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in my experience with libertarians so far, they are most disinclined to do any math. i don't see any math here either. there is a study mentioned a lot in the c

• waps 12y ago
  > as for the argumentation - it is again the same thing! instead of "whole company", you moved to topic into "individual branches", but it is still the same - apparently, a huge number of workers is employed in places with zero profit, be it whole companies or just branches. this is an incredible claim. why would we accept that workers in highly successful branches should get underpaid, just so that a couple of barely profitable branches could remain open? Let's do some maths then : McDonalds 2012 profit : $5.5 billion Revenue : $27.56 billion Employees : 1.8 million Revenue per employee : $15311 Profit per employee : $3055 So costs per employee : $12256 Let's say McDonalds locations vary in revenue by 25% (95%) and that the main cause is employee_cost/customer. That seems to me a very reasonable claim. That means employees make McDonalds between $11483 and $19138 in revenue, -772 to 6682 in profit. Let's assume uniform distribution. The amount of net-negative employees would be about 10%. Since most companies are much less profitable than McDonalds, the idea that a lot of people are effectively employed with zero or negative gain seems quite plausible to me. In the US and Europe both you could defend the idea that most people have a net-negative utility to the US and European nations (taken as a whole), a gap that gets filled by the sale of treasury notes to foreignors. But there are whole classes of employees that will have net-negative utility : 1) government employees (government does not produce goods or services. And where it does it's financed by taxes, negating the benefit) 2) management (they don't contribute directly to work getting done) Ideally, neither function would exist (and police and roads would simply be organised directly by the people who want to use them). I'm not saying that's realistic, but it would be better from an economic perspective. In my opinion people often overestimate how inefficient capitalism is. There was a huge fuss about oil profits a few years back, when oil first went to $100/barrel. When you calculate how much per gallon oil company profits were (and thus how much they could be theoretically maximally lowered by nationalizing the oil companies) you'd get something like 2-3% depending on the company. This was the populist solution to bring oil back from $105 or so to $60 ... Of course if you're living in San Francisco and see Goldman Sachs organise a bankers' convention in the most expensive hotel in the city it seems excessive, but all their costs only amount to at most the low double digits of their revenues. For the vast majority of firms, it is the low single digits. That doesn't mean improving the "common man"'s life is not worth it, of course.
  • bakhy 12y ago
    oversimplification. you are implying that employees are the complete source of expenses in running a business. this is, of course, not true. put most simply, if your hypothetical McDonalds (at the numbers before you introduced the arbitrary variation, for which BTW an application of the Zipf law would probably be more appropriate) fired one employee, they would not suddenly have $12256 more in revenue. they would be wise to determine the exact costs of keeping an employee when making these decisions. --- another important argument which is often overlooked - the extra money that people at lower incomes will receive through this will almost entirely and certainly be spent back in the economy where they live! i have a strong hunch that under certain circumstances, although they might, when thoroughly estimated, turn out to be extreme, hiking up minimum wage might produce increased employment in the mid-term.
• glenra 12y ago
  > in my experience with libertarians so far, they are most disinclined to do any math. i don't see any math here either. Fine. Suppose we want to increase the minimum wage by at least $5/hour. Let's see if that's possible without "cutting back": McDonald's has 1,800,000 employees and makes 5.46 billion in profit. Divide the latter by the former and you'll see that their profit is $3,033/employee. If they gave ALL the profit to the workers in the form of higher wages and divided it equally among the workers, that's how much of a raise they could afford to give without doing any "cutting back": ~$3k/year. A 40 hour workweek is about 2000 hours per year, so that means if they didn't save ANY profit to give back to investors or invest in the growth of the business or set aside against losses in bad years, out of profits they could afford to give their full-time workers a raise of: $1.50/hour. Any more than that, and they have to cut back. But wait, you say! What about bloated CEO salaries? Huffington post says the incoming CEO of McDonalds recently got paid ~$14 million and the outgoing one got ~$28 million. (source: http://www.huffingtonpost.com/2013/04/12/mcdonalds-ceo-pay_n_3070833.html http://www.huffingtonpost.com/2013/04/12/mcdonalds-ceo-pay_n... ). Let's add those together and round the total WAY up to $50 million dollars. Let's assume they can save $50 million dollars by not paying CEOs or ex-CEOs (and a couple other high administrators) anything, and distribute the savings to the workers as higher salary. $50 million / 1.8 million = $27.8. So by eliminating those top salaries we could give every worker an extra 27.8 dollars per YEAR. Divide that by 2000 and you'll see we can afford to give each full-time worker an additional raise of roughly: 1.4 CENTS per hour. Conclusion: doubling the minimum wage (or bumping it by $5, or anything in that ballpark) can't be done out of profits or out of cutting top salaries. Raising the minimum by more than a dollar or two would render the overall firm unprofitable.
  • bakhy 12y ago
    hm, interesting calculation. however, isn't McDonalds a franchise? where did these numbers come from? also, i am not that crazy to think that this would not cause ANY cutbacks. the money does indeed have to come from somewhere. it's just that there would be nowhere near a proportionate response in firings compared to the increase in the life quality of the people affected, and also in the consumption driven by their new incomes. ultimately, this is like a collective bargain on a wider scale, supported by the democratic process in Seattle. it is correcting for the unfavorable effect of market forces on the pay of uneducated workers. due to their abundance, the downward pressure on the pay of this category of workers can only be stopped by minimum wage or social security. EDIT - i've been googling around, and found a much lower number of employees, 440k employees (source: http://www.macroaxis.com/invest/market/MCD--McDonalds-Corp http://www.macroaxis.com/invest/market/MCD--McDonalds-Corp - don't know how reliable..) which, following your calculation through, gives ~ $6 net income per employee hour. also, another point is flat out ignored - prices can be increased, shifting part of this burden to the end consumer, which in the end only seems just. any business that is already giving a fair wage to it's workers is being driven out of business by competition exploiting lack of minimum wage rules and abundance of low skilled labor. EDIT 2 - Also, the crucial problem with executive pay is not so much that people think that from their pay some huge increases in workers' pay could be given, it's in the purely subjective feeling of injustice, when on one side managers are showered with millions (and I presume McDonalds has more than just 1), while workers are given advice on how to get food stamps. this quite understandably pisses people off. EDIT 3 - Sorry for all the edits :D Another thing worth noting is that it seems very unlikely that ALL McDonalds employees are working on a minimum wage. This would also reduce the effect of minimum wage hike on their profits.