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.

By Aimee Picchi Feb 14, 2013 2:47PM

A sign outside the fast-food chain McDonaldsWhile 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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1468Comments
Feb 14, 2013 5:48PM
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min wage jobs were never intedned to be a career position. 
Feb 14, 2013 6:00PM
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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...

Feb 14, 2013 7:31PM
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The REAL problem??

VASTLY overpaid management and administrative salaries!

6 DIGITS A YEAR FOR DOING NOTHING!

Feb 14, 2013 9:08PM
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My brother lost his job when his bank closed.  He went into the real estate business....bust.  Did he go on unemployment for 2 years? No. His attitude was and is "I will take whatever job I can get to pay bills."  He is working at Applebee's and stocking shelves at Costco.  Am I proud of him? Absolutely.  It shows a lot about a person character when they are willing to work and not go on the rolls because they can.  Cheers to a minimum wage hike.  A lot of hard workers deserve it!
Feb 14, 2013 6:03PM
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Democrats view both minimum wage jobs and welfare as career paths.
Feb 14, 2013 6:03PM
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So, when 10 mil illegal immigrants are granted amnesty, do their wages immediately go from say $3 per hour to $9?
Feb 14, 2013 8:55PM
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That's a 24% wage increase.  That $2 burger price would go to $2.48 and that is the price the minimum wage worker would have to pay to take a burger home to feed his kids.  Round and round we go.
Feb 14, 2013 4:35PM
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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. 

 

Feb 14, 2013 5:43PM
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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.

 

 

Feb 14, 2013 5:49PM
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One other item, is that McDonalds restaurant locations are not run by the McDonalds Corporation. These are franchises, and are privately and independently owned by small investors. These are literally akin to Mom & Pop business'.
Feb 14, 2013 9:20PM
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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.

Feb 14, 2013 5:57PM
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Democrats never think that any of their anti business legislation has a negative impact. Just ask the union hacks that are out of work due to shutting  down their plants. They're so dumb they still haven't figured out why they are out of work. I think they are waiting for their jobs to come back.
Feb 14, 2013 9:41PM
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Maybe Obamma should cancell some of his million dollar vacations to help the poor, or maybe Michelle Obamma should put the price of her million dollar earings hanging off her ears into food baskets to help those who have nothing.  Maybe his kids can be homes schooled or go to a public school like the rest of the kids instead of going to the MOST expensive school around.    Real good president and president's wife here, right?  Democrats voted him in, they will get what they deserve.
Feb 14, 2013 9:11PM
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When will you figure out the real result.  It is not just MCDonalds it is all the stores you shop in.

 

Feb 14, 2013 8:59PM
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Just wodering if anyone knows, how much would this increase the overall tax reveue for the federal goverment?
Feb 14, 2013 9:08PM
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In and Out burger pays their employees much more than 9$ an hour and are not even close to 1/10th the size of Mc Donalds and they seem to be doing just fine. This is just another case of big corporate greed. The main problem with this country.
Feb 14, 2013 9:30PM
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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.

Feb 14, 2013 9:55PM
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Everyone is missing why Obama is so keen on increasing the minimum wage.  It is NOT for the working poor, it is for the unions!  Many union contracts base their wages on a multiple of the minimum wage.  So, for example, a widget worker gets 4 times minimum wage (4 X 7.25 = $29/hr)  if the minimum wage goes to $9, that means the base union wage becomes $36/hr!  this is another giveaway to one of Obama's political allies!
Feb 14, 2013 9:22PM
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Simple...don't eat the crap at McD's, BK, or other fast food...it's garbage anyway!!!

Feb 14, 2013 6:52PM
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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.

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