McDonald's pushes back: "business model can't sustain $20/hr"
The California fast-food bill will raise the minimum wage for many California workers at fast-food chains to $20 an hour starting April 1.
Then change the business model or fail.
One could easily imagine a business that only works if they pay employees 50 cents a day. Such a business has no place in a society that respects human dignity.
If your business depends on purchasing a third of someone's waking hours but cannot afford to pay them enough to live securely and comfortably in exchange, then your "business model" depends on poverty to continue.
A McDonalds company help line used to advise their employees on how to apply for foodstamps. McDonalds is one of the largest employers of people who receive Medicaid and food stamps in the US. They've been using the social safety net as a form of government subsidies by the back door for years.
Oh, I just realized what needs to be done. You know how many states come after the families of people who died on Medicaid to get the money back, seizing inheritance and assets? How about instead of that, they start charging businesses for employees being on government assistance? Just straight fine them for every employee who has to be on food stamps, cash assistance, or Medicaid. Idk, 10k/employee/year sounds about right. Then paying them all +9k/year becomes the cheaper option.
Kind of like using tips to fill in for low wages, but with taking advantage of government help.
Sort of funny that a food company doesn't pay you enough to buy food so tells you to buy food stamps....
This is basically a subsidy for McDonalds. If the only way a company can be rich is by subsidies, maybe it shouldn't exist in the "free market".
This is exactly the thing.
If a business cannot afford to pay its employees a living wage, that business is insolvent. What we have currently are a bunch of insolvent businesses that think they aren't insolvent because they've been allowed to pay poverty wages.
Lol they are moments away from not needing any staff at all
Ive been hearing that for at least ten years.
That's what they said a decade ago with all the articles about the automated hamburger machine: https://www.businessinsider.com/burger-robot-could-revolutionize-fast-food-industry-2012-11
If they couldn't even incorporate this technology just for burgers into their restaurants after a decade, what makes you think they can cover the entire menu plus serving these items to customers in just "moments away"?
This is 100% bullshit and they 100% know it. They pay employees in Denmark over 20$/hr and the food is actually cheaper there than it is here. If it was unsustainable, then they wouldn't be doing business in Denmark. The difference between there and here, Denmark is essentially 100% regulated by industry-wide labor unions. Starbucks employees shouldn't be trying to unionize, the entire fast-food industry should be unionizing together.
https://www.snopes.com/fact-check/mcdonalds-workers-denmark/
Interesting, I don’t think I’d heard of an industry union like that. It’s a great idea
Yes you have, the Screen Actors Guild is an industry-wide actor's union. The Writers Guild of America is an industry-wide guild for writers. The Teamsters as well. Actually most "Blue Collar" unions are industry unions. Plumbers, carpenters, electricians, etc. all have industry-wide unions. It is a recent phenomenon relegated to service and sales industries that are forcing unions to be only at single stores instead of industry or even company wide.
Your McDonald's franchises are unsustainable? Oh well.
Most McDonald's stores are privately owned franchises. If corporate is crafting their franchise agreements such that private store owners are not able to pay a living wage to employees, then corporate is to blame.
But private owners are the ones who ultimately set wages. Franchisees need to bear some responsibility here, too. They're the ones who are in a position to pressure corporate for franchise agreements which give them a better opportunity to offer living wages, and they're not.
I'll stick to the multibillion dollar megacorp but you do you.
Anytime a corporation says something like this what they're really saying is "It would inconvenience our executives and shareholders."
"If I'm only able to buy two new yachts this year, and the CEO next door buys three, then that simply isn't a sustainable business model"
Let's be real, it is a threat against the consumer so we will do the work of keeping their employees in line. Translation for the corporate propaganda illiterate: "Hey, all you people, keep these upitty talking pieces of equipment we have to keep giving our hard-earned money to from thinking they deserve more of it or else we will take even more of your money than we already do. K thanks, bye!"
possibly, just possibly, if CEOs weren't pathologically greedy then you'd be able to pay your workers what they are worth and wouldn't have this 'it's too expensive' worry to keep you from doing the right thing
McDonald’s strong sales recovery and a healthy stock price performance earned its chief executive
Chris Kempczinski received a pay package of just over $20 million in 2021, according to new SEC documents filed on Monday.
That was nearly double the $10.8 million he was paid during the pandemic-plagued 2020. It was also the largest pay package received by a McDonald’s CEO since 2017, when Kempczinski’s predecessor Steve Easterbrook received $21.8 million.
I have a bigger issue with the billions they spend every year in stock buybacks. Last year, it was $4B. That's an additional 20k per employee.
That sounds nice and all, but if he gave up his 20m/yr and gave it to employees.. everyone would get an extra $100 per year.
There are some parts I agree with this, because if we did calculate the profits and gave all the profits generated for 2022, we would end up only being able to give the average worker a raise to $16.20 an hour divided over 1.35 million employees.
But that is part of the problem. McDonalds has become too heavy for American workers to save it. It is over franchised.
