Will Big Money Biden Mean Burgers For Billionaires Only?

“I guess Biden’s gonna undo all the good Trump did,” a Republican said to me with a straight face on Inaugaration Day. I resisted the urge to query as to what in the U.S.’s decreased respect around the world or Covid death rate two and a half times higher per capita than neighboring Canada’s there was that was good. “He’s going to raise the minimum wage to $15, then it’ll be $15 for a hamburger.”

There are many things wrong with that assumption. Many, many things, but I find it is a fairly common assumption among the right-wing segment of the population, so I figured it was time to look at the theory.

To begin, let’s look at that idea that he’s bound to do so. While it is true several prominent Democrats like Bernie Sanders made a $15 minimum wage a major plank in their platform, Biden didn’t. And his rise to power was largely facilitated working as Barack Obama’s Vice President. Obama had eight years to increase the minimum wage and ended up raising it by … 70 cents an hour, or about 10%. For better or worse, the last Democrat president did very little to increase the pay of the lowest end of the workforce. It takes a leap of faith to assume that his second-in-command will thus radically change course and more than double it.

However, Joe Biden is expected to sign an executive order today regarding a $15 minimum wage. But it won’t raise the national minimum wage to that amount. Instead it only mandates federal contractors to pay their employees at least that much. As long as McDonald’s or Dollar Tree aren’t federal contractors, they can continue business as usual, paying as little as $7.25 an hour in much of the country. Because that, $7.25 an hour, is the federal minimum wage, although a number of states like Florida and Massachusetts have raised their minimums state-wide with no ill repurcussions. In California, the minimum is already $14, so a $15 wouldn’t really make a great deal of difference. Even staunchly Republican Alaska recognize that $7.25 isn’t a living wage and have their floor set at $10.34. For a point of comparison, to the north, Ontario in Canada has a minimum wage of $14, which converts to about $11 when currency exchange rates are factored in, and across the sea, Britain’s is 8.72 pounds per hour, or around $11.75 American.

The $7.25 might have been an adequate, though mediocre, minimum wage when it was set – in 2009. Back in 1968, it was $1.60 an hour… but a buck sixty bought a lot more then than it does now. Back then, gas averaged 34 cents per gallon, the average American car to put it in cost $2800 and the house with the driveway you’d park it in would be in the range of $20-25 000. If the wage had kept pace with inflation since then, it would now be around $19.33 an hour. Little wonder there’s a common perception that the rich keep getting richer and the poor, poorer.

But what about that $15 hamburger? Who could afford that? Well, obviously that would be rather prohibitive and no doubt cut into the viability of fast food chains, if nothing else. But at McDonald’s the golden standard for these types of hypotheticals, I find, the cost of a Big Mac, their prize burger, is $3.99. So even if it doubled, along with the minimum wage, it would be around $8. Still pricey to be sure. But…

…that argument somehow assumes that the cost of your two all beef pattied, sesame-seeded lunch is determined by the wages of the cashier and fry cook and nothing whatsoever else. In fact, needless to say, many factors come into play – the cost of the food itself (beef ain’t cheap!), the rent or mortgage on the restaurant building, the chunk of money the franchisee pays head office to cover advertising, the electricity, and of course, if things work out properly, a tidy profit. In fact, in their fiscal 2018 year, the Golden Arches reported total revenue of $21.1 billion, with a profit of some $5.9 B. That’s a lot of french fries!

It’s also a 28% profit. Google tells us that 10.6% of the fast food giant’s expenses go to wages. Since after profit, 72% of their total money is money they have coming in ends up going out, that means about 7.3% of the total pie (an apple one, of course) goes to the employees. And that includes everyone from managers on down. Their usual starting wage in states with the $7.25 minimum is $8, and many floor staff make more than that. As you can see, even if the minimum wage was doubled overnight, it would still only increase the cost of your Big Mac by 7%, or about 28 cents. And that would be if all their workers were making minimum, which clearly isn’t the case.

