McDonald's Could Double Wages For Employees

[signals]

Lets face it, I will not eat fast food...http://shine.yahoo.c...-183300185.html http://www.today.com...anks-6C10326371 http://consumerist.c...es-of-all-time/ http://www.npr.org/t...ingId=129605773 As consumers, we really should demand better. What if McDonalds does raise wages of employees? Besides the fact that it will raise the cost of goods substantially, it also brings wages of the "WHAT'S LEFT OF THE" Middle Class, down towards poverty. But people also overlook the obvious, because McDonalds will have to make choices if it doubles the wage. 1) Raise prices to meet wage increase. 2) Cut workforce. 3) Change policy to only offer part-time jobs. McDonald's is a solid company and aren't going to lose money and there will be consequences if McD does raise wages to workers. I think I found a good paying job when I retire

 

[signals]

The average combo meal at a fast food place is actually closer to $16.

Norway is an example of price/wage spirals... the hourly wage looks good until you start to see the price of everything except groceries...

http://www.numbeo.co...layCurrency=USD

They treat their prisoners well in Norway. In 21 years, their most violent citizen will be a free man. Makes one wonder if Charles Manson would be better off in Norway?

 

[Ms Tree]

It would seem Costco has figured out a way to pay substantially higher than average wages and still make a profit.

 

[eolesen]

There's no comparison between a Costco and fast food. One is low overhead with restricted inventory and hours of operation, and the other is high overhead with a largely perishable inventory.

Impulse buys are where Costco makes their money -- all that stuff you have to walk past on the way to the snacks and the registers...

Nobody does an impulse buy at McDonalds, despite the incessant attempts by the drive thru and counter staff...

 

[Ms Tree]

There's no comparison between a Costco and fast food. One is low overhead with restricted inventory and hours of operation, and the other is high overhead with a largely perishable inventory.

Impulse buys are where Costco makes their money -- all that stuff you have to walk past on the way to the snacks and the registers...

Nobody does an impulse buy at McDonalds, despite the incessant attempts by the drive thru and counter staff...

Not all fast foods are 24/7. Half of Costco is food.

Not quite. Membership fees is where a bulk of the money comes from.

No one?

All beside the point. Costco pays their employees well and in turn gets a higher than average return and still makes a profit.

 

[eolesen]

In 2012, membership fees came to $2B, which rounded comes to about 2% of Costco's total revenue.

That's not what I would call a bulk of their revenue. Perhaps a bulk of their margin (currently ~10%), since fees are almost pure profit. The fees do likely help support the higher salaries -- it looks like between $8B and $9B of their operating expenses are wages and benefits. Unfortunately, they don't break out wages & salaries separately from their general selling costs.

Costco does pay their US-based employees more, claiming it supports lower turnover and thus lowers training costs. I'm not sure I buy into that -- airlines also have low turnover, but low pay. Fast food has low pay, but also low training costs since they don't appear to train their employees beyond some brief OJT. I also don't think wages are the motivator in someone leaving a fast food job. The environment sucks, and even in places where they do offer a higher wage, I'd be willing to bet turnover is still relatively high.

 

[Ms Tree]

In 2012, membership fees came to $2B, which rounded comes to about 2% of Costco's total revenue.

That's not what I would call a bulk of their revenue. Perhaps a bulk of their margin (currently ~10%), since fees are almost pure profit. The fees do likely help support the higher salaries -- it looks like between $8B and $9B of their operating expenses are wages and benefits. Unfortunately, they don't break out wages & salaries separately from their general selling costs.

Costco does pay their US-based employees more, claiming it supports lower turnover and thus lowers training costs. I'm not sure I buy into that -- airlines also have low turnover, but low pay. Fast food has low pay, but also low training costs since they don't appear to train their employees beyond some brief OJT. I also don't think wages are the motivator in someone leaving a fast food job. The environment sucks, and even in places where they do offer a higher wage, I'd be willing to bet turnover is still relatively high.

I was referring to the 'margin' as you call it because there is no cost associated with the membership costs.

The salaries are definitely part of it along with the health benefits. I do believe that the fast food business is not the place to ask for higher wages (at least not as high as they want) because I do not see them as long term positions other than managing staff. However do think the wally worlds and other places would do will to emulate the Costco business plan. Not everyone can have membership fees but salaries could be increased to increase the quality of applicants and the quality of service.