McDonald competes using the "Walmart strategy" Where they under price the competition until no one can compete and are forced to close.
But times have changed.
This business model doesn't work when workers have options for good paying jobs.
$15 1,350,000 = $20,250,000 per hour for all employees per hour.
McDonald made in profits 14 billion in 2023
Assuming McDonalds took that 14 billion and gave it all to the employees.
(14,000,000,000 / 365)/24 = 1.6 million per hour divided over 1,350,000 million employees give or take.
Add that to the original
$20,250,000 + 1,600,000 = 21,850,000 / 1,350,000 = $16.18 per hour.
Note: this does not include stock buybacks as those are not ready for 2023, but I imagine around 2 billion extra we could dig out of those expenses. Also I do not know the overall executive pay. I can tell you the CEO's pay, and even the average, but I have no Idea what that total number is.
In all, I have tried to keep the math consistent, Please criticize the math, as I still feel like I have done something wrong.
I didn't want this conclusion. But if it is true. The Food industry is going to need to raise it's prices and stop overpaying it's CEOs. Or small Family owned businesses that don't have those constraints will outpace them in the next few years.
Edit: If you want more context and made it this far, check out healththetank's post below, it adds a little bit more understanding on what I got wrong.
Translation: "We have decided that when given the choice between paying our workers a living wage and paying our executives lavishly, we pick the latter and think you are too dumb to notice"
That might be true, but people have to stop working there as employee demand dictates pay rates. Everyone saw this during the pandemic. Short supply of workers lead to an immediate raise in pay.
You also have to remember McDonald's is a franchise business and the owner might not be taking in millions, as McDonald's has been known to mistreat franchisees from lower income neighborhoods.
https://news.yahoo.com/mcdonalds-defeats-black-franchisees-1-134243905.html
https://www.eatthis.com/news-subway-mcdonalds-and-more-are-expected-to-be-investigated-by-the-ftc/
I mean I understand, but honestly I think if they can't survive in the area they should just close shop. If it was too much of a bother corporate would subsidize but, this would also allow for more local alternatives to potentially appear. We don't have a mcdonalds for a solid 40 mins from where I live, or any corporate/franchise chain, and the ma/pa food places are a nice change compared to going into more populated towns
Close your disgusting business then. Please start abroad
Well then don't run the Business
Then die.
They always say that like it's anyone's problem but their own. Figure out how to make your business model adapt to changing circumstances or die out, either way this is a problem for McDonald's to worry about internally, not for society to worry about on their behalf.
Bad business model, innit.
But its sustainable in other countries.
… while continuing to have a 45° profit angle year after year
McDonald’s sent its own letter to its restaurant system on Monday, which was viewed by CNBC. Responding to the bill, the company said it and other franchisee groups “worked tirelessly over the past year to fight these policies and protect Owner/Operators’ ability to make decisions for their businesses locally and protect their restaurants and their crew.
...
Our very-well-paid lobbyists are frantically schmoozing to bribe donate to whoever will take our money to vote to protect our crew from these egregious wage increases.
mcdonalds is basically a real estate investment company that sells hamburgers.. it's that business that stands to take a hit if their franchisees start failing because they, too, are greedy af.
a fair wage and fair menu prices work elsewhere. but not in the good o' u.s. of a.
Free market strikes again
Maybe they should pay their CEO 10x less
That’s capitalism, baby! Thanks for playing!
That doesn't sound very free market of you, McDonald's.
The food is poison to a community anyway.
They've been offering $19-$22 an hour starting pay at at least one McDonald's in Sunnyvale, CA. I don't understand how $20 is unsustainable given CA prices.
Paying your employees a livable wage is your first priority as a business owner. You always make payroll, no matter what.
If you can't find a way to reconcile infinite growth as a company against your employees' requirement to feed and house themselves, you're a garbage business owner and should just step down.
I mean.... McDonald's corporation doesn't sell hamburgers, or employ the workers. The franchisees do that. McDonald's corporate pays their workers extremely well, but they are property managers. McDonald's is a landlord that happens to rent exclusively to one type of business. They are probably correct that their own franchisees cannot afford rent, but that's a whole different can of worms.
"business model Greedily taking 13.2 billion dollars every year for our wealthy executives can't sustain $20/hr matching inflation closer."
hmmm well looks like the invisible hand of the free market says its time for your business to close since it failed or whatever capitalists fuckheads like to say
Let's burn the place down!
No it won't, bunch of fucking assholes who don't want to drop a fancy dinner every now and then.
How about we make every Mickey D’s a worker co-op and then everybody can verify this information.
They could open a co-op and see what happens. That would be an interesting model for fast food.
Then close the fuck down.
Great, if they can’t pay a living wage then they are just a drain on taxpayers anyways. Happy to get these welfare queens off the government dime.
Their vomit inducing processed shit is an equal drain on society to their vile business practices, shortly followed by their terrible diet vanilla ads.
