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Thread: Food prices soar as incomes stand still

  1. #221
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    Re: Food prices soar as incomes stand still

    Quote Originally Posted by Lord Tammerlain View Post
    So 100% of the cost of a Big Mac is due to the labour costs of the staff at the Macdonald's the burger is made at?

    The transportation, the building, the food, the electricity etc have zero cost when it comes to the price of a big mac, just the labor of the 16 year olds making the burger and at the till
    No, all those factors (overhead etc) project into the cost of a Big Mac... However doubling an employees salary will dramatically increase the costs of goods.

    I'll tell you a little secret tho - McDonalds makes almost nothing on their food - most of their profit comes from fries and soft drinks.

    15+ years ago my mom was actually a corporate accountant for McDonalds, and at the time I had interest in accounting so me and my mother had a lot of good conversations about the corporation.

    Also, you have to remember McDonalds is a franchisee restaurant and some do better than others.

    However yes, the cost of overhead will be reflected in the cost of product.

    Raising the minimum wage to 10.10 an hour will kill numerous businesses - that, or places of business that primarily hire minimum wage workers will drastically cut back just to keep their businesses afloat.

    Another aspect such a nonsense 10.10 hour minimum wage will do is increase the amount of "illegal labor."

    Obama obviously has no idea how a business is run or even how our economy works.... He just panders to his voting base - as if his voting base have any idea how a business or the economy works.

    The only fair way to assess minimum wage is through studying regional economics and the standard of living in those regions - but Obama is not that smart.

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    Re: Food prices soar as incomes stand still

    Quote Originally Posted by Lord Tammerlain View Post
    Meaning if min wage was doubled then the cost would double. Inversely, if min wage was reduced by half the cost would reduce by half.

    Taken to extreme, if you remove the labour cost of the min wage worker, the cost of the product becomes zero.

    Or more to the point, the idea that increasing the min wage by double would increase the cost of the goods of services by nearly double is idiotic. It ignores the vast number of other costs involved in the production of said good or service. Only services at the most basic level would come anywhere close to what he said (neighborhood kid shoveling snow for instance). A fast food restaurant has a huge number of other costs associated with making and selling any product. The restaurant alone will cost over 1 million to build, food costs, heating costs, electricity costs, transportation costs, waste etc. Labour is definitely a significant cost, perhaps 30 -40 % in most cases, which means an increase of 20% in Wages would lead to an increase of the COG of 6-8%. Not the nightmare scenario that most seem to make it out to be

    Heck the people working there (who are not students living with their parents) would be able to eat there
    I don't know about double but the cost of product or service would certainly go up anywhere from 30-75% depending on a companies payroll and general overhead.

    Restaurants are probably going to get hit the hardest, and if they close their doors MILLIONS will lose their jobs from transportation jobs, to bakery jobs, paper good jobs, printing jobs - to just about anything you can really think of that is associated with these fast food chains. Next time you're in one take a look around and realize that the place was built by numerous industries. From the guys who manufacture the trash cans, toilets, tables, chairs, coke machines, cups, counter tops, the tile on the floor - the cost of labor to construct a McDonalds, the guys who make the signs.....

    Those guys lose their jobs too if there is no demand for their products - and they're not even McDonalds employees.

    It's really nothing more than one gigantic domino effect.

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    Re: Food prices soar as incomes stand still

    Quote Originally Posted by Mr.Nick View Post
    It would have an extremely dramatic increase in food prices, if you for example double minimum wage you may as well double the cost of the service that worker is doing.

    It's extremely simple math.....

    Communists just don't get it because they're under some delusion that every business has a 99% profit margin.
    Since less than 3% of all US workers now make the MW and the proposed increase is about 35% that would mean, at most, a tiny increase in prices of goods/services. The real harm, in large increases in the MW, is to the MW worker that will then not keep/get a job.
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  4. #224
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    Re: Food prices soar as incomes stand still

    Quote Originally Posted by Lord Tammerlain View Post
    Meaning if min wage was doubled then the cost would double. Inversely, if min wage was reduced by half the cost would reduce by half.

    Taken to extreme, if you remove the labour cost of the min wage worker, the cost of the product becomes zero.

    Or more to the point, the idea that increasing the min wage by double would increase the cost of the goods of services by nearly double is idiotic. It ignores the vast number of other costs involved in the production of said good or service. Only services at the most basic level would come anywhere close to what he said (neighborhood kid shoveling snow for instance). A fast food restaurant has a huge number of other costs associated with making and selling any product. The restaurant alone will cost over 1 million to build, food costs, heating costs, electricity costs, transportation costs, waste etc. Labour is definitely a significant cost, perhaps 30 -40 % in most cases, which means an increase of 20% in Wages would lead to an increase of the COG of 6-8%. Not the nightmare scenario that most seem to make it out to be

    Heck the people working there (who are not students living with their parents) would be able to eat there
    That's on top of the already 10%+ recent increases in food costs*, so it's not insignificant.

    *-I'm speaking groceries, not McD's specifically, but the two are related.
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    Re: Food prices soar as incomes stand still

    Quote Originally Posted by radcen View Post
    That's on top of the already 10%+ recent increases in food costs*, so it's not insignificant.

    *-I'm speaking groceries, not McD's specifically, but the two are related.
    Grocery stores outside of Walmart, meaning Safeway, and other like it tend to pay quite a bit more then min wage or at least used to 12 years ago. Their pay was along the lines of Home Depot. A 20% increase in min wage would push their wages up by probably an average of 10%, meaning a COG increase of 3%.

    For Walmart, as most mention it pays better then min wage, already not sure by how much and given how well it tends to control costs, may not increase wages propotionally. So its direct costs might remain flat.
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    Re: Food prices soar as incomes stand still

    Markup on food has increased exponentially. This is something your not gonna see in the news. Markup on fresh baked goods now comes in at an average of 120% at BJs Whole sale, up 50% from about 10 years ago. I imagine the mark up of non wholesale is higher. Markup on fresh meat is all over the place, from a mere 10%, up to almost 100%, depending on what you get, but it's also up across the board.

    How else has profit margins increased to the extent that they have, despite a relatively low growth in unit sales. Meanwhile, wages remain frozen, hours are cut, and top executive pay increases another another 15%.
    Quote Originally Posted by calamity View Post
    Reports indicate that everyone knew he was hauling a bunch of guns up there. But, since you brought it up, there's something which should be illegal: guns that breakdown.

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    Re: Food prices soar as incomes stand still

    Why is this happening? Well, because it can. And because of vulture capitalism. The majority of grocery stores in the US are owned by just a few capital investment firms. Their goal? Increase profit from Monday to Friday, to the detriment of all else.

    Welcome to the new normal.
    Quote Originally Posted by calamity View Post
    Reports indicate that everyone knew he was hauling a bunch of guns up there. But, since you brought it up, there's something which should be illegal: guns that breakdown.

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