According to University of Kansas undergraduate business student Arnobio Morelix, who gathered financial data over the past several years from McDonald's, increasing every item on the McDonald's menu by 17 cents per dollar would allow the company to pay its workers twice as much. The math behind it isn't as complex as you'd imagine: Morelix found out that 17.1% of McDonald's revenue went towards worker compensation and benefits, so adding 17 cents per dollar would allow a double salary increase, meaning many employees could transcend the $7.25 per hour minimum wage. Coming in light of the recent fast food strikes and Obama's plan to increase the federal minimum wage to $9, this research is just another reminder that we desperately need to increase the minimum pay in this country, and the disadvantages aren't nearly as severe as previously thought.
While the numbers seem slightly exaggerated on Morelix's report, particularly granted that the 17% accounts partially for benefits and the research assumes that income will stay the same, it still shows how easily McDonald's could earn back the money with a more-than-reasonable price increase. Morelix also limited his findings to McDonald's, which, albeit the biggest fast food enterprise in the U.S., isn't the only company that would (or should) try to allow more spending towards workers.
The biggest flaw with the report is probably that an increase in spending might turn off many customers. We already know that many people go to McDonald's and other fast food chains because of convenience and price, not because of the health benefits and or even taste of their products. Plus, considering that many citizens are beginning to struggle affording the food and another good portion of the population are heading towards "fast-casual" chains, it's incredibly risky to change one of the major elements keeping the business ahead of the competition. A 17% isn't going to necessarily pressure the middle and upper classes, but then again, those aren't the type of people who usually eat at McDonald's in the first place. The Golden Arches are usually frequented by a population that simply can't afford paying even so much as 17 cents more on their Dollar Menu options.
But even though raising prices may cause many citizens to ditch McDonald's in favor of cheaper eateries, the fact of the matter is that this shouldn't be a specialized case. McDonald's may be the exact enterprise in question, but if minimum wages are increased across the entire spectrum of businesses in America, as Paul Krugman has suggested, more money will go back into the services that have to increase the wages. So maybe a company like McDonald's would have to pump more money into paying its workers, but those workers would then be more readily available to bear the small price increases, thus benefiting both sides.
The most important condition is that this system doesn't apply to solely one chain or business. It shouldn't seem surprising that around 35% of the Huffington Post's quick poll believed that McDonald's shouldn't boost its prices; if only McDonald's implements this method, the masses will just move to another fast food chain whose lower wages allow for lower prices.
While strikers may be asking for an increase from the national non-managerial median of $8.94 per hour to $15, an increase from $7.25 to $15, as even Krugman has admitted, would be simply too much too soon. Instead, a more gradual tactic should be in place so that eventually even lower-scale workers should be able to reach the cost of living easily, even if that cost of living may also have to increase in tiny increments.
Of course, we can't assume that all McDonald's or other fast food patrons are necessarily employed, but for those who are, an increased minimum wage would certainly allow them to accommodate for moderately-boosted prices. Unfortunately, most Republicans in Congress don't seem to be on board and may be the only opposition to an otherwise rational idea.
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