Consequence of $20 minimum wage for fast food workers?

[Bomb#20]

California Increases Minimum Wage, Protections for Fast-Food Workers

I never understood why fast food workers should have a higher minimum wage than other industries, or why burger flipping and cashiering should get you $20/hour anyway. In any case, forcing companies to overpay fast food workers is surely accelerating trends like this one:

California restaurant incorporates kitchen robots and AI

You are applying motive that doesn't exist.

You mean the legislators who enacted the new law weren't motivated by thinking fast food workers should have a higher minimum wage than other industries, or thinking burger flipping and cashiering should get you $20/hour? They did it because it was in their self-interest? That's probably right.

 

[Bomb#20]

The outrage over excessive pay seems to be focused on those at the bottom, those earning more that $10 dollars per hour.

Generally speaking, very little of that moral outrage is aimed at those at the top of the heap, who's value is measured in multiple millions, without a blink of the moral eye.

What reason is there for moral outrage aimed at those at the top of the heap, whose value to their customers is measured in multiple millions? Those people's pay is what willing buyers pay to willing sellers, for mutual benefit. The moral outrage over excessive pay is focused on coercive busybodies who appoint themselves to hunt down mutually beneficial trade they aren't a party to and stop it from happening, thereby preventing both transacting parties from making themselves better off. It only "seems to be focused on those at the bottom" because the coercers are currently laser-focused on stopping anyone whose work is worth $15/hour to customers from making a living. The coercers are currently letting people who want to trade with Jeff Bezos et al. go ahead and do it, so at that end of the scale there's no coercive wage control for anyone to get outraged about.

The moral issue is gross inequality in society, where a relatively small percentage of the population acquire or inherit great wealth, while many others work full time yet struggle to pay for the basics of life, housing, food, transport....

Ah. You were talking about Derec et al.'s moral outrage; was it actually your own moral outrage you were concerned with?

If gross inequality in society is a moral issue, how would you explain, to an unskilled person with no income who wants a job preparing fast food for $15/hour and could get one, why it's moral for you to prohibit her from getting that job because you want some other guy who already has a job to get $20/hour instead of $15/hour?

She's not going to have a $20/hour job too, because fast food outlets hire fewer unskilled workers when the price is higher, so there isn't another job available, so somebody will have to go without. And since the guy you got the raise for has experience because he already has a job, naturally the employer prefers him. So the somebody who has to go without is her.

So what would you tell her? Sucks to be her, but it's more important for the other guy to be $5/hour closer to Jeff Bezos than for her to be $15/hour closer to Jeff Bezos, because gross inequality? Or sucks to be her, but it's more important for him to be $5/hour closer to Jeff Bezos than for her to be $15/hour closer to the unskilled workers who have jobs, because the inequality between $20/hour and $0/hour isn't gross enough to be a moral issue?

 

[Bomb#20]

Most great wealth has a different source: ownership and management of assets. Having large amounts of capital on hand is a necessity for building factories and warehouses and mines and ships and server farms and other such big things, but the owners and managers of such capital are all too often Yet Another Arrogant Ruling Class.

And that's a reason for moral outrage, is it? Show your work.

Moral outrage? Can someone consider the needs of the many overweighing the needs of the few to acquire apparently limitless sums of money need to extrapolate immediately to "moral outrage"?

You're right, that extrapolation is totally unnecessary; but take it up with DBT -- I only talked about moral outrage because it's what he wanted to talk about.

People on the right believe that people should have the right to do something generally because they can do it.

Au contraire. There are all sorts of things people can do that people on the right generally believe people should not have the right to do -- terminate their pregnancies, for instance. But in this thread I don't think there are any people on the right; I take it you mean liberals like me. There are all sorts of things people can do that we generally believe people should not have the right to do either -- punch one another in the nose, for instance. We're typically not on board with the whole "Your right to your nose ends at somebody else's fist." persuasion that's so popular with people on the left.

