UPDATE:
Ryan Chittum of Columbia Journalism Review, one of the
nation’s top critics of the news business, reports that the information given
to The Huffington Post, which led to the story below that went viral, was
nothing more than a paper written by a University of Kansas undergrad student.
nation’s top critics of the news business, reports that the information given
to The Huffington Post, which led to the story below that went viral, was
nothing more than a paper written by a University of Kansas undergrad student.
Chittum also dissects the numbers and finds that, in
fact, doubling salaries and benefits at McDonald’s would result in a 25 percent
increase for menu items. So, the Big Mac would not go up in price by just 68
cents, as reported below. The $3.99 double-decker burger would rise by $1. “And
the Dollar Menu would have to become the Dollar Twenty-Five menu,” Chittum adds.
fact, doubling salaries and benefits at McDonald’s would result in a 25 percent
increase for menu items. So, the Big Mac would not go up in price by just 68
cents, as reported below. The $3.99 double-decker burger would rise by $1. “And
the Dollar Menu would have to become the Dollar Twenty-Five menu,” Chittum adds.
The college paper also failed to distinguish between
McDonald’s-owned restaurants and franchise locations. Apparently the impact for
franchisees – again, assuming profits remain steady – would be 24 percent. And
that’s assuming price increases wouldn’t hurt sales, which they would.
McDonald’s-owned restaurants and franchise locations. Apparently the impact for
franchisees – again, assuming profits remain steady – would be 24 percent. And
that’s assuming price increases wouldn’t hurt sales, which they would.
Here’s Chittum’s conclusion:
“The bottom line is: This ‘study’ and The Huffington Post
are both wrong.
are both wrong.
Unfortunately, bad information spreads pretty fast these
days. The false findings got picked up far and wide.”
days. The false findings got picked up far and wide.”
Chittum was especially hard on MLive.com, the network of
news websites across central and western Michigan. They attributed the 68-cent
figure to “comprehensive research conducted by the University of Kansas.”
news websites across central and western Michigan. They attributed the 68-cent
figure to “comprehensive research conducted by the University of Kansas.”
*****
As fast-food workers across the country strike for a $15 per
hour “living wage,” a researcher from the University of Kansas has exposed
long-held corporate myths about the destructive impact of raising the minimum
wage.
According to The Huffington Post, Arnobio Morelix found
that doubling the salaries and benefits of all McDonald’s employees — from
workers earning the federal minimum wage of $7.25 per hour all the way up to CEO Donald Thompson, whose 2012 compensation totaled $8.75 million — would cause the
price of a Big Mac to increase just 68 cents, from $3.99 to $4.67.
that doubling the salaries and benefits of all McDonald’s employees — from
workers earning the federal minimum wage of $7.25 per hour all the way up to CEO Donald Thompson, whose 2012 compensation totaled $8.75 million — would cause the
price of a Big Mac to increase just 68 cents, from $3.99 to $4.67.
Obviously, if the CEO and upper management salaries were
excluded, the cost of doubling the salaries for only the lowest-paid workers
would be substantially less than 68 cents per Big Mac.
excluded, the cost of doubling the salaries for only the lowest-paid workers
would be substantially less than 68 cents per Big Mac.
With all employees’ compensation doubled, Morelix
concluded that every item on the Dollar Menu would go up by just 17 cents. The
conclusions are based on McDonald’s profits remaining steady.
concluded that every item on the Dollar Menu would go up by just 17 cents. The
conclusions are based on McDonald’s profits remaining steady.
Perhaps most revealing of all is the bottom line:
salaries and benefits only account for only 17.1 percent of the companies
expenses. Think about that the next time some corporate big-wig says that a 5
percent raise for his employees (in McDonald’s case, that would be less than a 1
percent increase in total costs) will break the bank.
salaries and benefits only account for only 17.1 percent of the companies
expenses. Think about that the next time some corporate big-wig says that a 5
percent raise for his employees (in McDonald’s case, that would be less than a 1
percent increase in total costs) will break the bank.
The research, based on McDonald’s financial reports,
comes as fast-food workers are holding strikes in seven cities over a four-day period.
comes as fast-food workers are holding strikes in seven cities over a four-day period.
It also comes just two weeks after it was revealed that
Thompson and his executive crew demonstrated just how out of touch they are
with their workforce. As a service to their workers, the company put out a
suggested household budget for these low-paid employees to follow.
Thompson and his executive crew demonstrated just how out of touch they are
with their workforce. As a service to their workers, the company put out a
suggested household budget for these low-paid employees to follow.
The financial guide caught flak because, for starters, it
didn’t account for food and gasoline, according to CNN. The second line on the
sample budget leaves room for income from a second job, which many called an
admission by the fast food giant that its workers can’t live on its wages
alone.
didn’t account for food and gasoline, according to CNN. The second line on the
sample budget leaves room for income from a second job, which many called an
admission by the fast food giant that its workers can’t live on its wages
alone.
I would check his figures, when I ran a fast food restaruant, labor costs accounted for almost 35% of revenues, more then food costs, which were 30%. And McDonalds has twice as many employees working at any given moment then we used to have.
This story was retracted by HuffPo. The research study in question turned out to be an undergrad term paper, and the guy got all the math wrong. http://www.huffingtonpost.com/2013/07/29/mcdonalds-salaries_n_3672006.html?utm_hp_ref=tw