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The state already subsidizes the cost of your Big Mac by providing foodstamps and assistance to McDonald's poverty-wage workers. McDonald's had a 'bad' 3rd qua

The state already subsidizes the cost of your Big Mac by providing foodstamps and assistance to McDonald's poverty-wage workers. McDonald's had a 'bad' 3rd quarter last year, which means they only made $1B in profit. It was down from 1.5B the previous year. http://www.forbes.com/sites/laurengensler/2014/10/21/mcdonalds-profit-down-30-on-sales-slump/ http://www.forbes.com/sites/laurengensler/2014/10/21/mcdonal... These companies can afford to pay their workers a living wage. It's not a question of whether workers "deserve" one hourly rate or another. The question is whether the working class will continue to tolerate it.

jerf 11y ago
"McDonald's had a 'bad' 3rd quarter last year, which means they only made $1B in profit. It was down from 1.5B the previous year.... These companies can afford to pay their workers a living wage." Big number fallacy... you see a big number and it doesn't occur to you to check against the other big numbers that may be involved. Wikipedia has 36,000 franchises worldwide. Assume we're paying about 100 person hours/day for a franchise, assume 360 days in a year, and you get... about 1.3 billion paid hours. (And I suspect I'm being generously conservative with 100 personhours/day for an average franchise, especially when you account for the whole thing, like the shipping and accounting and such.) So, all else being equal (which it never is, but roll with it), and had they paid everyone another $1/hour, they'd be making a loss. You can't just see big profit numbers and go "Oh, they've got money, surely they can pay better!" Capitalism is very efficient (in the conventional sense of the term of "using inputs well") and very competitive, in that McDonalds can't just charge 50% more and nobody changes their buying habits, and it's actually really good at shaving profit margins down to a surprisingly small level, contrary to the numerically-illiterate rhetoric often flung at it. A lot of big corporations make billions a year, but it turns out that when you do the analysis in percentages, they're typically making waaaay less than you think. For instance, here's the 10 most profitable companies in 2013: http://www.usatoday.com/story/money/business/2013/01/20/10-profitable-companies-2013/1848581/ http://www.usatoday.com/story/money/business/2013/01/20/10-p... By #10, "Wal-Mart" (how convenient, a favored bête noire of the labor community), you've got a company pulling in $467 billion in revenue, to make a "mere" $16 billion earnings. That's a 3.4% of their revenue! Yes, it would be a big pile if you just handed it to me personally, but it means that a 4% fuckup at a high enough level would be enough to fry their entire profit. (Do you do your job with 4% tolerance?) And those are the 10 most profitable, not even the "average" companies. There both is, and is not, a lot of money in the system. Start trying to "distribute" the "excess" out and suddenly it looks a lot less "excess". Further, bear in mind this is simple math. You can't argue away the math.
- LesZedCB 11y ago
  That basic math assumes that you add on the cost of raising the minimum wage by $1.00 instead of reallocating it from one paycheck to another. Person A now makes $999/hr and Person B now makes $11/hr from 1000 and 10 respectively. Net loss: $0.00. The real problem isn't that people making minimum wage don't make enough, it's that the wage gap is gigantic.
  - jerf 11y ago
    There aren't anywhere near enough people making "gigantic" wages to make that math work. The vast bulk of the McDonalds labor force will be middle class at best.
    - LesZedCB 11y ago
      what happens to the 1.5 billion in profit? It certainly isn't trickling down to the workforce. Bonuses, dividends, some in the bank.
- misterbishop 11y ago
  You're right that it's a 'big number fallacy', but you've made many mistakes here: - $1B profit is only for a quarter, not for an entire year, for which you've attempted to roughly calculate labor costs. - $15 minimum wage is only in the US, not worldwide. Although McDonalds does pay its workers more than $15 in some parts of the world, and somehow manages to stay in business despite the ruthless efficiency of capitalism http://www.businessinsider.com/denmark-mcdonalds-pays-20-hourly-wages-2014-10 http://www.businessinsider.com/denmark-mcdonalds-pays-20-hou... - It's a mistake to talk about profits as a percentage of revenue because the profit is distributed to very few hands. You scoff at "a big pile if you just handed it to me personally", but McDonald's board of directors is 14 people.
  - jerf 11y ago
    "$1B profit is only for a quarter, not for an entire year," Fair. $4/hour then, which is still less than we're talking about. I rather suspect I'm lowballing the labor by about 2x, also, if not more, but I'll stick with my numbers below. "$15 minimum wage is only in the US, not worldwide. Although McDonalds does pay its workers more than $15 in some parts of the world, and somehow manages to stay in business despite the ruthless efficiency of capitalism " I very deliberately did not try to calculate the price of raising minimum wage, because I do not have that data. I very deliberately calculated what they even theoretically could pay additionally across the board, because I think even at ~4$/hour, people are still going to be surprised at how small that number is! I do not think that when people think "Oh, big companies are just using people as wage slaves and sucking oodles of value out of everyone's pockets" that they're thinking "McDonalds is making about $4/hour/person." I think people think that McDonalds is making at least $dozens/hour/person, but there's no way that's the case. Also, McDonalds has a lot of people who get more than minimum wage. They've got stacks of professionals, accountants, managers business people, etc. But, contra what LesZedCB asserts, you can't make up for it by just taking it out of their paycheck, because then those people will on the margins go work for someone else... plus these are still generally speaking middle class people (not even upper middle class here, I'm sure!), not people getting "rich". And if you do just try to take it out of a few execs hands, well, we're back to the problem where even all of McDonalds profits being reallocated back to the workers doesn't do as much as people think. There is no scenario where McDonalds can pay enough to make a front-line order taker a "middle class" job. "It's a mistake to talk about profits as a percentage of revenue because the profit is distributed to very few hands." The board of directors do not just walk off with the profits. That's not how this works, and it's the sort of criticism that makes this sort of argument hard to take seriously. Where it does go is complicated, but theoretically it eventually ends up in the stockholders hands, and "the set of people who own McDonalds stock" is extremely widely distributed. The executives generally get a good chunk of stock and that's how they get the money, but in order to pay the executives "lots" it also means paying out to the rest of the stockholders "lots and lots and lots", and a lot of that stock is also ultimately going to middle class holders via various funds. And again, my point is to work on recalibrating your understanding of just how much money "$1.5Billion" isn't, rather than argue for or against any particular policy. It isn't anywhere near as impressive as it sounds. It is not an infinite money fountain that can be easily "just" handed out to employees en masse and simply isn't Because Greed. And given the variance we experienced between quarters, it's a money fountain that can in the blink of an eye become Negative $1 Billion Dollars, even with labor costs where they are now. It's way more temperamental and way more fragile than it looks.

