Tag: McDonald’s

HuffPo Economic

HuffPo put out an article the other day claiming that doubling the wages of McDonalds employees would cause the Big Mac to cost just 68 cents more (the original article seems to have gone down the memory hole; see below).

Of course, being idiots, they ignored several basic economic problems. For one, McDonald’s managers won’t pay the same number of people $15 an hour to flip burgers: they’ll find ways to cut back on staff. For another, if McDonalds were paying $15 an hour, they’d have a much larger pool of employees from which to draw, which could squeeze out the low-skill entry-level workers who desperately need the kind of stepladder jobs offered by … places like McDonalds.

The bigger problem is a fundamental failure to understand Econ 101. If McDonald’s could charge 68 cents more for a burger, they almost certainly would. McDonald’s would charge $45 for a burger if they thought they could. But they have set their prices at a point that maximizes revenue. If you’re a rich economist or politician, paying 68 cents more for a burger doesn’t sound like much. But centuries of economic experience tells us that the market will respond to such a price change with less purchasing, either of burgers or of something else so that they can buy burgers.

And that’s the last part they’re ignoring: that cheap burgers help poor people and middle class people get ahead in life. As Kyle Smith recently pointed out, the McDouble is one of the most cost-effective methods of getting calories out there. It’s a cheap way for working poor people to grab a bite or indulge a vice. Why charge them more for it under the guise of helping them?

Anyway, it turns out that HuffPo — haha — completely garbled the math, counting McDonald’s revenue that included franchise fees but only their direct labor costs. Even HuffPo has to admit that a doubling of salaries would increase the price of a Big Mac by $1.28, more than double what they previously claimed.

Oh, and the story didn’t come from a “researcher” at the University of Kansas but from an undergraduate student. So … it’s bullshit anyway. And the left wing ran with a story that was literally an undergraduate project that would have gotten a D at best.

You know, I didn’t think any left wing meme would beat out the Platinum Coin for stupidest idea of the year but … hmmm … nah. I still think that Platinum Coin idea was even stupider.