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 $2,788.
Multiply that by the dozens of workers at each fast-food restaurant, and McDonald's and others would most likely feel an impact. Then again, consumers might be the ones paying -- in the form of higher burger prices.
Aimee Picchi owns shares of YUM but hasn't traded the stock in at least 12 months.
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“Print more money “, “increase the minimum wage”, next will be “force a company to hire” (the E-2 visa already have to) are utopist statement in a utopia society or a kindergarten solution.
For a business owner point of view he/she will just increase (probably 2$ not $1.85) the price of his/her products or services. That’s mean inflation….
1) Why do not let the market decide or better
2) We just have won the Nobel prize in Economic science (Alvin E. Roth, Lloyd S. Shapley) why does not ask them?
I THOUGHT MINIMUM WAGE JOBS WERE FOR HIGH SHCOOL KIDS. I DON'T THINK YOU'RE SUPPOSE TO SUPPORT A FAMILY ON IT.
Minimum wage law is linked to the big government philosophy that the individual worker has insufficient bargaining strength to obtain a fair wage from his powerful employees. It came into existence during FDR's presidency and is supposed to be increased only to keep pace with inflation.
It should come as no surprise that economists are divided over whether a minimum wage is good or bad for the economy, but I believe that if you set a minimum wage that employers must pay without setting a minimum standard for the work to be performed to earn that pay, you create an imbalance in the economic system that leads to a chicken and egg problem. If the minimum wage is increased because workers cannot afford to buy a hamburger, then the price of a hamburger goes up to cover the increased wage cost.
The government has been successful in only one area - proving that it knows nothing about running a business, so maybe it's time to listen to Rand Paul.
Why do we keep having these same stupid arguments. We've had minimum wages since I believe the 1930's and periodically it goes up and every time the business people cry that jobs will disappear. McDonalds is not going to go out of business because they have to pay people a little more. A Hamburg may cost an extra nickel but we'll adjust.
In my opinion the minimum wage should be equal to the average cost of a movie ticket. A kid should be able to buy his girlfriend a movie ticket for an hours work
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Like rival Wal-Mart, it's pointing the finger elsewhere for its problems while other retailers are coping just fine.
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