4 ms·

To simplify things, let's say the McDonald's owner owns the property. If his profit drops to $1.25 million per year, but he can sell the property and invest the

To simplify things, let's say the McDonald's owner owns the property. If his profit drops to $1.25 million per year, but he can sell the property and invest the proceeds so that he earns $1.3 million per year, then the activity will cease. Even if a McDonald's is profitable, something else may be even more attractive when costs change.

learc83 9y ago
The average cost to start a McDonald's is around $1 million. The rate of return is absurd. Most franchise owners also become experts running at running a restaurant franchise making them even less likely to move into something else. McDonalds isn't going anywhere when minimum wage goes up. Your point would have been better if you'd been talking about someone working at a small struggling restaurant that was barley able to stay open. Even then, you're completely ignoring the effect that moving money from the wealthy to low income earners will have on the economy (read up on velocity of money). There are definitely more efficient ways to do this, but you can't just ignore the effect and state that minimum wage = fewer jobs.
- matthewmarkus 9y ago
  I never said that minimum wage = fewer jobs in all contexts. It will definitely destroy certain employment opportunities in certain circumstances. I suppose I would consider it an accelerant for automation.
  - learc83 9y ago
    You implied that a minimum wage of $15 would eliminate fast food jobs. The numbers indicate that it won't. >It will definitely destroy certain employment opportunities in certain circumstances. Sure and a 0.1% sales tax will destroy certain employment opportunities in certain circumstances. The key is to find a balance. I'd prefer a universal basic income or an increase in the EITC. But I think fighting for a $15 minimum wage that won't kick in until 2024 at the earliest, and will probably be negotiated down to $12, is better than what we have now. $15 in 2024 will be about $12.50 in 2016 dollars based on projected inflation by the way.
- lsiebert 9y ago
  The US has raised the minimum wage multiple times. Want to read a study of seven decades of historical data about what happens when the minimum wage increases? http://www.nelp.org/publication/raise-wages-kill-jobs-no-correlation-minimum-wage-increases-employment-levels/ http://www.nelp.org/publication/raise-wages-kill-jobs-no-cor... There is no correlation with decreased employment, in fact most times, there are employment increases, and these increases are bigger in industries more effected by minimum wage like retail and hospitality.
ams6110 9y ago
McDonalds franchisees do not own the property. That is how corporate keeps them under control.
- matthewmarkus 9y ago
  Yes, I purposely simplified things. In the case of the corporation, it has to look at the rent it can squeeze from the franchisee versus selling or repurposing the land. In that case, it is even more likely the store will be shut down since the corporation has way more opportunity cost than the franchisee.

learc83 9y ago

The average cost to start a McDonald's is around $1 million. The rate of return is absurd. Most franchise owners also become experts running at running a restaurant franchise making them even less likely to move into something else. McDonalds isn't going anywhere when minimum wage goes up. Your point would have been better if you'd been talking about someone working at a small struggling restaurant that was barley able to stay open. Even then, you're completely ignoring the effect that moving money from the wealthy to low income earners will have on the economy (read up on velocity of money). There are definitely more efficient ways to do this, but you can't just ignore the effect and state that minimum wage = fewer jobs.

matthewmarkus 9y ago
I never said that minimum wage = fewer jobs in all contexts. It will definitely destroy certain employment opportunities in certain circumstances. I suppose I would consider it an accelerant for automation.
- learc83 9y ago
  You implied that a minimum wage of $15 would eliminate fast food jobs. The numbers indicate that it won't. >It will definitely destroy certain employment opportunities in certain circumstances. Sure and a 0.1% sales tax will destroy certain employment opportunities in certain circumstances. The key is to find a balance. I'd prefer a universal basic income or an increase in the EITC. But I think fighting for a $15 minimum wage that won't kick in until 2024 at the earliest, and will probably be negotiated down to $12, is better than what we have now. $15 in 2024 will be about $12.50 in 2016 dollars based on projected inflation by the way.
lsiebert 9y ago
The US has raised the minimum wage multiple times. Want to read a study of seven decades of historical data about what happens when the minimum wage increases? http://www.nelp.org/publication/raise-wages-kill-jobs-no-correlation-minimum-wage-increases-employment-levels/ http://www.nelp.org/publication/raise-wages-kill-jobs-no-cor... There is no correlation with decreased employment, in fact most times, there are employment increases, and these increases are bigger in industries more effected by minimum wage like retail and hospitality.

ams6110 9y ago

McDonalds franchisees do not own the property. That is how corporate keeps them under control.

matthewmarkus 9y ago
Yes, I purposely simplified things. In the case of the corporation, it has to look at the rent it can squeeze from the franchisee versus selling or repurposing the land. In that case, it is even more likely the store will be shut down since the corporation has way more opportunity cost than the franchisee.