Would a $9 minimum wage hurt McDonald's?
Some investors worry that Burger King and other fast-food chains might get dinged by Obama's proposal for a higher federal baseline wage.
While millions of Americans working low-paying jobs would cheer if President Barack Obama's call for a $9 minimum hourly wage were successful, not everyone is happy about the idea.
Shares of McDonald's (MCD) slid more than 1% Wednesday, the day after Obama called for boosting the minimum wage from its current $7.25 per hour. Yum Brands (YUM), which operates KFC and Taco Bell, and Burger King (BKW) also saw shares take a hit.
A $9 minimum wage "definitely adds some kind of pressure" to the stock prices of fast-food chains, S&P Indices analyst Howard Silverblatt told The Huffington Post.
Paying fast-food workers higher wages "would definitely push profits down. It would mean less money for shareholders," he added.
Already, Obama's proposal is receiving push-back from businesses, which predict a boost in the minimum wage would damper hiring.
If history is anything to go by, it's likely fast-food chains will lobby against the proposal.
Restaurant chains and their franchisees spent almost $1 million in 2006 to lobby against minimum-wage increases in several states, according to Bloomberg News, citing Followthemoney.org.
It's clear that minimum-wage workers would find the extra money useful. As Obama noted in his address, a family with two children that earns the minimum wage still lives in poverty.
More fast-food employees now depend on food stamps to feed themselves, according to the Bloomberg report, which cited data from the University of Minnesota Population Center. While 15% of the overall U.S. population receives food stamps, almost 27% of fast-food employees require assistance to buy groceries.
So how much does McDonald's pay its employees? According to Glassdoor.com, which compiled reports from hundreds of McDonald's employees, a typical crew member, or an employee who flips the burgers, makes $7.66 an hour.
That translates into gross income if less than $16,000 per year. Under Obama's proposal, a worker would make $18,720, or an annual raise of about $2,788.
Multiply that by the dozens of workers at each fast-food restaurant, and McDonald's and others would most likely feel an impact. Then again, consumers might be the ones paying -- in the form of higher burger prices.
Aimee Picchi owns shares of YUM but hasn't traded the stock in at least 12 months.
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| Tags: | EconomyMCDRestaurants |
The car wash down the street has 20 employees, all at minimum wage. With Obamas increase in minimum wage, the owner's direct cost of labor would increase $72,800.00 a year. As I see it the owner has three choices;
1. Lay off 6 - 7 employees to keep the same labor expense for the year, asking the rest to work harder.
2. Raise his prices and seriously risk losing customers.
3. Accept the fact he will earn $72,800.00 less the next year, ( I sure as heck wouldn't accept this)
Why can't Obama and the government see the mistake in raising the minimum wage?..............BECAUSE NONE OF THEM HAVE EVER RUN A BUSINESS!!! Had to pay taxes on a business, had to make a payroll, had to pay for insurance etc. had to handle employee issues or ever had to be a responsible business owner.
I am a small business owner and after all the crap the local, county, state and federal government throw at me each year, I am not encouraging my childre to take over my business, I am suggesting to go to work for the governement and get on that government "gravy train". Work 10 hours a week and goof off the other 30.
If you do not want to get an education and work to achieve a better life than stay at minimum wage. I have a business where some are minimum wage and when I heard the head guy say $9.00 per hour I right away decided that I would just raise prices to compensate.
Minimum wage was not meant to be a life long profession.....it will only cost the average person more in goods and services if he raises this again. Hence the vicious cycle continues. All we are doing is empowering the poor to stay poor and never strive to get ahead and work hard to increase their earning power.
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