It’s not just CEO pay. CEO pay is certainly a symptom of the upward transfer of wealth, and it’s quite harmful in its own ways, but simply dividing the pay of a CEO among N employees isn’t going to change much at most companies.
As far as charging more per product goes, that becomes a question of what the per unit labor costs are. An old (2015) report from Perdue estimated that doubling the minimum wage of $7.25 and offering health insurance would raise prices at a place like McDonald’s about 4.5% and tripling it would raise prices 22%. These are generally fairly complex formulas and incorporate factors like federal offsets for health insurance.
The Big Mac is the universal product for a lot of these things. The ingredients for a big mac cost less than $1. The estimate I saw from McD was $0.77. That’s the raw material cost. The other costs are things like rent, electricity, advertising, labor, and so on. What we would need is an accurate estimate of the labor component of the big mac price and multiply it by 1.33 or whatever the labor increase is and see what the new total cost is. If labor is 10% of the cost, then on a $10 big mac the labor is $1. Increasing the paid wage from $15 to $20 would raise the price of a big mac to $10.33.
But even that is overestimating the impact, because the actual big mac sandwich is one of the lower profit margin items. Fries and sodas have massive profit margins, so the total impact of a wage increase per order would be even lower because the cost would be spread over high margin items as well.
Current supply chain problems (and price gouging) has shifted cost of goods even further away from labor as a component.
So overall, without them actually opening the books on their cost of goods, I’m going to guess that the drama they’re enacting over their business model is BS, just like it was whe the minimum wage was raised to $15 in CA.
Yeah people don’t get the ceo pay isn’t the issue. It sounds grand but when you divide it out, it’s little per employee.
The answer is they have to charge more for the product. It’ll hurt sales but that’s what they have to do.
McDonald’s has become expensive. It’s around 12 a meal now.
It’s not just CEO pay. CEO pay is certainly a symptom of the upward transfer of wealth, and it’s quite harmful in its own ways, but simply dividing the pay of a CEO among N employees isn’t going to change much at most companies.
As far as charging more per product goes, that becomes a question of what the per unit labor costs are. An old (2015) report from Perdue estimated that doubling the minimum wage of $7.25 and offering health insurance would raise prices at a place like McDonald’s about 4.5% and tripling it would raise prices 22%. These are generally fairly complex formulas and incorporate factors like federal offsets for health insurance.
The Big Mac is the universal product for a lot of these things. The ingredients for a big mac cost less than $1. The estimate I saw from McD was $0.77. That’s the raw material cost. The other costs are things like rent, electricity, advertising, labor, and so on. What we would need is an accurate estimate of the labor component of the big mac price and multiply it by 1.33 or whatever the labor increase is and see what the new total cost is. If labor is 10% of the cost, then on a $10 big mac the labor is $1. Increasing the paid wage from $15 to $20 would raise the price of a big mac to $10.33.
But even that is overestimating the impact, because the actual big mac sandwich is one of the lower profit margin items. Fries and sodas have massive profit margins, so the total impact of a wage increase per order would be even lower because the cost would be spread over high margin items as well.
Current supply chain problems (and price gouging) has shifted cost of goods even further away from labor as a component.
So overall, without them actually opening the books on their cost of goods, I’m going to guess that the drama they’re enacting over their business model is BS, just like it was whe the minimum wage was raised to $15 in CA.
That does not change the fact that nobody deserves to be paid what CEOs are being paid. That’s the point.
Do you want others telling you what should be paid? The board decides the pay. If you don’t like it. Vote against it.