08-03-2013, 05:36 PM
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Confirmed User
Join Date: Feb 2005
Posts: 214
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Quote:
Originally Posted by $5 submissions
According to some estimates, the economy would improve due to higher spending power by fastfood workers which comprise a large chunk of the working population. Also, the cost of a Big Mac will "only" increase by 68 cents. 68 cents USD.
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This "68 cents" claim originated from a Huffington Post article last week. It was debunked the next day by the Columbia Journalism Review:
Quote:
A Big Mac miss by The Huffington Post
The Huffington Post reports that McDonald?s could double its workers wages by raising the price of a Big Mac by 68 cents. It went large on the Internet on Tuesday.
Unfortunately, what it originally claimed was a study by a University of Kansas researcher turns out to be something?a term paper, maybe??given to Huffington Post by a KU undergrad. And there are serious problems with it. The correction on its provenance came too late, though: it?s all over the internets.
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The bottom line is: This ?study? and The Huffington Post are both wrong.
Unfortunately, bad information spreads pretty fast these days. The false findings got picked up far and wide. I retweeted a Henry Blodget post at Business Insider before looking into its origins.
FULL ARTICLE - http://www.cjr.org/the_audit/a_big_m...e_huffingt.php
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And so HuffPo posted a retraction:
Quote:
Errors in McDonald's Wage Analysis
On Monday, The Huffington Post published a story entitled "Doubling McDonald's Salaries Would Cause Your Big Mac To Cost Just 68¢ More." HuffPost has since learned that the research used as the basis of the story contains significant errors that cast doubts on its claims. This story has replaced the one originally published in this space.
The story drew on data presented by Arnobio Morelix, an undergraduate student from The University Of Kansas who identified himself as a researcher for the school. In an interview, Morelix told the HuffPost that only 17.1 percent of McDonald's revenue goes toward salaries and benefits, meaning that for every dollar McDonald's earns, a little more than 17 cents goes toward the income and benefits of its employees.
However, as the Columbia Journalism Review subsequently noted, Morelix's analysis only takes into account the payroll and employee benefits of McDonald's company-operated stores while excluding franchise businesses. Prior to publication, HuffPost asked Morelix if his analysis included franchises and he said it did. He later conceded it did not. McDonald's franchises make up more than 80 percent of McDonald's restaurants worldwide. This means that a majority of the payroll and employee benefits of McDonald's workers are not included in Morelix's findings.
A typical fast-food restaurant spends 30 to 35 percent of its income on labor, according to a recent release from the Employment Policies Institute, a research organization whose work is often cited by those who argue against increasing the minimum wage. The institute estimates that small-business owners who run McDonald's franchises spend about a third of their income on wages, which would mean the price of a Big Mac would go up by $1.28 to $5.27.
A doubling of wages at McDonald's would almost certainly involve some layoffs, asserts Dean Baker, co-director of the Center for Economic and Policy Research and a HuffPost blogger. At the same time, more workers would stay in their jobs longer, Baker added.
Experts generally assume that roughly one-third of the cost of increased wages gets passed on to consumers, with much of the rest of cutting into profits, Baker said. Regardless, McDonald?s is so vast and lucrative that it could easily survive a major wage increase, Baker added.
?The idea that it?d put McDonald?s out of business, there?d be no way,? said Baker.
By the reckoning of Bonnie Riggs, a restaurant industry analyst at market information and advisory firm the NPD Group, a doubling of wages for all McDonald's workers is "not even in the realm of feasibility." With fewer and fewer Americans eating out at restaurants due to factors like the payroll tax hike and increases in gas prices, Riggs said restaurants like McDonald's are trying to discount prices as much as possible to get customers through the door. This means the company's profit margins could not withstand a labor cost increase of this magnitude, she added.
FULL ARTICLE - http://www.huffingtonpost.com/2013/0...n_3672006.html
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