If a person can make $15 billion, "Why shouldn't they be allowed to?"

For people on the left, however, the question is "What benefit is it to the populace to allow it?"

Yes, that's exactly right. For instance, Kim Jong Il allowed a man to have long hair only when there was a benefit to the populace: not having to look at the man's bald spot. Their default rule is social control based on what's best for the populace (as judged by themselves); it's letting people do what they want that requires special justification. To liberals it's the other way around -- our default rule is to let people do what they want, and it's social control that requires special justification. People on the right have a mixed approach -- their default rule is to follow tradition, to let people do what they want in areas traditionally left up to individual autonomy while socially controlling them in areas that have traditionally been socially controlled. What requires special justification is changing the practice of who gets to decide what.

Which is exactly why so many liberals perceive leftists to be even more tyrannical than rightists -- the rightists seem to want to run your sex life while the leftists seem to want to run everything except your sex life. Why should "What benefit is it to the populace to allow it?" be the gatekeeper on what we allow, instead of "What harm is it to the populace to allow it?"? Why the bejesus should leaving people alone to do their own thing have burden of proof?

Ultimately, it comes downs to priorities. Access for Anyone vs Access to Everyone.

And not having billionaires results in Access to Everyone, does it? Does this look to you like a list of countries where Everyone has Access?

Show

Afghanistan
Angola
Benin
Bhutan
Burkina Faso
Burundi
Central African Republic
Chad
Comoros
Congo, Democratic Republic of the
Eritrea
Ethiopia
Gambia
Guinea
Guinea-Bissau
Haiti
Kiribati
Laos
Liberia
Madagascar
Malawi
Maldives
Mozambique
Myanmar
Nepal
North Korea
Samoa
Sao Tome and Principe
Senegal
Sierra Leone
Solomon Islands
Somalia
South Sudan
Sudan
Syria
Tanzania
Timor-Leste
Togo
Tuvalu
Uganda
Vanuatu
Yemen
Zambia
Zimbabwe

I don't think this wall will be broken through. Especially when some make ridiculous arguments asking, "But how is it even possible to do this differently?!" when we were doing it a certain way for several decades until the Reaganites came into office and then we just stopped caring about revenue.

Hey man, the topic under discussion was the morality of private ownership and management of great wealth, whether we should feel outrage against allowing a million customers to make one seller very rich, and whether there should be a limit on the sums of money people can acquire. If what you want to talk about is only what the tax rate on billionaires should be, with a view to increasing revenue, that's a whole other question. The revenue from a billionaire tax is zero if there aren't any billionaires.

 

[Don2 (Don1 Revised)]

This article is interesting:

Between a guac and a hard place: California’s new $20/hour fast food minimum wage may force Americans to eat 'significant' price hikes, warns Chipotle — here's the scoop

So much for beans and rice being the cheap option.

finance.yahoo.com

Here's why. Previously, I showed some back of napkin calculations where they'd only need to raise prices by less than 6% because I used overestimates. Experts had said 4% instead. This is only applicable to the locations with wage changes, i.e. California. I also showed that fast food restaurants raised prices too high relative to inflation in 2023 and so could actually absorb the wage change instead because they "overcharged" in a sense.

So...the reason I say the article is interesting is for 3 reasons.

