Is this surprising? This is the direct result of raising minimum wage. After few years, the spending power will be decreased again and it will need to be raised again.
Workers shouldn't be demanding a minimum wage increase. They should be looking for ways to increase their value to businesses, which will always increase their wages, regardless of government intervention.
I used to believe the wage price spiral when I was a teenager. As I grew up and lived through the 2008 financial crisis, I realized that increasing wages were only a fraction of the problem compared to the monstrous amounts of wet ink money being piped into investment firms and banks.
Now we are seeing monopolistic practices driving prices of basic needs to the moon and then blaming it on workers wanting to make enough to barely live? I'm not buying it.
> Workers shouldn't be demanding a minimum wage increase. They should be looking for ways to increase their value to businesses, which will always increase their wages, regardless of government intervention.
Nah. The minimum wage is "we would pay you less if we could, but we cannot." The business will extract as much as possible regardless of the value workers deliver. They are not going to magically pay you more because you are more efficient or deliver more value, but you might get a pizza party.
> Chipotle Mexican Grill gross profit for the twelve months ending June 30, 2023 was $2.383B, a 30.05% increase year-over-year.
Shareholders and management will need to make peace with lower go forward returns and comp, respectively. Workers deserve a living wage and are enabled to get it in the current macro (structural demographics and executive branch posture, NLRB specifically). Robust labor policy and labor organizing is the only antidote for corporate sociopathy.
> A Special Report on Greedflation: How Corporations Are Making Record Profits On The Backs of American Families
>The minimum wage is "we would pay you less if we could, but we cannot."
That is what what the minimum wage is, but I'm not sure that's indicative of a flaw. We are all seeking the most value for our money. E.g. I need some repairs done to my roof. One company quoted me $1,800 and another $4,200. Considering I had a recommendation for the first company, I went with them. That is something we all do, and it isn't indicative of sociopathy. If the second company was offering more value (better matching roof shingles, a much shorter time to start, etc) then it might be worth more money. Otherwise, like fast food workers, they're generally interchangeable and by saving money I can choose to spend it on something else of value.
This is such a naive view of the situation. It's so easy to blame minimum wage workers for all the issues when really it's corporate greed eating into the economy
It even violates basic causality: price increases lead minimum wage increases by a wide margin, as they're (at best) a CoL adjustment. Though the reality is even with minimum wage increases, the relative spending power of the minimum wage is in the toilet compared to past decades.
Even if you assume that the value of fast food workers has not increased but has remained flat, the Federal minimum wage has declined over time in real dollars. So this is just an overdue correction. The companies chose to raise prices rather than reduce executive compensation (which has soared in recent decades), despite the lack of any evidence that executive value to the business has actually increased. It makes more sense economically to attribute the price increase to the rise in executive pay than it does to blame the minimum wage.
This is simply the result of greed from the owners. McDonald's in Denmark has had lower/same prices as the US depending on currency exchange rate while giving full benefits and higher salaries to their workers. McDonald's Denmark is rated among the best places to work.
The difference is that the franchise taker doesn't get to underpay workers to prop up their own compensation. If they want higher compensation, they'll have to work for it and expand.
I ate McDonald's in Aarhus once (2006) and remember it being even more expensive than Switzerland, where I was living at the time. These days, big macs are expensive in the USA (we paid $6.50 in Seattle yesterday for just one big mac), I'm pretty sure that is competitive Denmark today, right?
A Big Mac in Denmark as of July 2023 costs 38DKK, which with today's currency conversion rate comes to $5.46. DKK is pegged to EUR, so the conversation rate follows the EUR to USD fluctuations.
Doesn't matter how much value you generate for The Company. They're perfectly happy to take it from you for free if they can get away with it. Without bargaining power and leverage, either through unions or scarcity of labour, there's no natural limit to how little a company will pay it's employees.
Used to be that knowledge workers were scarce, now everyone is getting degrees. The scarcity of the engineering labour pool that meant people could get good jobs without a union is gone. If you want a good job, get a union.
I would love to know how much the increase actually is.
There is a local place that put up a sign that to pay all of their staff a livable wage they were increasing all of their prices by something like $0.20 (not percent).
A very minor increase in cost compared to the benefits.
If we are seeing a similar increase from these stores this is a complete non issue.
However I also feel like if we are going to do this we need to eliminate tips or at the very least the expectation of them.
That sounds like a way of narrative distortion - convincing people that higher prices are somehow a good thing, when all this does is hurt the working poor more than anyone else. Shame on NPR.
> That sounds like a way of narrative distortion - convincing people that higher prices are somehow a good thing, when all this does is hurt the working poor more than anyone else. Shame on NPR.
It's NPR-- their heart is in the right place, but their understanding of the world is academic. They think the way things should work is the way things actually do.
NPR is just nice and comfortable people telling themselves comforting stories. Truth isn't the point, it's about feeling ok, like the world is in order, no matter what.
This is an insanely politicized topic so it's basically impossible to actually discuss, but of course you see all the comments here and elsewhere about "corporate greed" and it's just so interesting to me to think about when conspiracy theories are allowed to be held and when they're not.
What's being proposed is a grand conspiracy theory. That across most companies across all the states in the country they've all decided to be evil and greedy together, they're all supposedly run by greed heartless bureaucrats, and in the last few years in particular they've all decided together, in a grand conspiracy, to unanimously raise prices at the same time and extract as much profit as possible.
Yes, it's all a grand conspiracy involving thousands of people and companies that are all evil and greedy. It's definitely not just that economic and political decisions that were made have had an effect. It's corporate greed that's the problem.
The conspiracy doesn't even make sense. If all these companies were so greedy, wouldn't the best way for a company to make money in this world of greedy corporations be to just keep lower prices, which would result in stealing all of the business from the companies that raised prices, and thereby making more money?
> That across most companies across all the states in the country they've all decided to be evil and greedy together...and in the last few years in particular they've all decided together, in a grand conspiracy, to unanimously raise prices at the same time
Not necessarily accurate - the current situation (high prices) could be a result of seeing one company do it successfully, without blowback (initially), and copying it. I'm not clear why it would require explicit co-operation. Additionally, companies can change prices within a single quarter based on their observation of the market.
> wouldn't the best way for a company to make money in this world of greedy corporations be to just keep lower prices, which would result in stealing all of the business from the companies that raised prices, and thereby making more money?
Only under the rational economic model of consumers, where people change their buying habits due to price increases. But store loyalty/convenience/location/familiarity is sticky, and there were few other options out there. The stores that cut prices would face lower margins as well, so they would have to do more work for similar-ish profit, which increases wage cost.
Either way, as you said, this is insanely politicized and I'm pretty sure any one person's interpretation reflects more about their own biases than any explanatory power of the price increase phenomenon.
You’re inserting the word “grand” into what is otherwise standard collusion, which is easy to do with plausible deniability or even unspokenly when there are few competitors (at least for large franchises fast food)
And it's also inserting collusion into what is normal Market Behavior. If customers complain but don't change buying Behavior, then prices will continue to go up until profit is high enough for a competitor to enter
> If all these companies were so greedy, wouldn't the best way for a company to make money in this world of greedy corporations be to just keep lower prices, which would result in stealing all of the business from the companies that raised prices, and thereby making more money?
This is a good thinking. Further if they wanted to make even more money they could keep prices low until gaining a large amount of market share and then jack up prices once competition is scarce.
Thankfully as you’ve pointed out this either never happens or is not a sign of a greedy company.
That only makes sense if the wage price spiral that can drive inflation is also dismissed as an impossible grand conspiracy amongst workers.
What we have currently, however, has components of a profit price spiral, which posts like this one are trying to dismiss as a grand conspiracy.
Neither type of price spiral should be dismissed as “impossible grand conspiracies” but yeah people like hand waving away inconvenient issues by claiming they’d require grand conspiracies.
They’re colluding to keep low effort consumption down.
The only meme the meat based cassette tapes of the US accept is “market charges what it must not heat you can afford.” Inflation deflates low effort buying power.
CEOs are not ignorant of the waste generated by the industrial pipelines their companies rely on. It’s why Trump and My Pillow types are freaking out so hard. Drop off in retail can hit online orders. Subsidized leisure travel and replacing shitty cheap pillows often are under threat if people buy items that last and save for fewer, nicer vacations.
Collusion is NOT a prerequisite to raising prices. No conspiracy is required. It also helps a lot that these large corporations have driven out their competition.
> What's being proposed is a grand conspiracy theory. That across most companies across all the states in the country they've all decided to be evil and greedy together...
To quote the late George Carlin "you don't need a formal conspiracy when interests converge."
Minimum wage is a red herring. If workers want real change how about tying worker pay to some percentage of CEO pay? Example: if your average employee is legally required to earn, say, 1/10th of what the CEO earns then if the McDonalds CEO makes $9,200 [1] an hour they'll have to pay their average employee $920 an hour. Of course this isn't sustainable so in practice worker pay will drive CEO pay: if the CEO wants to earn more, they'll need to pay their employees more.
I don't think this is sustainable either, especially since most McDonalds are franchises and the "CEO" of their franchise probably only barely clears 6 figures.
I'm pretty sure the price changes are guidance to franchisees, and some will have prices that are more or less. There are also some corporate stores to consider (I used to work for a corporate store when I was in HS/first two years of college).
And why is this weird? Have you seen McDonalds pricing in Switzerland?
Minimum wage is a red herring. Everything other than unionization is a red herring. Countries with strong labor don't even need a minimum wage. Think about a place you consider to have strong workers rights. You might think of northern European countries like Germany, Denmark, Switzerland, etc. Many are surprised to learn that these countries don't (or didn't until recently) have a minimum wage. In many ways, requiring a minimum wage is a sign that your labor pool doesn't have enough leverage at the bargaining table. Without bargaining power, management is always going to find a way to screw you.
Countries with strong unions have stagnant wage growth.
The spectre of any large worksites becoming unionized keeps significant amounts of manufacturing out of the US too.
Increasing bargaining power is a Red Herring to convince the population to restrict people's rights to freely contract, for the benefit of unions. Everyone already has infinite bargaining power in a market economy, which is why the only negotiating leverage a prospective employer has to convince an individual to work for them is to offer them better employment terms.
A society where voluntary interaction is not restricted by labor laws sees more rapid economic development, and with it, wage growth, which is why Hong Kong and Singapore massively closed the wage gap between them and the Nordic countries over the last 50 years.
It doesn't matter how much value you generate for The Company. If you don't have strong labour (eg. via unions) then there's absolutely no reason for a company to compensate employees fairly. Companies are not only happy, but DEFAULT to raising prices AND lowering wages. Max profit.
I live in Texas where the minimum wage hasn't increased since 2007 I believe (I was making it at that time actually). I haven't looked at a McDonald's menu from back then, but I suspect the prices are higher today.
Minimum wage should be enforced by implementing a tax that is relative to employee compensation. If you pay minimum wage, you pay maximum corporate tax (or a new tax), something like 49%. Every dollar/hr on average you raise reduces it by 5% until the min 5%. So, if avg compensation is +$8, tax is 9%. This assumes they will raise prices no matter what, the max tax can be lowered when they charge less. Basically force them to accept low profits or close down locations.
That makes no difference, you don't factor in management pay above a certain amount at all. I don't believe in the whole "ceo gets paid X, that's bad" thing, it's never bad for someone else to get paid whatever they can get paid.
There is no alternative to letting the market set prices. Mandatory price floors on labor create unemployment where there would otherwise be none, while creating economic deadweight that reduces per capita productivity and with it per capita income.
The only way to increases wages on an economy wide basis is to institute policies to increase per capita productivity, and that can only be done by restricting growth in the size of the population or accelerating growth in total productivity.
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[ 3.3 ms ] story [ 127 ms ] threadWorkers shouldn't be demanding a minimum wage increase. They should be looking for ways to increase their value to businesses, which will always increase their wages, regardless of government intervention.
Now we are seeing monopolistic practices driving prices of basic needs to the moon and then blaming it on workers wanting to make enough to barely live? I'm not buying it.
Nah. The minimum wage is "we would pay you less if we could, but we cannot." The business will extract as much as possible regardless of the value workers deliver. They are not going to magically pay you more because you are more efficient or deliver more value, but you might get a pizza party.
https://www.macrotrends.net/stocks/charts/MCD/mcdonalds/gros...
> McDonald's gross profit for the twelve months ending June 30, 2023 was $13.900B, a 6.55% increase year-over-year.
https://www.macrotrends.net/stocks/charts/CMG/chipotle-mexic...
> Chipotle Mexican Grill gross profit for the twelve months ending June 30, 2023 was $2.383B, a 30.05% increase year-over-year.
Shareholders and management will need to make peace with lower go forward returns and comp, respectively. Workers deserve a living wage and are enabled to get it in the current macro (structural demographics and executive branch posture, NLRB specifically). Robust labor policy and labor organizing is the only antidote for corporate sociopathy.
> A Special Report on Greedflation: How Corporations Are Making Record Profits On The Backs of American Families
https://www.casey.senate.gov/imo/media/doc/greedflation1.pdf
That is what what the minimum wage is, but I'm not sure that's indicative of a flaw. We are all seeking the most value for our money. E.g. I need some repairs done to my roof. One company quoted me $1,800 and another $4,200. Considering I had a recommendation for the first company, I went with them. That is something we all do, and it isn't indicative of sociopathy. If the second company was offering more value (better matching roof shingles, a much shorter time to start, etc) then it might be worth more money. Otherwise, like fast food workers, they're generally interchangeable and by saving money I can choose to spend it on something else of value.
The difference is that the franchise taker doesn't get to underpay workers to prop up their own compensation. If they want higher compensation, they'll have to work for it and expand.
Doesn't matter how much value you generate for The Company. They're perfectly happy to take it from you for free if they can get away with it. Without bargaining power and leverage, either through unions or scarcity of labour, there's no natural limit to how little a company will pay it's employees.
