Friday, April 29, 2016

Former McDonalds CEO Warns Minimum Wage "Will Wipe Out 1000s Of Jobs"

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.









RELATED POSTS:

UK Unemployment Rises Again as part time jobs increase.

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 ...
Armageddon

No Real Jobs In New Economy

Bitter Fruit

A Future Of Medieval Serfdom

Magic Money


Elsewhere: [ The Original Boggart Blog] ... Daily Stirrer ...[Little Nicky Machiavelli]... [ Ian's Authorsden Pages ]... [Scribd]...[Wikinut] ... [ Boggart Abroad] ... [ Grenteeth Bites ] ... Ian Thorpe at Flickr ] ... [ Tumblr ] ... [Ian at Minds ] ... [ Authorsden blog ] ... [Daily Stirrer News Aggregator]

No comments: