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The logic is so very simple, why is it so hard to understand?

August 10, 2016

I avoided specifics as much as possible, but I think my math is right and the logic is actually very very simple

Seems like everyone worked at a McDonald’s in high school, it’s what you did to earn spending money. But today people are expecting these jobs to provide enough income to support a family.

Here’s why the federal government needs to stay out of the private sector.

The cost and revenue based on national averages, to own a McDonald’s.

2.6m in yearly Revenue (based on a national avg)

874.40 $ = Avg cost of 4 min wage workers for a 24 hour day @ 9.15 an hour (National average)

320,616 yearly wages for min wage staff

1440 $ = Avg cost of 4 min wage workers for a 24 hour day @ 15$ an hour (figuring peak and off times avg out to 4 workers)

525,000 yearly wages

15% take home for franchise owner (390,000)

12.5% to McDonalds corporate (325,000)

1.564m Profit (current national averages at 9.15 an hour)

1.36m Profit (at 15$ an hour)

So using some basic numbers based on average, as government forces wages to be raised on the private sector the take home for the franchise owner is reduced by 200,000 annually.

Where is the franchise owner going to make up that money? Certainly they’re not taking less.

Spend less on goods? Can’t ever afford to be ‘out’ of product so that’s not an option

Corporate take less? Not a chance, you’re bound by contract to pay them their 12.5%

So it’s one of two options

Raise prices enough to pass the 200,000 to us, the consumer OR
Reduce expenses via wages and/or insurance for FT employees.
Since the gov’t has created laws that force you to pay the wages, you cannot reduce cost without raising prices and/or eliminating salary.

Changing your Min wage hourly expense from 60$ an hour to 45$ an hour by eliminating “one employee” worth of expense each hour. That would likely mean a reduction of min wage employees from 12 (figuring 3 8 hour shifts of 4 people) to 9. Now remember that will likely be higher simply because a min wage worker CANNOT work more than 29 hours otherwise the owner is required to provide affordable health care coverage that meets minimum requirements, or pay an annual penalty (known as the “shared responsibility” penalty).

So you would need to create 672 hours of minimum wage work with 29 hour work weeks. That’s an average of just over 23. So 23 part time employees making min wage would make up the staff.

29 hours a week at 15 an hour is 435$ a week or 22,620 in annual salary

Which means 8.8 workers would need to be fired to reduce salaries 200,000 annually.

So no, raising min wage does not and will not ‘boost’ the economy because the companies liberals all try to use as examples are NOT hourly pay companies.
It’s also the very HEART of small business in America.

One more VERY important point. If you kept the averages, and said that 8, not 9 but 8 folks were fired to make this work $$ for the owner.

114,136

What is that? That’s the number of jobs lost as 14,267 McDonalds reduced staff to offset the dramatic increase in the min wage.

 

 

 

 

 

 

 

14 Comments leave one →
  1. August 10, 2016 1:28 am

    God forbid the franchise owner settle for $1.36 million per year vs. $1.56 million, on the back of his minimum wage employees.

    • August 10, 2016 1:39 pm

      Why should they have to be forced to take a pay cut??? Who cares if they’re millionaires? Good for them for capitalizing in a capitalist society. I wish I was smart enough to do it.
      They are also employers. If they have to do this more people will be out of jobs and/or benefits.
      I have a job I love, but it pays crap. I choose to stay. Without a college degree I don’t have a ton of choices for high paying jobs, but that’s my fault. I don’t expect anyone to sacrifice for me.
      Get over yourselves. Stop being so jealous of the rich. If it weren’t for them you would be paying a lot more taxes and have a lot less jobs.

  2. empirelady permalink
    August 10, 2016 1:57 am

    It is easy for you to say because you have money and are living a comfortable life(I know,you lost money and are down to your last million). But for the people who do not have money and need a higher minimum wage just to be able to afford food or rent,basic needs like food and housing,it is not too much to ask for the wages to be increased to $15 an hour. For those who are unemployed and looking for any kind of wages,$15 an hour sounds great and even $8.75 an hour would be good,so I do not think it would hurt to help these people out. I used to think that you had a great sense of humanity and compassion,wanting to help others as you did with the people suffering with ALS,etc,but this shows no sense of caring or compassion at all for those who are struggling. It goes to show that you,like all of the other wealthy people,only see dollar signs. You definitely disappoint me on this one….NYC resident..

  3. August 16, 2016 12:39 pm

    wow! you shot past that $1.56mm vs $1.36mm part of the story real quickly! While i’m not necessarily supportive of a national min. wage, don’t you see an issue with a system that allows a business to be extremely profitable while providing only the bare minimum in wages and benefits? It’s no wonder service is so terrible in many retail businesses; the owner gets what he pays for. You know, there used to be a ‘social contract’ between Capital and Labor and that was good for this country. This contract is nowhere to be found anymore. The problem is greed. Greed is not good. It’s tearing the fabric of our country apart. I’m not sure of the best way to combat it but railing against higher min. wages in defense of high profit margins seems to be a corrupt crusade. We can do better as a country.

    PS. I liked Amalur. Sorry it didn’t work out.
    PPS. Thanks for the bloody sock game.

  4. August 17, 2016 9:16 am

    As a Rhode Islander, all I can say is…..are you freaking for real???? How dare you!