So that $15 hamburger… don’t worry about it. In a worst case scenario your four buck Big Mac might become a $4.25 one. In places like Texas or Alabama. In California, the added cost would be far less since they already pay their people far more. But on the positive side, the Congressional Budgetary Office say some 17 million Americans would benefit from such an increase. That might be underselling it, because if 17 million low wage earners suddenly get substantially more pay, they’re going to go out and put it back into the economy. They’re not notoriously big on stashing extra bucks in bonds or 20 year term deposits. It will have a side effect of generating a lot more business for retailers and realtors, and create ripple effects from there. Stores selling more means more work for truckers, more warehouses being built, more warehouse workers being hired on, to spend more in stores…and so on and so on.

I’m not sure I actually would advocate a quick jump to $15 an hour, but a substantial increase is necessary. Perhaps to $10 right away, $12 next year, $14 the year after. It’s not only the kind thing to do, it’s the economically sensible thing. That’s my two cents worth… even if it means I might indeed need to pay about two cents more for every takeout coffee I get down the road.

6 Replies to “Will Big Money Biden Mean Burgers For Billionaires Only?”

  1. I think it should be up to the state. Some states as you have said are ready for it and equipped. This is something that needs a foundation built before you can do that. I mean doubling it right off the bat would hurt small businesses and workers also. I work with a lot of small Franchisee’s (not talking McDonalds or any other big place) and they said it would hurt them bad and they would have to cut labor down…hence less jobs.

    I’m not saying don’t raise it…yes it’s due for a raise but not doubling it all at once… every side has to be thought of. The plan I do like is to have college affordable for everyone…that way more people are trained and they will make more because of skilled jobs.

    One thing I thought of…if you doubled it…lets say a trained low end computer tech that makes 15-16 dollars an hour…why would they continue when they could go to fast food and make as much? They would have to get raised also across aboard…so it’s not just minimum wage that it affects….I don’t know how to fix it though…at all. I do see your point…I just work with these Franchisee’s so much that I feel for them.

    Liked by 1 person

    1. You raise some entirely valid points (I was going to respond yesterday but I was kind of working on the fly & wanted to give a more thoughtful response). I too think that an immediate rise to $15 would be foolish, but there needs to be a significant increase and an upwards scaling over the next 4 years. As well, they could raise the threshold for minimum income to pay tax on up so that the lower wage earners would have less of a tax burden. I think the national minimum should be at least $9, preferably more, but that states should be free to set higher amounts. Obviously, for instance the cost of living in california is going to be higher than Wyoming; and even within regions, the cost of living in NYC would far exceed that of say, Utica, so perhaps minimums should reflect that.
      I would assume the rising of the minimum , to even say $10, would have an upwards push on all low-wages. ie – if you’re in a retail or restaurant and the starting wage is $7.25 but you’re at $10 now, as maybe a supervisor, if the entry level rises to $10, you’re going to demand more to reflect your greater responsibility or seniority. Otherwise, indeed, there’d be little incentive to take the slightly above minimum type jobs.
      I don’t really buy into the argument that it would cost jobs on any big scale because we’re already seeing big business do everything possible to replace menial jobs with machines, or shift the work to the consumer. Yesterday’s ten check outs and ten cashiers is today’s two checkouts, one cashier and a bunch of self checkouts with one supervisor watching them all. The Walmart nearest us now has a robot floor cleaner which is kind of freaky, but it’s there. Every take out meal means one less in-store table that will need to be cleaned up. Theyre already doing that if they can save $7.25 an hour, they’ll keep doing so if they’re saving $10 an hour instead. HOWEVER, I will accept that there are likely a few small businesses that might be struggling and who couldn’t increase the low wages and stay afloat… if they could demonstrate that I wouldn’t mind having a project in place where the government would top up the wages for a year or two on agreement that the employer keep the staff. It would be cheaper to pay a couple of workers an extra $2.50 an hour or so than pay five or six unemployment or welfare, after all.
      And yes to more affordable colleges and universities. Absolutely. It should be attainable for any student who’s bright enough and ambitious enough… we’re in Baylor country here and it’s absurd. Something like $40 000 a year for basic… who can afford that? Now, whether state schools, grants to low income kids, gigantic tax breaks…. I don’t know what the best way to do it is but it should be open to any sharp mind – that’s important for the country’s future.
      Whew – quite a topic! thanks for commenting, Max

