McDonald’s and the Minimum Wage

http://www.financeokey.com/business/mcdonalds-minimum-wage-debate-is-really-about-their-business-model.html

McDonald’s Minimum Wage Debate Is Really About Their Business Model

Aug 8th, 2013

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The Daily Beast created a McPoverty calculator that lets you see how your extra cents could translate into real-life wages based on the work of economists Jeannette Wicks-Lim and Robert Pollin. Using this calculator, the price of Big Mac would need to increase by 22 cents to enable workers at McDonald’s to make $ 15.23 per hour, or $ 31,671.83 per year.

Another estimate comes from a group of 100 American economists who signed a petition last month in support of raising the federal minimum wage to $ 10.50 per hour. In the petition, the economists write: “On average, even fast-food restaurants…are likely to see their overall business costs increase by only about 2.7 percent from a rise today to a $ 10.50 federal minimum wage. That means, for example, that McDonalds could cover fully half of the cost increase by raising the price of a Big Mac, on average, from $ 4.00 to $ 4.05.” [So they could cover the whole cost by raising it only 10 cents.]

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