1. They are talking about using this as an excuse to raise prices across the whole country. ("Chipotle currently has around 3,400 restaurants, with 475 located in California. ... To cover that wage hike, Chipotle may have to raise its menu prices across all of its 3,400 restaurants by 80 to 100-plus basis points, Hartung told investors.")
2. Reading the article doesn't give an impression they are discussing extremely small increases. Words like "hike" are being used. And direct quote: "We know we have to take something of a significant increase, when you talk about a 20%-ish increase in wages..." It's 15% for Chipotle which I suppose can be rounded to 20%ish. Now, if we are talking a ~4% increase in revenue for Chipotle, i.e. around the same as reported for McDonald's, but the vast majority of locations 2925 out of 2400 are outside California, then raising prices by something like 0.5% would distribute that 4% across the country. Even if we are wrong and it's double, this is still a 1% increase nation-wide, not a significant increase.
3. Lastly, there's an interesting statement ("We haven’t made a final decision, in terms of pricing,” Hartung noted. “We’ll wait and see what the landscape looks like, what the consumer sentiment is [and] what other companies are going to do.") That seems very dangerous because there's this kind of implicit, unintended collusion in price raising that can happen there. If they are their competitors all say they are going to raise prices 10%, then they are pretty much a cartel or monopoly/duopoly/*opoly. It comes across as price fixing, no?

In any case, these alleged changes seem way too high and certainly would turn consumers against the union, meanwhile making a hefty profit in the process.

 

[thebeave]

Forget $20/hour. How about $50/hour?:

$50 minimum wage? Here’s what US Senate candidates for California say

Minimum wage is a topic that draws a lot of attention, especially in California, a state that has one of the highest minimum wages in the United States.

In a debate Monday night, Rep. Barbara Lee (D) defended her previous advocacy for a $50 minimum wage.


“In the Bay Area, I believe it was the United Way that came out with a report that very recently $127,000 for a family of four is just barely enough to get by,” Lee said. “Another survey very recently: $104,000. For a family of one, barely enough to get by low income because of the affordability crisis.”

A wage of $50 an hour would total $104,000 over the course of a year.

“Just do the math. Of course we have national minimum wages that we need to raise to a living wage,” Lee said. “We’re talking about $20, $25 – fine. But I have got to be focused on what California needs and what the affordability factor is when we calculate this wage.”

 

[TSwizzle]

Forget $20/hour. How about $50/hour?:

$50 minimum wage? Here’s what US Senate candidates for California say

Minimum wage is a topic that draws a lot of attention, especially in California, a state that has one of the highest minimum wages in the United States.

In a debate Monday night, Rep. Barbara Lee (D) defended her previous advocacy for a $50 minimum wage.


“In the Bay Area, I believe it was the United Way that came out with a report that very recently $127,000 for a family of four is just barely enough to get by,” Lee said. “Another survey very recently: $104,000. For a family of one, barely enough to get by low income because of the affordability crisis.”

A wage of $50 an hour would total $104,000 over the course of a year.

“Just do the math. Of course we have national minimum wages that we need to raise to a living wage,” Lee said. “We’re talking about $20, $25 – fine. But I have got to be focused on what California needs and what the affordability factor is when we calculate this wage.”

Jeezus christ, that was brutal to watch. Garvey was asked what housing regulations would you remove. His answer was waffle. The follow up question. "specifically, what regulations would you remove". Answer was the same waffle. Four uninspiring candidates and all of them batshit crazy although Shifty Schiff is the best at disguising it. Fucking hell, no wonder this state is fucked.

I don't think Lee goes far enough, why not $100 minimum? She ran a business, she knows what she is talking about.

 

[lpetrich]

(on Chipotle raising prices)

In any case, these alleged changes seem way too high and certainly would turn consumers against the union, meanwhile making a hefty profit in the process.

Avoiding stock buybacks ought to cover this cost nicely.

From back in 2017,

A business gives raises, and Wall Street freaks out | Internet Infidels Discussion Board
noting
American Airlines gave its workers a raise. Wall Street freaked out. - Vox

American Airlines agreed this week to do something nice for its employees and arguably foresighted for its business by giving flight attendants and pilots a preemptive raise, in order to close a gap that had opened up between their compensation and the compensation paid by rival airlines Delta and United.

Wall Street freaked out, sending American shares plummeting. After all, this is capitalism and the capital owners are supposed to reap the rewards of business success.

“This is frustrating. Labor is being paid first again,” wrote Citi analyst Kevin Crissey in a widely circulated note. “Shareholders get leftovers.”

