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elleng

(130,974 posts)
Mon May 19, 2014, 10:19 PM May 2014

The minimum wage and the Danish Big Mac

The Los Angeles Times drops into the debate over whether or how much prices would have to rise at fast-food restaurants for their employees to get $15 an hour.

But the LAT runs with this dumb-question headline: Would a higher minimum wage mean pricier burgers?

No, expert opinion is not mixed on whether doubling minimum wages would “affect consumer wallets,” even if the LAT found one academic to sort of say so. If labor costs doubled suddenly, restaurant owners would have to raise prices significantly in order to stay in business. It’s just math.

Last week, I moved to the workers’ paradise of Denmark, where I will man the Audit Aalborg bureau for a year while my wife is here on a Fulbright. One of the things that’s striking here is the disparity between the cost of food at restaurants and at grocery stores. The minimum wage in Denmark (ADDING: I should say that this is an effective minimum wage negotiated with unions, not a legal one) is roughly $20 an hour (though teenagers can earn somewhat less). Not coincidentally, labor-intensive restaurants have very high prices, while less-labor-intensive grocery store prices are much less shocking.

http://www.cjr.org/the_audit/the_minimum_wage_and_the_danis.php

4 replies = new reply since forum marked as read
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The minimum wage and the Danish Big Mac (Original Post) elleng May 2014 OP
I'm not sure what we can take from Denmark... TreasonousBastard May 2014 #1
We used to do that here in the US Politicalboi May 2014 #3
So the price of a Big Mac extra value meal is 30% higher when wages increase mbperrin May 2014 #2
When I worked at McDonalds in the late 70's, minimum wage was around $1.75 OnlinePoker May 2014 #4

TreasonousBastard

(43,049 posts)
1. I'm not sure what we can take from Denmark...
Mon May 19, 2014, 10:37 PM
May 2014

a tiny, fairly homogenous country with a culture quite unlike ours.

I heard women actually leave their babies in carriages outside on the sidewalk when they go inside to shop or eat! How horrible and irresponsible-- here we would often arrest a woman who would dare do that. At the very least fill Facebook with images shaming her.

 

Politicalboi

(15,189 posts)
3. We used to do that here in the US
Mon May 19, 2014, 10:59 PM
May 2014

My father remembered it, and there are old movies that show it too. I know it's the movies, but people did leave their babies outside in the carriage. It was normal back in the 20's and 30's.

mbperrin

(7,672 posts)
2. So the price of a Big Mac extra value meal is 30% higher when wages increase
Mon May 19, 2014, 10:53 PM
May 2014

by 200%?

I can live with that.

Truth is, people work better with higher morale when the money they earn gets them the things they want. It's called the income effect, and it's a totally standard Econ 101 concept.

Business most assuredly cannot just raise their prices at will, regardless of what their costs are. If they could, there would be no reason to keep costs down at all, just pass it on.

So would much higher minimum wages put some awful, low-price, greasy slop-houses of business? Very likely and thank God.

Would more people be able to afford to eat at much nicer places, even though more expensive, eating better ingredients and more fresh stuff? Yep.

OnlinePoker

(5,722 posts)
4. When I worked at McDonalds in the late 70's, minimum wage was around $1.75
Wed May 21, 2014, 09:49 AM
May 2014

Total, all-in cost including labor for a Big Mac was 28 cents. We were selling them for $1.25. The restaurant owner raked in the rest. I can't see that it would have changed that much.

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