Used to be that knowledge workers were scarce, now everyone is getting degrees. The scarcity of the engineering labour pool that meant people could get good jobs without a union is gone. If you want a good job, get a union.
There is a local place that put up a sign that to pay all of their staff a livable wage they were increasing all of their prices by something like $0.20 (not percent).
A very minor increase in cost compared to the benefits.
If we are seeing a similar increase from these stores this is a complete non issue.
However I also feel like if we are going to do this we need to eliminate tips or at the very least the expectation of them.
It's NPR-- their heart is in the right place, but their understanding of the world is academic. They think the way things should work is the way things actually do.
What's being proposed is a grand conspiracy theory. That across most companies across all the states in the country they've all decided to be evil and greedy together, they're all supposedly run by greed heartless bureaucrats, and in the last few years in particular they've all decided together, in a grand conspiracy, to unanimously raise prices at the same time and extract as much profit as possible.
Yes, it's all a grand conspiracy involving thousands of people and companies that are all evil and greedy. It's definitely not just that economic and political decisions that were made have had an effect. It's corporate greed that's the problem.
The conspiracy doesn't even make sense. If all these companies were so greedy, wouldn't the best way for a company to make money in this world of greedy corporations be to just keep lower prices, which would result in stealing all of the business from the companies that raised prices, and thereby making more money?
Not necessarily accurate - the current situation (high prices) could be a result of seeing one company do it successfully, without blowback (initially), and copying it. I'm not clear why it would require explicit co-operation. Additionally, companies can change prices within a single quarter based on their observation of the market.
> wouldn't the best way for a company to make money in this world of greedy corporations be to just keep lower prices, which would result in stealing all of the business from the companies that raised prices, and thereby making more money?
Only under the rational economic model of consumers, where people change their buying habits due to price increases. But store loyalty/convenience/location/familiarity is sticky, and there were few other options out there. The stores that cut prices would face lower margins as well, so they would have to do more work for similar-ish profit, which increases wage cost.
Either way, as you said, this is insanely politicized and I'm pretty sure any one person's interpretation reflects more about their own biases than any explanatory power of the price increase phenomenon.
This is a good thinking. Further if they wanted to make even more money they could keep prices low until gaining a large amount of market share and then jack up prices once competition is scarce.
Thankfully as you’ve pointed out this either never happens or is not a sign of a greedy company.
What we have currently, however, has components of a profit price spiral, which posts like this one are trying to dismiss as a grand conspiracy.
Neither type of price spiral should be dismissed as “impossible grand conspiracies” but yeah people like hand waving away inconvenient issues by claiming they’d require grand conspiracies.
Ref on profit price spiral: https://www.marketplace.org/2023/07/28/do-corporations-take-...
The only meme the meat based cassette tapes of the US accept is “market charges what it must not heat you can afford.” Inflation deflates low effort buying power.
CEOs are not ignorant of the waste generated by the industrial pipelines their companies rely on. It’s why Trump and My Pillow types are freaking out so hard. Drop off in retail can hit online orders. Subsidized leisure travel and replacing shitty cheap pillows often are under threat if people buy items that last and save for fewer, nicer vacations.
To quote the late George Carlin "you don't need a formal conspiracy when interests converge."
https://youtube.com/watch?v=VAFd4FdbJxs
[1] https://finance.yahoo.com/news/mcdonalds-starbucks-ceos-more...
I'm pretty sure the price changes are guidance to franchisees, and some will have prices that are more or less. There are also some corporate stores to consider (I used to work for a corporate store when I was in HS/first two years of college).
And why is this weird? Have you seen McDonalds pricing in Switzerland?
The spectre of any large worksites becoming unionized keeps significant amounts of manufacturing out of the US too.
Increasing bargaining power is a Red Herring to convince the population to restrict people's rights to freely contract, for the benefit of unions. Everyone already has infinite bargaining power in a market economy, which is why the only negotiating leverage a prospective employer has to convince an individual to work for them is to offer them better employment terms.
A society where voluntary interaction is not restricted by labor laws sees more rapid economic development, and with it, wage growth, which is why Hong Kong and Singapore massively closed the wage gap between them and the Nordic countries over the last 50 years.
It doesn't matter how much value you generate for The Company. If you don't have strong labour (eg. via unions) then there's absolutely no reason for a company to compensate employees fairly. Companies are not only happy, but DEFAULT to raising prices AND lowering wages. Max profit.
TLDR Chipotle has raised prices several times in the last couple of years.
Opportunistic price increase.
The only way to increases wages on an economy wide basis is to institute policies to increase per capita productivity, and that can only be done by restricting growth in the size of the population or accelerating growth in total productivity.