Indeed, major financial players were so outraged by American’s decision to pay higher wages that they punished airline stocks across the board. American itself took it hardest on the chin, of course, but the consensus among stock analysts was that higher pay at American could signal higher pay at other airlines too, with negative consequences for the overall industry.

and

Wall Street vs. Wages II | Internet Infidels Discussion Board
noting
No, Chipotle isn’t paying workers too little.

Chipotle had its stock downgraded on Wednesday by an analyst at Bank of America. It makes sense. The chain has endured a tough time. Health-safety issues that had scared customers away resurfaced this summer. Bill Ackman—the erratic, hypomanic hedge-fund manager—has amassed a large stake in the company, which is often a contrary indicator. Chipotle’s latest game-changing product—queso!—hasn’t met a rapturous reception. In this golden age of lunch, competition is intense, and consumers have fantastic, affordable choices. The stock has fallen about 20 percent in the past year—a year in which the S&P 500 rose 20 percent.

So, yes, an analyst might question Chipotle’s prospects. But this one had another problem: the wages of the generally low-paid people who staff Chipotle’s locations. While the company has aggressively cut down on the number of hours per employee as its sales have fallen, analyst Gregory Francfort noted, “We believe further gains from trimming hours will prove difficult which limits the opportunity to get labor below 27 percent of sales even if traffic recovers.” Simply put, Francfort is down on the stock because Chipotle can’t lower the percentage of every dollar of revenue it spends on labor.

Anything more than 27% is intolerably high?

 

[lpetrich]

Paywalled.

Sorry I posted that link because it is a link to an article in a reputable publication that covers business affairs.

‘Greedflation’ Trends 2024 And How To Use Credit Cards To Fight High Costs – Forbes Advisor

What Is ‘Greedflation’?

“Greedflation” is roughly defined as excessive price increases that companies roll out to take advantage of an inflationary situation and grow their profits.

The term is said to have morphed out of “seller’s inflation,” a theory proposed in a 2023 paper by Isabella Weber, an economist at the University of Massachusetts Amherst. Weber first floated the idea in an opinion column in the Guardian in 2021 [1]. She wrote that one reason inflation was so high at that time was that corporations were enjoying an “explosion in profits” as they saw an opportunity to greatly boost their prices amid supply problems stemming from the pandemic.

In her later paper [2], Weber and a colleague said what was going on was seller’s inflation: that businesses were hiking prices purely because they could, at the expense of consumers. This scenario was initially dismissed—even criticized as a “conspiracy theory.[3]” But the notion of greedflation hasn’t gone away and remains a topic of concern and debate.

Shrinkflation vs. Greedflation

In “shrinkflation,” corporations shrink the size of their products but continue to charge the same prices for them. Companies, mainly those in the food and beverage industries, employ this tactic to quietly boost—or at least maintain—profits.

Greedflation occurs when the product remains the same, but the company hikes the price to generate more profits. The idea is that even though production costs haven’t risen enough to justify price increases, companies carry out price increases anyway to improve their bottom lines.

noting
"Sellers’ Inflation, Profits and Conflict: Why can Large Firms Hike Prices in an Emergency?" by Isabella M. Weber and Evan Wasner

The dominant view of inflation holds that it is macroeconomic in origin and must always be tackled with macroeconomic tightening. In contrast, we argue that the US COVID-19 inflation is predominantly a sellers’ inflation that derives from microeconomic origins, namely the ability of firms with market power to hike prices. Such firms are price makers, but they only engage in price hikes if they expect their competitors to do the same. This requires an implicit agreement which can be coordinated by sector-wide cost shocks and supply bottlenecks. We review the long-standing literature on price-setting in concentrated markets and survey earnings calls and compile firm-level data to derive a three-stage heuristic of the inflationary process: (1) Rising prices in systemically significant upstream sectors due to commodity market dynamics or bottlenecks create windfall profits and provide an impulse for further price hikes. (2) To protect profit margins from rising costs, downstream sectors propagate, or in cases of temporary monopolies due to bottlenecks, amplify price pressures. (3) Labor responds by trying to fend off real wage declines in the conflict stage. We argue that such sellers’ inflation generates a general price rise which may be transitory, but can also lead to self-sustaining inflationary spirals under certain conditions. Policy should aim to contain price hikes at the impulse stage to prevent inflation from the onset.

