McDonalds Has a Sly Way of Responding to Minimum Wage Increases


The minimum wage is nothing if not a hot topic throughout the U.S.

Five states let businesses dictate their minimum wages, but the vast majority have set it above $7.25 an hour.

A recent study has shed some light on the issue from an interesting angle. When it comes to a minimum wage increase, who is footing the bill?

The research pointed at McDonald's and how they dealt with a mandatory minimum wage increase throughout different states.

Unsurprisingly, Ronald McDonald's upper-echelon (i.e., those who run the company) are not paying for it out-of-pocket. Instead, they transfer the extra costs to the customer. Who would have seen this one coming?

So, for every minimum wage increase, you are forced to pay a McWage - but you don't get fries with that one.

You would think that they would just introduce more touch screen machines so that you can place your own order, right? That's not the case according to the study.

"We also find that McDonald’s restaurants do not introduce touch-screen ordering, a potential labor-saving technology, in response to increases in labor costs driven by minimum wage
hikes. Moreover, we find restaurants are able to pass nearly all of such labor cost increases onto their customers in the form of higher Big Mac prices. As a result our evidence indicates that the elasticity of Big Macs per hour of Basic Crew work (a real wage measure) is 0.54, which is substantial, but about one-fifth lower than the 0.68 McWage elasticity."

And, of course, the government gets a little cut from the extra tax revenue!

Simply put, corporate stays rich, the government gets more money; in the meantime, the working man fights for scraps. Remember, no one benefits from minimum wage laws like the government does. It's going to cost everyone in the long run because everything will cost more, but people will be poorer because they'll have to pay more taxes.

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