Fast food strikes to massively expand: “They’re thinking much bigger”

[Omaha Steve]

14. Forbes:The Real Change In The Cost Of A Big Mac If McDonald's Workers Were Paid $15 An Hour: Nothing

http://www.forbes.com/sites/timworstall/2013/08/02/the-real-change-in-the-cost-of-a-big-mac-if-mcdonalds-workers-were-paid-15-an-hour-nothing/

8/02/2013 @ 5:00AM |15,263 views

I will admit to having been amused at the error strewn Huffington Post piece which insisted that doubling the wages of McDonald’s workers to $15 an hour would have only a minimal effect on the price of a Big Mac or the dollar menu. Clare O’Connor here at Forbes describes what went on. My amusement isn’t at the errors in the calculation, nor in the way that it was subsequently re-reported. We all make errors at times and the important thing is what one then does: just as Mother always said, ‘fess up and try not to do it again. On which point everyone has acted excellently.

My amusement rather is about the fact that a doubling of, or a halving of, or any other change in, the wages of McDonald's MCD -0.35% workers will have absolutely no effect whatsoever on the price of a Big Mac or the dollar menu. For prices are not set by the cost of production of something, but by the supply and demand for that item.

Adam Ozimek makes an excellent point here about changes in labour costs. The choices available are not only whether to raise prices in order to cope with those changes in costs. Instead, a change in the price of labour leads to the opportunity to substitute capital for labour.

Doubling of labor costs will simply increase a fast food restaurant’s incentives to adopt technology like this. And if fast food wages doubled everywhere it would spur the development of these technologies even faster.

FULL story at link.