      Liked by 1 person

  2. Now one thing you could do for these businesses…and NO I’m not a Trump fan but one thing he did and got bashed for…I was actually for… lets take Amazon…they paid hardly any taxes for one or two years…people got really pissed BUT they made a lot of new jobs. With those new jobs, people pay taxes. With more jobs out there our economy clicks.

    I think companies big and small should be rewarded for making new jobs available and their taxes reduced…it’s a win-win situation. People can say what they want but our economy was doing very well before covid hit…that is one area…about the only one where I thought he did a good job…I’m afraid Biden will reverse all of that part…and that is what I don’t want to be reversed…most of the other I could care less.

    Biden will do much better on covid…It won’t be hard to do much better.

    $9-10 would be fine. Dave, I know the world has changed but when we grew up fast food and restaurant jobs…unless you were in management were mostly for teenagers and people in between jobs. The reason I’m harping on restaurant jobs is that I’m in IT with a restaurant chain. Labor costs are hard on restaurants and unfortunately what I’ve seen is dumping 2 or more jobs on one person. It’s not fair or right but it’s reality. It was usually not a career choice but now it’s getting that way.

    I’m totally in favor of raising it though…make no mistake. I remember I started off in 1985 at $3.15 so I get that it’s hard.

    Oh college…Yes our whole goal as a nation should be to get people trained…even vocational schools…if Johnny down the street is not into accounting or whatever…plumbing, heat and cooling, and etc.

    Thanks, Dave…you are one of the very people I would have ever left a comment because you are level headed and not an extremist. These days I never comment on a post like this and you know why…I know music, not politics lol.

    PS… I’ve already talked to a vendor about a fully automated store…robots cook, clean, serve, unload the trucks…everything.

    Liked by 1 person

    1. I figure the biggies like Amazon should be paying their fair share in taxes… man, with their kind of revenue even if they end up actually paying 2% in tax, that’s billions of dollars.
      I can concur that some tax breaks for companies creating jobs would be fair and helpful. Around here, the opinions on chip & Joanna Gaines are mixed…many love them, some think they’re publicity whores (I quite like them). But undeniable, they’ve taken their little Magnolia store and remodeling service and grown it into a major industry here… stores, bakeries, a food truck park, large real estate company, tv shows, hotel on the way, several large warehouses in the city. That’s a lot of jobs directly and many more indirectly through tourism and revitalizing the downtown core. I could see giving them a good tax break compared to comparable companies who are laying off people left and right.
      I sometimes worry where the jobs will be twenty years from now. I’ll be too old to worry much about it but I mean, self-checkouts, online everything…what happens when self-driving trucks get accepted? Where are people going to find work to do?

      Liked by 1 person

  3. The no tax for Amazon only last around a year or two and then it was back to normal but we got big time jobs out of it. That is one plus but I get what you are saying.

    If the Gaines are creating jobs that is a great thing. Everyone wins…I’m not saying give them or every company no tax but work with them and give them a cut…it will encourage more companies to do it.

    Automation is great but yea it is getting scary. My industry will be safe because someone has to manage those automations but everyone doesn’t want to be in IT. Personally I won’t like going somewhere where there is no people. That makes some places. I go to mom and pop places just for the atmosphere at times and maybe spend a little more than going to a chain.

    Liked by 1 person

    1. True enough… back in the day up in Canada I’d often go to this cafe or that just because I knew the staff and became friends with them, and the staff could influence my decision on which store to buy, say a new CD from (back when there were record stores and several to choose from!)

      Liked by 1 person

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