USA President Of McDonald’s Reveals What $15 Minimum Wage REALLY Means
One of the primary targets of the protesters’ misguided and uneducated wrath is the fast food franchise McDonald’s, which the protesters accuse of making millions in profit while millions of workers struggle to pay their bills.
But now the former president and CEO of McDonald’s USA, Ed Rensi, has written an op-ed for Forbes detailing the “ugly truth” about a minimum wage doubled to $15 per hour.
Rensi revealed what most of the protesters fail to understand or deliberately choose to ignore — doubling the minimum wage will result in “wiping out thousands of entry-level opportunities for people without many other options.”
He proceeded to push back against the false assumption that the McDonald’s corporation is the same as the individual franchises, which instead of making “millions in profit” actually only keep on average six cents out of every dollar.
Crunching the numbers for the average franchisee, Rensi showed that a raise of the minimum wage to $15 would eat up roughly three quarters of their annual profit, which isn’t even taking into account the fact that all other employees already making above minimum wage will see a proportionate raise to their wage as well, which would likely consume more than the remaining profit.
Furthermore, Rensi dismissed the notion that restaurants can simply increase their prices marginally to recoup the increased labor costs, noting the extreme sensitivity to even the slightest price changes exhibited by customers.
The inevitable remaining option for franchisees seeking to handle increased labor costs without passing them along to the customers is a turn to automation, such as self-service kiosks.
Rensi pointed at a successful and widely used example of this in the McDonald’s restaurants in Europe, which must already deal with artificially high labor costs and have been increasingly turning to automated kiosks as a replacement for entry-level workers.
Ironically, those hurt the most by an increased minimum wage are the very same young individuals protesting themselves out of a job, as they will have literally priced themselves out of the labor market if their demands are met.
Such an outcome would only add to the youth unemployment rate, which is already higher than than the national average, particularly in urban cities and among minority youth.