Oh wow none of it's sustainable? Oh wow
My business model can't sustain decades of stagnant wages and an exponential increase in the cost of literally everything needed to remain alive, but I'm expected to just eat shit and just deal with it.
Gee I've heard this story before except it was $15. Now they offer up to $18 starting pay.
We can't earn billions each year of we have to make all the franchisew pay the workers fairly
Sounds like they shouldn't be in buisness then
Cue up all the people complaining why their Big Macs are $15 in about a year's time.
I love how people on Lemmy just don't get that throwing out random hourly wage numbers don't just happen in an island. When labor costs go up, then so too will the price of a product. And when workers in other fields find out that they can make more money in a brainless job flipping burgers, then they will push for more money or threaten to quit. That's great and all until you then realize that the price for those products will go up as well. So you just tried elevating skill-free fast food workers to allow them to have more buying power, but now you just raised the price of everything which just eliminated that extra buying power. Thus inflation. Congrats! And yet Lemmy will have learnt nothing.
You are so blindly focused on skill-free jobs and completely losing sight of the bigger picture. The idea isn't to elevate these pointless Mcjobs and artificially inflating their pay. The point is to push these workers who have no skills to go out and learn a trade, get a degree or certification and just in general gain a marketable skill to where companies will pay them good money for their work. There are about 160 million workers in the US and only 2% of them work in fast food. Yet if you looked at the number of posts on Lemmy, you'd think that the majority of Americans work in that industry. Then again, what am I saying? Lemmy is probably disproportionately represented by teenagers working their first jobs, which would explain why these antiwork communities just can't stop talking about fast food.
In Denmark, they get $22/hr.
A Big Mac costs $4.6
Fun! Someone who drank the Kool-Aid and doesn't understand the context, or statistics, at all. It isn't about fast food. It is about human beings being treated as wage slaves. I want you to reconcile a few things for me with your argument.
Point 1: Since you used statistics, I will too. Drawing from https://www.bls.gov/oes/current/oes_nat.htm. There are ~147M employees in the United States. Considering the first quartile median wage, ~67.8M people make less than $40k/yr with the interquartile range biasing heavily towards the bottom (meaning most people in the lower 50% of people making less than $40k/yr are making closer to the bottom than they are the median annual wage). These jobs come from such unskilled areas as Arts, Design, Sports and Media, and Construction and Extraction Operations, aka highly skilled, trained, specialized, and educated people. Now, the current median rental price in the US is $2,052/month. That is $24,624 per year just for rent, or, let me check, 61.56% of a $40k/yr income. You know, the amount of money that 46% of hourly employees in the country do not even make.
Point 2: McDonald's (and nearly all fast food employees) make over $22/hr in Denmark. They get 401k with matching, 2+ weeks of paid vacation per year, parental leave, and much more, and a Big Mac costs less there than it does here and is made with higher quality ingredients due to the health codes of the EU. Now, please, reconcile that. The corporations know they can easily sustain on what is being demanded by the labor, they just don't want to.
Point 3: A Big Mac is already creeping towards $15 without them paying a living wage, so what fucking good is that old chestnut of corporate propaganda? It is a blatant threat to make sure the social structures of the country do their work for them of beating down their employees to make sure they stay in line. Same with your whole "skilled labor" argument. It is an artificial divide. My father even tried the "fast food jobs are for teenagers" argument once and got exceptionally deflated when I pointed out that A. they are open and obscenely busy for lunch during school hours, so they have to have adults working there and B. it is beyond illegal to discriminate wages based on age, so they should be paying the adults a living wage for the full-time hours that they dedicate that the company NEEDS to function, and the teenagers deserve to get paid the same because they are putting in the same work as the adults.
I am curious if you have ever worked a fast food job, or any minimum wage job. Especially in the last 20 years.
I didn't need to read past your first sentence, because it's pretty absurd when you consider McDonald's already pays over $20/hour in countries that require it and Big Macs there cost barely more than they do here. Oh, and the employees there get full benefits too.
So whatever talking points you've parroted in your wall of text, they don't fit the reality that's already been here for years.
It's actually 4% but that doesn't matter - your talking points dressed up arguments aren't fooling anyone. Pushing people to get certifications doesn't work when the cost is so prohibitive that it's literally drawn along class lines. And for another thing lots of these mcjobs offer upward mobility into management and marketing - should people not vye for those roles because you seem to only think in Republican talking points? Should they not get a decent wage to support their families because you can't leave your bubble? And what of the cycle of upper management who earn often 50-100 times the median wage of their employees - are they really worth as much as 50 to a 100+ people and their families? Of course not.
Cue up all the people complaining why their Big Macs are $15 in about a year’s time.
Price inflation has been due principally to the greed of companies, not to prosperity of workers. There is plenty for everyone, but wealthy owners insist on hoarding.
The point is to push these workers who have no skills to go out and learn a trade
Perhaps for you.
For others, the point is to advance beyond the suffocating narrative of punishing individuals for structural failures.