In short, greedflation is real.

 

[TV and credit cards]

This article is interesting:

Between a guac and a hard place: California’s new $20/hour fast food minimum wage may force Americans to eat 'significant' price hikes, warns Chipotle — here's the scoop

So much for beans and rice being the cheap option.

finance.yahoo.com

CHIPOTLE ANNOUNCES FOURTH QUARTER AND FULL YEAR 2023 RESULTS

These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements, including but not limited to: increasing wage inflation and the competitive labor market, including as a result of regulations such as California AB 1228, which impacts our ability to attract and retain qualified employees and has resulted in occasional staffing shortages;

My bold.
How does that work? Raise the minimum wage three dollars per hour and no one wants to work there anymore? Unless they plan on working a smaller staff and cracking the whip so as not to increase labor cost from the current 25% of operating expenses. But that flies in the face of the Yahoo! article that cries wolf about rising prices.
Other than that, they don't look like they're doing too bad. Expecting good continued growth and pays out a nice fat dividend.

Let's revisit this earnings report a year from now and see if the sky is falling.

Investors seem to be taking it in stride.

 

[Derec]

$20/h is passe. Senate candidate Barbara Lee is demanding a $50/h federal minimum wage.
Rep. Barbara Lee in California Senate race says minimum wage should be raised to $50

 

[thebeave]

$20/h is passe. Senate candidate Barbara Lee is demanding a $50/h federal minimum wage.
Rep. Barbara Lee in California Senate race says minimum wage should be raised to $50

Wow! Who knew?!


Look 5 posts above you

 

[Loren Pechtel]

Should Jack in the Box pay a living wage to a woman with six kids and a dog? It would require a huge payout from them to give her a living wage in California. And how much does JitB give to her coworkers? For example, a young single guy sharing an apartment with 2 other guys? Is it fair for her to get, say, $120,000/yr to support her family and give him only $40,000/yr to support just himself even though they may have similar experience and work histories? And why should JitB (or any employer for that matter) be obligated to, basically support someone (and their kids) who obviously made some very poor choices in life?

Exactly. "Living wage" is a deliberately unattainable objective, it's a dog-whistle for more no matter what.

 

[Loren Pechtel]

When you finish playing with your dolls, maybe you could respond to the living wage comments.

Do you mean your strawman argument?

Just because you have no rebuttal for the unpleasant reality doesn't make it go away.

 

[Loren Pechtel]

She's not going to have a $20/hour job too, because fast food outlets hire fewer unskilled workers when the price is higher, so there isn't another job available, so somebody will have to go without. And since the guy you got the raise for has experience because he already has a job, naturally the employer prefers him. So the somebody who has to go without is her.

So what would you tell her? Sucks to be her, but it's more important for the other guy to be $5/hour closer to Jeff Bezos than for her to be $15/hour closer to Jeff Bezos, because gross inequality? Or sucks to be her, but it's more important for him to be $5/hour closer to Jeff Bezos than for her to be $15/hour closer to the unskilled workers who have jobs, because the inequality between $20/hour and $0/hour isn't gross enough to be a moral issue?

How can you let unpleasant reality interfere with a utopian dream!

 

[TV and credit cards]

Should Jack in the Box pay a living wage to a woman with six kids and a dog? It would require a huge payout from them to give her a living wage in California. And how much does JitB give to her coworkers? For example, a young single guy sharing an apartment with 2 other guys? Is it fair for her to get, say, $120,000/yr to support her family and give him only $40,000/yr to support just himself even though they may have similar experience and work histories? And why should JitB (or any employer for that matter) be obligated to, basically support someone (and their kids) who obviously made some very poor choices in life?

