68 Cents More for a Living Wage

Non-managerial fast-food workers are among the lowest paid in the country with a median wage of $8.94 per hour.  University of Kansas research assistant Arnobio Morelix discovered that McDonald's spends only 17 percent of revenue on salaries and benefits.  So increasing revenue by the same percent--which amounts to 68 cents on a $3.99 Big Mac--would allow McDonald's to double their employees' pay.

Update (July 31):  The Huffington Post article linked above has been updated to correct an erroneous analysis. Individual franchises spend around one-third of revenue on wages.  Not all of such an increase would necessarily be passed on to customers, so profits would be lower. Dueling opinions suggest that either McDonald's could easily afford it or that any increase would drive away customers.

But suppose the 17 percent increase were implemented.  Will 68 cents really push that many customers out the door?  And wouldn't a 50 percent raise still amount to at least a somewhat more livable wage?

Update (August 1):  Henry Blodget suggests that McDonald's could increase employees' pay without raising prices and just make less profit.  Huh?

McDonald's restaurant employees would, finally, rise above the poverty line.  And their extra spending money would quickly be spent on other products and services, thus helping the whole economy.

Update (August 2):  David Sirota mentions studies that claim a higher minimum wage would lead to very modest price increases. One concluded that $15 per hour wages would only increase the price of a Big Mac by 22 cents.  Daniel Gross asks, "What Happens When Fast Food Actually Pays"?

Update (September 3):  A Los Angles Times editorial draws the connection between demands for a higher minimum wage and the lack of economic mobility.

Update (September 11):  Steven Rosenfeld contrasts employment practices at three restaurant chains.

Update (October 15):  Two reports quantify the public cost for low wage fast food employment. The families of fast food workers are twice as likely to be enrolled in public assistance programs at a total cost of $7 billion.  And McDonald's tops the list with $1.2 billion to their employees.

Update (October 17):  A chart from the Berkley report shows how workers in various industries depend on public assistance.

Update (October 28):  Given that some industries get massive public subsidies to support their employees, receiving assistance and working aren't mutually exclusive.  And then this Fox News graphic just outright distorts the scale to make the comparison wildly misleading.