jerf 11y ago

"McDonald's had a 'bad' 3rd quarter last year, which means they only made $1B in profit. It was down from 1.5B the previous year.... These companies can afford to pay their workers a living wage." Big number fallacy... you see a big number and it doesn't occur to you to check against the other big numbers that may be involved. Wikipedia has 36,000 franchises worldwide. Assume we're paying about 100 person hours/day for a franchise, assume 360 days in a year, and you get... about 1.3 billion paid hours. (And I suspect I'm being generously conservative with 100 personhours/day for an average franchise, especially when you account for the whole thing, like the shipping and accounting and such.) So, all else being equal (which it never is, but roll with it), and had they paid everyone another $1/hour, they'd be making a loss. You can't just see big profit numbers and go "Oh, they've got money, surely they can pay better!" Capitalism is very efficient (in the conventional sense of the term of "using inputs well") and very competitive, in that McDonalds can't just charge 50% more and nobody changes their buying habits, and it's actually really good at shaving profit margins down to a surprisingly small level, contrary to the numerically-illiterate rhetoric often flung at it. A lot of big corporations make billions a year, but it turns out that when you do the analysis in percentages, they're typically making waaaay less than you think. For instance, here's the 10 most profitable companies in 2013: http://www.usatoday.com/story/money/business/2013/01/20/10-profitable-companies-2013/1848581/ http://www.usatoday.com/story/money/business/2013/01/20/10-p... By #10, "Wal-Mart" (how convenient, a favored bête noire of the labor community), you've got a company pulling in $467 billion in revenue, to make a "mere" $16 billion earnings. That's a 3.4% of their revenue! Yes, it would be a big pile if you just handed it to me personally, but it means that a 4% fuckup at a high enough level would be enough to fry their entire profit. (Do you do your job with 4% tolerance?) And those are the 10 most profitable, not even the "average" companies. There both is, and is not, a lot of money in the system. Start trying to "distribute" the "excess" out and suddenly it looks a lot less "excess". Further, bear in mind this is simple math. You can't argue away the math.

LesZedCB 11y ago
That basic math assumes that you add on the cost of raising the minimum wage by $1.00 instead of reallocating it from one paycheck to another. Person A now makes $999/hr and Person B now makes $11/hr from 1000 and 10 respectively. Net loss: $0.00. The real problem isn't that people making minimum wage don't make enough, it's that the wage gap is gigantic.
- jerf 11y ago
  There aren't anywhere near enough people making "gigantic" wages to make that math work. The vast bulk of the McDonalds labor force will be middle class at best.
  - LesZedCB 11y ago
    what happens to the 1.5 billion in profit? It certainly isn't trickling down to the workforce. Bonuses, dividends, some in the bank.
misterbishop 11y ago
You're right that it's a 'big number fallacy', but you've made many mistakes here: - $1B profit is only for a quarter, not for an entire year, for which you've attempted to roughly calculate labor costs. - $15 minimum wage is only in the US, not worldwide. Although McDonalds does pay its workers more than $15 in some parts of the world, and somehow manages to stay in business despite the ruthless efficiency of capitalism http://www.businessinsider.com/denmark-mcdonalds-pays-20-hourly-wages-2014-10 http://www.businessinsider.com/denmark-mcdonalds-pays-20-hou... - It's a mistake to talk about profits as a percentage of revenue because the profit is distributed to very few hands. You scoff at "a big pile if you just handed it to me personally", but McDonald's board of directors is 14 people.
- jerf 11y ago
  "$1B profit is only for a quarter, not for an entire year," Fair. $4/hour then, which is still less than we're talking about. I rather suspect I'm lowballing the labor by about 2x, also, if not more, but I'll stick with my numbers below. "$15 minimum wage is only in the US, not worldwide. Although McDonalds does pay its workers more than $15 in some parts of the world, and somehow manages to stay in business despite the ruthless efficiency of capitalism " I very deliberately did not try to calculate the price of raising minimum wage, because I do not have that data. I very deliberately calculated what they even theoretically could pay additionally across the board, because I think even at ~4$/hour, people are still going to be surprised at how small that number is! I do not think that when people think "Oh, big companies are just using people as wage slaves and sucking oodles of value out of everyone's pockets" that they're thinking "McDonalds is making about $4/hour/person." I think people think that McDonalds is making at least $dozens/hour/person, but there's no way that's the case. Also, McDonalds has a lot of people who get more than minimum wage. They've got stacks of professionals, accountants, managers business people, etc. But, contra what LesZedCB asserts, you can't make up for it by just taking it out of their paycheck, because then those people will on the margins go work for someone else... plus these are still generally speaking middle class people (not even upper middle class here, I'm sure!), not people getting "rich". And if you do just try to take it out of a few execs hands, well, we're back to the problem where even all of McDonalds profits being reallocated back to the workers doesn't do as much as people think. There is no scenario where McDonalds can pay enough to make a front-line order taker a "middle class" job. "It's a mistake to talk about profits as a percentage of revenue because the profit is distributed to very few hands." The board of directors do not just walk off with the profits. That's not how this works, and it's the sort of criticism that makes this sort of argument hard to take seriously. Where it does go is complicated, but theoretically it eventually ends up in the stockholders hands, and "the set of people who own McDonalds stock" is extremely widely distributed. The executives generally get a good chunk of stock and that's how they get the money, but in order to pay the executives "lots" it also means paying out to the rest of the stockholders "lots and lots and lots", and a lot of that stock is also ultimately going to middle class holders via various funds. And again, my point is to work on recalibrating your understanding of just how much money "$1.5Billion" isn't, rather than argue for or against any particular policy. It isn't anywhere near as impressive as it sounds. It is not an infinite money fountain that can be easily "just" handed out to employees en masse and simply isn't Because Greed. And given the variance we experienced between quarters, it's a money fountain that can in the blink of an eye become Negative $1 Billion Dollars, even with labor costs where they are now. It's way more temperamental and way more fragile than it looks.