retail news in context, analysis with attitude

by Kevin Coupe

If McDonald's were forced by a minimum wage increase to pay its employees $15 an hour, what would the impact be on the cost of a Big Mac?

That's the question posed by the Washington Post, which reports on a study by Purdue University's School of Hospitality and Tourism Management, which "used data from both the National Restaurant Association and Deloitte & Touche to estimate how much fast-food companies would need to boost sales given varying changes in the minimum wage. Assuming the industry maintained its current profit margin of 6.3 percent - which, to be fair, is fairly slim - hiking the pay floor at fast-food restaurants to $15 an hour would mean just a 4.3 percent increase in prices."

Now, to be fair, this is just a rough estimate - the numbers would vary based on location and what the minimum wage is now, just as financial needs vary depend on where the employees live.

But, the Post writes, essentially the question is whether people would be willing to "pay 17 extra cents for a Big Mc if it meant the person who prepared it could earn a living wage."

Though I suppose that some might ask whether people should be forced to pay that extra 17 cents for a Big Mac to support a living wage.

Seventeen cents? To me, that's both a no-brainer and an Eye-Opener.
KC's View: