by Arthur Foxake
This blog is not a big fan of McDonald’s, their food does not appeal to us and their business practices are appalling. but they have been a very successful business over the past 50 years and so when a former CEO speaks out against one of the left’s great sacred cows, the minimum wage.
For some reason that can only be related to their economic illiteracy, the left; USA’s Democratic Party, UK’s Labour Party and Europes Social Democratic parties seem to think the imposition of a minimum wage must improve the lot of ‘the poor’.
Nothing could be further from the truth, we have written on the negative effect of minimum wage laws on the income of low wage workers. The first minimum wage scheme, The Speenhamland Poor Relief System, introduced in the late eighteenth century in England was disastrous for the people it was supposed to help. Faced with having to pay a legal minimum hourly rate, employers simply cut workers hours. Things are no different now, as former McDonalds chief Ed Rensi explained in a Forbes op – ed recently:
(While his words might shock the big government worshipping, Nanny State tit suckling ‘progessives’ should be no surprise to any rational businessman or accountant.)
“A $15 minimum wage won’t spell the end of [fast-food brands]. However it will mean wiping out thousands of entry-level opportunities for people without many other options.” The $15 minimum wage demand, which translates to $30,000 a year for a full-time employee, is built upon a fundamental misunderstanding of a restaurant business (and we add simple supply and demand fundamentals) – just “do the math” Rensi rants…
“They’re making millions while millions can’t pay their bills,” argue the union groups, suggesting there’s plenty of profit left over in corporate coffers to fund a massive pay increase at the bottom.
In truth, nearly 90% of McDonald’s locations are independently-owned by franchisees who aren’t making “millions” in profit. Rather, they keep roughly six cents of each sales dollar after paying for food, staff costs, rent and other expenses.
Let’s do the math: A typical franchisee sells about $2.6 million worth of burgers, fries, shakes and Happy Meals each year, leaving them with $156,000 in profit. If that franchisee has 15 part-time employees on staff earning minimum wage, a $15 hourly pay requirement eats up three-quarters of their profitability. (In reality, the costs will be much higher, as the company will have to fund raises further up the pay scale.) For some locations, a $15 minimum wage wipes out their entire profit.
Recouping those costs isn’t as simple as raising prices. If it were easy to add big price increases to a meal, it would have already been done without a wage hike to trigger it. In the real world, our industry customers are notoriously sensitive to price increases. (If you’re a McDonald’s regular, there’s a reason you gravitate towards an extra-value meal or the dollar menu.)
Instead, franchisees can absorb the cost with a change that customers don’t mind: The substitution of a self-service computer kiosk for a a full-service employee.
Rensi concludes on a sombre note…
I suspect that the labor organizers behind this campaign for a $15 minimum wage are less interested in helping employees, and more interested in helping themselves to dues money from their paycheck.
They’re unlikely to succeed in their goal of organizing the employees of McDonald’s franchisees, but they may well succeed in passing $15 into law in other sympathetic locales.
You’ll see their legacy every time you visit the Golden Arches, where “would you like fries with that” is a button on a computer screen rather than a phrase spoken by an employee in their first job.
While Mr. Reni is referring specifically to a familiar situation at McDonalds, similar things will happen in other businesses and industries. A business can only survive if it pays what the job is worth. And what the job is worth must be dictated by market rules and not by Barack Hussein Obama, Killary Clinton and their elitist cronies.
Unsurprisingly, while governments are prepared to condem the children and grandchildren of their own nationals to the gringing poverty of part time work and zero hours contracts, there are some groups who have contributed nothing to society and in many cases have no legal right to be in the country, for whom special arrangements are made
Denmark Gives Large Bonuses To Get Migrants To Work – How Is That Fair To Danes
In a move that tells us much about what is wrong with the politically correct Culturalk Marxism that dominated European politics, the government of Denmark has announced a plan to persuade migrants to work for a living instead of claiming state handouts by offering companies 40,000 kroner to hire them.
This new plan for migrants is part of the ‘integration basic education’ plan that hopes to get migrants working so they are not as huge a drain in the Danish welfare system as they are becoming more and more in places like Germany and Austria. It is difficult to see any logic behind that, surely it is no more expensive to pay out doles than to employ people who have no skills and cannot speak the national lanugage to do nothing. How many office cleaners and kebab stuffers does a sma;; country like Denmark need?
The programme announcement follows the leaking to Danish media of figures showing non-Western migrants made up a startling 84 per cent of all Danes on welfare. Migrants currently cost the government around 1.1 billion pounds every year.
TheLocal.dk reports the new programme aims to get migrants into short-term jobs at an apprentice salary of around 50 to 120 kroner an hour. This is the equivalent of around 12 pounds an hour which is almost double the current wage for British apprentices who are paid the legal minimum wage of £6.70 an hour, although that will increase to £7.20 in April.
The migrant jobs will last up to two years and they will also be offered 20 week courses to increase their skill development and further their education. The companies that participate in the scheme will also be eligible for a bonus of 40,000 kroner (£4,179), if the migrants remain employed for the two-year term of the contract.
The Danes will also pay for accommodation for the migrants who take part, making sure that they are able to live close to their employer or at least in the same city or town. Relocation and transportation costs will likely also be paid for by the state.
This is just another example of the wrong headedness of political elites, it will do nothing to help integrate new immigrants into Danish society, but by sending out the message that foreigners are given special treatment and their interests are prioritised over those of local people it will encourage more to come and thus make the crisis worse.
Unemployment in the UK rose by 48,000 in the quarter to December 2011. The figure of people without jobs now stands at 2.67 million, a jobless rate of 8.4 per cent, the worst figure since the end of 1995. The number of people claiming Jobseeker’s Allowance rose by …
Globalisation can work, but only with a unified international plan says Will Hutton. WRONG!We need global economic and social institutions working across national borders economist Will Hutton who now appears to have been re educated and started working for The New World Order argued recently. If only it were that simple. Unfortunately globalization is the enemy not the trigger of the kind of economic recovery we need.
No Jobs For The Masses In The New Economy Despite University EducationNo matter how leaders like David Cameron and Barack Obama try to talk up their economies or assure voters the jobs market is improving, growth returning and unemployment will soon start falling, the truth is change does not equal progress and forcing the pace of social change has only masked the true depth of economic and social problems. One of these is unemployment and particularly joblessness among the young. Even a universdity education does not provide a guaranteed career path.
The 99ers: Death Of The American Dream.
The 99ers are a new social class created by the economic recession in the USA. This new demographic, not one the advertizing industry will be interested in are jobless people whose unemployment benefit (job sekers in UK parlance) benefit has run out and thus who have dropped off the unemployment statistics. But even for people who are not 99ers times are hard scross the pond …
No Real Jobs In New Economy
A Future Of Medieval Serfdom
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