Quote:
Originally Posted by 8gv
McD's has some major problems operating in a rising labor cost market.
First, there's the menu and its price structure. There is a "value" section of the menu and there is all the rest of the menu. When prices are increased on the rest of the menu the return from that increase is reduced by trade off to the value items.
This makes it harder to keep the value items priced low. Eventually "value" has to be redefined. You may recall the McD's "Dollar" menu. Now it is "$1, $2 and $3" value menu.
The second and in my view bigger problem, is the quality of execution when each labor hour costs so much. To provide fast, accurate and friendly service there needs to be adequate staffing. Herein lies the dilemma. Hourly pay that is too low can result in understaffing. Raising wages to an attractive level can bring in more bodies but there is no guarantee that the additional employees improve results. The cost to train them becomes higher and there is a temptation to minimize the hours spent doing so.
If the pool of available workers does not increase you just end up with the same tight staffing and mediocre execution but at greater cost.
This situation is worsened by the current government sponsored couch careers.
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Full disclosure: I'm not an economics guy, but here goes:
Robert Reich, in his book The Common Good, delves into "Shareholder" capitalism and "Stockholder" capitalism. The former, he claims, exists when all three points of the capitalism triangle—consumer, worker, and owner—exist in a state that works equally for all. For example, workers get paid well, owners make a reasonable amount of money, and consumers are offered solid products at fair prices.
The latter, however, maximizes profit and pay for the owner/stockholders while adversely affecting product quality and price, worker pay, or both.
My basic question is this: why is it that worker pay and benefit questions always result in "costs of products will skyrocket" rather than "CEOs/stockholders/etc." might not make 320x what their employees make?
This is a serious question as, long before my father passed away, he watched this trend in his company and it always hurt him. In the 60's when he started, his bosses made five times what he made while in the '00s when he retired, they were making thirty times.
I looked this up not long ago, and though his numbers were probably off (low!), he wasn't wrong at all:
https://www.epi.org/publication/ceo-...ypical-worker/
Thoughts? Why isn't this talked about more?
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