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.
More on moneyNOW
Minimum wage is dumb. Minimum wage is actually bad for the middle class, it raises our grocery prices, our gas prices, and our service prices. All the jobs for the youth of this country have been taken by our government. We used to have grocery baggers and tellers in every aisle, we used to have kids pump gas and wipe our windows, kids used to landscape. When will we as a people learn that government does not solve problems, it creates them. How do young high school kids find work anymore to help out the already struggling parents? I know what someone will say to this, how can someone live with the minimum wage so low. I respond, they are not supposed to...
VASTLY overpaid management and administrative salaries!
6 DIGITS A YEAR FOR DOING NOTHING!
If Obama really wants to help the middle-class, he should consider the impact his laws have the businesses that need to pay for them. The middle class relies on their investments, whether in a small Etrade account or their 401Ks, to provide for a retirement. All of these anti-business practices will hurt the middle-class which he claims to be protecting.
Note that .66%, that is point six-six percent of the full time population works at minimum wage. The Glassdoor web site lists numerous jobs at McD's. No one really works at min wage their entire career. Even Glassdoor's salary range for Crew member ranges up to $9-10 an hour.
Someone with some ambition, can move to a Shift Manager. A fry cook according to the website earns an average of $8.23 and up to $12.
Keep in mind thse are transient job, held mainly by high school and collefge kids to earn spending money.
1) $9.00/hr will reduce hours. Less hours worked, sent home if business drops off and slower service.
2) food prices go up, poor people can not go out to eat.
3) Everyone from Wal-Mart to the corner store will use less people and make them work harder.
4) the people whose hours are cut will not appear as unemployed since they either make too little to qualify or will have hours reduced but still unable to claim unemployment leaving this number unaffected and the benevolent heroes look good except the people drop off the charts.
5) Any change in the economy becomes everyone else's fault - businesses or bad consumers not bad government.
6) When your kids cannot earn college money, poor youths don't get jobs, retirees earn less money, Of course I see the economy growing.
7) Less people at the low end of the income level will drop off of the statistics and the net result the average working American is making more money. We just don't count the drop off.
When will you figure out the real result. It is not just MCDonalds it is all the stores you shop in.
Coming from someone who works in the industry, this would kill not only the efforts being made to create jobs, but the middle class as well. Most retail stores as well as some industrial are already cutting people back to under 30 hrs a week because of all the new health care regulations being put into place forcing people to get 2 or even 3 jobs to support themselves. Raising minimum wage to 9 dollars would force the same people to cut back on the number of employees their to serve everyone. It will raise prices for people to cover the costs of those lucky enough to stay employed as well. So now the people who make 10 or maybe 11 dollars an hour and are a bit above those making 7.25 would end up in the same class as those at 9 just creating a larger poor class as all prices will go up so the corporations continue to profit at the same levels and everyone else is left paying for it.
Simple...don't eat the crap at McD's, BK, or other fast food...it's garbage anyway!!!
It's not the min. wage increases that would hurt Mickey's or it's customers.
It would be poor food or poor service...
Remember those wage increases would be spread over the volume of food and business they do...
Not over just a few hamburgers and fries..
Although sometimes a singular Franchise...Some owner/operators...Own several McDonalds in a Region or Area....Not just a Mom & Pop Diner.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The stock market ended the holiday-shortened week on a mixed note as the Dow Jones Industrial Average shed 0.1%, while the S&P 500 added 0.1% with seven sectors posting gains.
Equity indices faced an uphill climb from the opening bell after disappointing quarterly results from Google (GOOG 536.10, -20.44) and IBM (IBM 190.04, -6.36) weighed on the early sentiment. Google reported earnings $0.15 below the Capital IQ consensus estimate on revenue of $15.42 ... More
More Market News
Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'