporations for the welfare state that they've created?  The issue isn't that the wages being paid are too low, its that the welfare programs allow people to settle for much lower wages than they otherwise would.  These jobs should be held by teenagers, not welfare queens looking to do as little as they can get by with to get along.  A healthy income should require some actual effort, not settling into a job any 15 yr old can do...
Jul 30, 2013 1:22PM
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The minimum wage someone earns should not be legislated by the state(US Gov't), it rightly should be dictated by economics, what the market will bear for the skill of the employee, and it's corresponding worth to the company and the products it produces. PERIOD!

I know it's troubling to some that hamburger flippers can't afford to support a family, but what troubles me is the Liberal Intellectuals who put their social engineering agenda before what's practical for this country, and the laws of economics. Do we really want to raise a generation of hamburger flippers? Is that what we should aspire to as Americans? Or should we be teaching our children to aspire to a higher level, to actually strive to acquire skills that allow them to earn a wage they can raise a family on?

Sorry, but hamburger flippers are probably already earning what their skills are worth, if not more! Sorry liberal Intellectuals, but your ideals, although kind and caring, are encouraging the laziness and irresponsible behavior that is tearing the country apart, and making US uncompetitive in the global economy! This country already has more than enough people who will try to get by with the minimum effort, taking advantage of the system and stealing from others if they have to. We don’t need to encourage more of the same.

Jul 30, 2013 2:40PM
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1.  You have a right to quit your job and seek better paying employment.

2.  You have a right to go on strike.

3.  McDonald's has a right to hire someone else when you don't show up for work.

We will never see $15 an hour at McDonald's in this decade.   Some jobs unions or not will only pay so much.  Its a fact of life.
Jul 30, 2013 12:42PM
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lol.. bargain to pay an additional 68 cents for a Bic Mac.. just what do you think the government will do with the extra money not being doled out for food stamps.. they sure as hell won't stop collecting it from us or give us a refund
Jul 30, 2013 2:51PM
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The article fails to point out that burger flippers and servers are not worth $15.00 per hour.
Jul 30, 2013 12:45PM
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Soo tired of Fast Food chains anyway.  Same old product for twice the price.  I'll eat ramen for lunch and save the money to pick up a Ribeye to grill when I get home.
Jul 30, 2013 12:20PM
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So they were right, an increase in wages to $15.00 an hour would increase prices by over 15%.

 

If the Big Mac costs $0.68 more that means the value meal will probably increase by a dollar. That will translate into fewer sales which means fewer workers will be needed.

Jul 30, 2013 2:59PM
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I had eight employees join this strike yesterday. They are now earning $0.00 per hour from me.
Jul 30, 2013 2:41PM
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Another "expert" telling a business how to run said business.
Jul 30, 2013 3:00PM
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Crappy no skill jobs SHOULD pay less. A low wage is what gives people the incentive to learn how to do something useful, so they can make a higher wage. If they gave every lazy idiot out there $15 an hour, then no one would ever both learning anything, or going to college, because they can get by just fine being uneducated, and lazy.
Jul 30, 2013 11:39AM
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No ...SLASH the vastly overpaid management and administrative salaries,   the ceo,     etc
Jul 30, 2013 2:00PM
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Going to McDee's when I was a kid was a treat. Unfortunately now it is all people can afford to feed there kids.....Sad.

Jul 30, 2013 12:38PM
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This is really about the ever failing GREEDY Unions trying to make a buck off the kids and the various fast food chains. They have been trying to get in there for years, it will never happen!
Jul 30, 2013 2:21PM
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The Shock wave sent through the Economy is when Wages were held back in order to fatten the pockets of the Already Wealthy. The Wage Gape went from 40 to 1 to now well over 400 to 1. And the economy has never recovered. So instead of rewarding Workers for increased Productivity over the years, we have given them less and the Barking Dogs, more. That shock wave has resulted in Workers unable to buy more and thus an economy that create little if any meaningful jobs. If you only pay most folks the least amount of money, how can you expect the economy to create higher paying jobs. There simple isn't enough buying power to support it. That's real MATH. Then you have the Fear Mongers claiming how the next guy/gal might demand far more.

Maybe those folks already make far too much for what they actually do. You know all the Legacy Jobs where folks make a ton but do very little. And not just Government jobs, this is widespread across the Nation private or public. When real Workers make more, they can buy more, more Jobs can be created. When Corporations keep all the Profits and Cash Hoards for themselves, you have what we currently see, a Economy on Life support from the Global FEDS.



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