  5. August 17, 2016 9:33 am

    Regarding your potential Senate campaign, can we talk? Please see public bio halfway down post: http://www.black-and-right.com/2002/02/03/learning-from-black-history/

  6. August 17, 2016 12:53 pm

    So let me get this straight ….you’re a fiscal conservative unless YOU are the one taking other people’s money?

    • August 21, 2016 10:02 pm

      He didn’t take other people’s money. He redistributed the government’s money while also losing about $30 million of his own. It was a video game company. Do you know what is 90% of the cost of video game development? Employees salary and other expenses. His company had great employee benefits, and when they came to Rhode Island they brought lots of jobs with them, tax paying jobs, with people who bought groceries and houses (and paid taxes on that) etc etc. The benefits were so good I remembered thinking “He’s going to go broke, no one in game development does that”. When the Government pretends that the money was stolen or wasted, where did they think it went? Swiss bank accounts for concept artists?

      OK, rant is over. You may not be stupid, maybe just ignorant, but get over it.. or go watch War Dogs if you want to see how much the government actually does waste on stupid shit.

      • August 28, 2016 7:38 am

        He didn’t take anyone’s money. He was promised $26M more than he got from the RI gov’t. Without that money the company couldn’t continue.
        They pretty much had him move everything & everyone to RI dangling a $75M carrot. Then decided to only give the co a $49M carrot. It was like a bait & switch. That difference set them up to fail. Yet he continues to take responsibility & blame for not coming up with that unexpected extra.
        Would your boss buy your old house if they asked you to move and it didn’t sell?
        Would your boss pay for top of the line health insurance out of his own pocket?
        Would your boss pay moving expenses?
        Curt Schilling should be blamed for believing in the government, being a generous employer and not having the business sense & patience to let the company grow slower.
        He brought 300 people to RI who pay taxes and spend money at those businesses. People of RI should thank him and blame the losers they elected. That’s where the anger should be directed.

      • October 18, 2016 8:05 am

        “Redistributed” the govt’s money, but that’s ok with you? And I’M the one who’s stupid or ignorant?

  7. August 18, 2016 5:56 am

    While there is nothing wrong with the math in general, this is an extremely simplistic and one dimensional view of minimum wage.

    I’d suggest you also consider the following potential effects that increased minimum wage may have:
    – increased spending (keeping in mind low income families spend everything and save very little)
    – increased worker productivity/morale (maybe they no longer have to work 2 jobs)
    – decreased turnover
    – decreased safety net burden

    Note how some of this would have increased revenue effects and others would have decreased cost effects even without raising prices or eliminating workers.

    Another thing to keep in mind is that prices of products are not solely a product of the cost of labor. For example, your game studio could not charge whatever it might have wanted for the game you were making. People may or may not have paid for it at certain prices. The price range at which you could price it is limited – regardless of what you choose to pay your employees. This is even more true at places like McDonald’s where there are ample alternatives.

    At the same time, you might be interested to know that the vast majority of empirical studies find little to no employment effect when minimum wages are increased gradually.

    • October 24, 2016 12:12 pm

      Your comment makes a lot of sense. To have slight increases can be more beneficial long term with little to no risk.
      I have been at my job for 10 yrs. I have gotten 1 raise 5 yrs ago. Not long after my hrs were cut. Years later the cost of living has increased, but my pay hasn’t so I am working a 2nd & 3rd job to try to keep up. Although I love my job, I no longer do extra and have much less respect for the bosses I once cared about very much. I see now they don’t appreciate loyalty like they claimed. If they did they wouldn’t hire outsiders to work the hours that used to be mine at a lower wage.
      They will never have another worker who will put so much into their business as me. I’ve been there almost since day one. But I can no longer stay. As soon as I find the “greener pastures” I’m out. It breaks my heart, but I literally cannot afford to work there anymore.

  8. October 18, 2016 8:06 am

    Shepsperson, read up on what went on in RI, other than what your boy Curt chooses to spin, and you’ll see that he’s a big fuck-up. Thank God Chafee pulled the plug when he did or it would have been worse.

    • October 24, 2016 12:00 pm

      Janey, he’s not “my boy”. While I disagree with a lot of his views, I do believe he is a good person at his core and means well. His actions come from a good place. I don’t think he’s as smart as his thinks he is. (Which has and will again bite him in the ass.) But I also don’t think he’s a complete idiot even though does seem impatient and impulsive.
      CS says he likes to have a back & forth and listen to other points of views, but obviously he speaks more than he listens. He’s a little too rigid in his beliefs.
      That being said, I look at situation from all side with an open mind and come to conclusions based on whatever info is available at the time. Simply put it appears EDC promised an unsecured loan amount that wasn’t delivered. Thus leaving the RI taxpayers holding the bag. (As a result the SEC, FBI, etc got invoved.) Schilling counted those overpromised chickens before they hatched. He should have had a plan B in case there were unforeseen circumstances and he should’ve listened to his business advisors.
      Shame on all of them. The government, the EDC and Schilling. And shame on the people of RI for electing the governor who started the whole thing and the governor who stopped it without having a reasonable exit strategy.
      Unfortunately for CS it was his idea, his product, his company, his stupidity, his ignorance, his trust that the government would keep a promise, his name that he gets to carry most of the blame and have the reputation he has from the people of RI.

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