As for the airlines, I was making pretty good cash for the work I was doing. That is why I stuck around for as long as I did. I was able to take advantage of the flight bennies and the health bennies were good as well. Not sure what the ratio is of union v non-union but the union folks are locked in because of their seniority and can't leave without leaving that unless they want to get out of the industry and give the current job market I do not see many being able to leave no matter how bad they want to.

Personally I believe the management and union crap is what is screwing everything up with the airlines. I know the worst part of my job was dealing with all the union BS day in and day out.

 

[Ifly2]

"If McDonald's doubled the wages of its restaurant employees (not management, which is presumably very well-compensated), it might add, say, another $3 billion of annual expenses. This would knock its operating profit down to a still healthy $5.5 billion."


I think the op's point was that Mickey could pay its min wage employees better without havig to raise prices at all....

...If they were willing to see their profits drop to 5.5 billion.

Ain't happenin' of course, but in this case there is no support for the "raising the min wage forces companies to raise prices, or cut workers. Or go out of bisiness argument"

They'd just make a few less $billion

 

[xUT]

"If McDonald's doubled the wages of its restaurant employees (not management, which is presumably very well-compensated), it might add, say, another $3 billion of annual expenses. This would knock its operating profit down to a still healthy $5.5 billion."


I think the op's point was that Mickey could pay its min wage employees better without havig to raise prices at all....

...If they were willing to see their profits drop to 5.5 billion.

Ain't happenin' of course, but in this case there is no support for the "raising the min wage forces companies to raise prices, or cut workers. Or go out of bisiness argument"

They'd just make a few less $billion

Exactly, but I didn't consider the franchise's either.
Some franchises may be loosing money while corporate makes money.
To make a generalization that "ALL" Micky'Dees are profitable is a mischaracterization of the business.
While corporate might be able to double the wage of the lowest wage earners, some franchises may have to close.
JMHO,
B) xUT

 

[delldude]

Capitalism has done a Great Job (so far)...choking the middle class into near oblivion,......so It's just a matter of time before the Mc D /Walmart workers in the good ol' USA....Revolt over Slave wages, and No bennies.
It will happen in NE/NY/NJ and CA. First (of course), but it WILL happen.
Hey, Everyone said WN would NEVER raise Fares, ...but alas..............

Funny, I just don't picture working at McDonyalds and Wal Mart as middle class work.

 

[delldude]

Tell them the real reason unions support minimum wages increases......most union contracts are tied to raises if MW goes up.

Funny, last time MW went up around here, small business didn't go on a hiring boom.....laid off instead.

 

[SparrowHawk]

I've been reading with mild amusement and it amazes me how many people think Corporations operate in a vacuum without competition.

Never mind that most as in 90% of McDonald's stores are franchised and not corporate owned. We have a FFOCUS member who owns 9 of them and I have a business associate who owns 5 or 6 Wendy's. If you read the news McDonald's profits are being squeezed and as a result they have increased fees to franchisee's. The end result is the franchisee's are almost in open revolt. They stop paying royalities and you can kiss profits good bye. Hey hey in Libtardia reality is suspended while all kneel toward Mecca and hail Fuhrer Obama.

 

[whatkindoffreshhell]

Henry Ford doubled the prevailing wage to $5 per day and did pretty good for himself.

McDonald's annual labor turnover is over 200% -- so offering an attractive and fair wage will attract better, more dedicated workers. Heard of Costco?

Also, a huge reduction in management resources devoted to recruiting new workers will fatten the bottom line. Do the math.

If I were a McD's franchisee I would try it.

 

[Knotbuyinit]

Henry Ford doubled the prevailing wage to $5 per day and did pretty good for himself.

McDonald's annual labor turnover is over 200% -- so offering an attractive and fair wage will attract better, more dedicated workers. Heard of Costco?

Also, a huge reduction in management resources devoted to recruiting new workers will fatten the bottom line. Do the math.

If I were a McD's franchisee I would try it.

You should do the math! Ford had a monopoly and a product everyone could afford. Of course McDonald's turnover rate is 200%! High school and college students earning some extra cash with no intention of making McDonald's a career position. Yeah, I've heard of Costco but I'm not foolish enough to compare their business model to McDonald's. There's not a whole lot of management resources tied up in recruiting, a help wanted sign out front usually does the trick.

I'm not inclined to believe you invested in or managed a business.

 

[delldude]

.

If I were a McD's franchisee I would try it.

Like they'd approve it.