Exactly. "Living wage" is a deliberately unattainable objective, it's a dog-whistle for more no matter what.

No. thebeave and you are attempting to shape the narrative to your end. The worker should be paid a living wage. California can and does have programs in place to help children paid through taxation. To say a wage should be structured based on the number of children and pets a person has is akin to saying they should be paid enough to have a nice car and house just like you. That is not the argument. The argument is every wage being a living wage for work performed.

 

[Don2 (Don1 Revised)]

$20/h is passe. Senate candidate Barbara Lee is demanding a $50/h federal minimum wage.
Rep. Barbara Lee in California Senate race says minimum wage should be raised to $50

Wow! Who knew?!


Look 5 posts above you

I think your news feed item deserves a separate thread.

That said, don't blame Derec. Blame your corporate overlords. He's getting the same info from the same feed as you.

 

[thebeave]

$20/h is passe. Senate candidate Barbara Lee is demanding a $50/h federal minimum wage.
Rep. Barbara Lee in California Senate race says minimum wage should be raised to $50

Wow! Who knew?!


Look 5 posts above you

I think your news feed item deserves a separate thread.

That said, don't blame Derec. Blame your corporate overlords. He's getting the same info from the same feed as you.

Huh? I have corporate overlords? 'splain, Lucy.

 

[laughing dog]

Should Jack in the Box pay a living wage to a woman with six kids and a dog? It would require a huge payout from them to give her a living wage in California. And how much does JitB give to her coworkers? For example, a young single guy sharing an apartment with 2 other guys? Is it fair for her to get, say, $120,000/yr to support her family and give him only $40,000/yr to support just himself even though they may have similar experience and work histories? And why should JitB (or any employer for that matter) be obligated to, basically support someone (and their kids) who obviously made some very poor choices in life?

Exactly. "Living wage" is a deliberately unattainable objective, it's a dog-whistle for more no matter what.

How do you come up with such intellectual rubbish? Whether or not a particular living wage is attainable is an empirical question.

 

[Loren Pechtel]

Should Jack in the Box pay a living wage to a woman with six kids and a dog? It would require a huge payout from them to give her a living wage in California. And how much does JitB give to her coworkers? For example, a young single guy sharing an apartment with 2 other guys? Is it fair for her to get, say, $120,000/yr to support her family and give him only $40,000/yr to support just himself even though they may have similar experience and work histories? And why should JitB (or any employer for that matter) be obligated to, basically support someone (and their kids) who obviously made some very poor choices in life?

Exactly. "Living wage" is a deliberately unattainable objective, it's a dog-whistle for more no matter what.

No. thebeave and you are attempting to shape the narrative to your end. The worker should be paid a living wage. California can and does have programs in place to help children paid through taxation. To say a wage should be structured based on the number of children and pets a person has is akin to saying they should be paid enough to have a nice car and house just like you. That is not the argument. The argument is every wage being a living wage for work performed.

Not our problem that words mean what they mean. You're trying to walk back the inconvenient reality of your position.

 

[Loren Pechtel]

Should Jack in the Box pay a living wage to a woman with six kids and a dog? It would require a huge payout from them to give her a living wage in California. And how much does JitB give to her coworkers? For example, a young single guy sharing an apartment with 2 other guys? Is it fair for her to get, say, $120,000/yr to support her family and give him only $40,000/yr to support just himself even though they may have similar experience and work histories? And why should JitB (or any employer for that matter) be obligated to, basically support someone (and their kids) who obviously made some very poor choices in life?

Exactly. "Living wage" is a deliberately unattainable objective, it's a dog-whistle for more no matter what.

How do you come up with such intellectual rubbish? Whether or not a particular living wage is attainable is an empirical question.

"Particular living wage"--binaries don't have ranges.