Hey, this is super interesting. Last week we did a piece about the
15 dollar minimum wage, which which I support. You know, I've pointed out there are parts of
the country where 15 is almost or even more than a doubling of the current minimum wage. And it
may not be the cost of living adjusted wage, but big picture, I support a 15 dollar minimum wage.
And we talked about how this new radical, wacky Republican Congresswoman Lauren Bobert tweeted
about the minimum wage, something really dumb. She tweeted, quote, I got my start working at
McDonalds. That job doesn't exist. If the minimum wage is raised to fifteen dollars per hour,
small business would be crushed by this arbitrary mandate and big business would simply automate
away jobs. Not everything that sounds good is actually good in practice. And what is fascinating
is that now it just so happens that the companies she mentioned, McDonalds, has put out a statement
about this. McDonald's CEO Chris Kaminsky did a fourth quarter earnings call with investors
on Thursday after we had covered this story. And he said the company is doing just fine in
states that have increased minimum wages beyond the federal minimum wage and we are basically
going to be fine. We will do just fine even if minimum wages continue increasing in a variety of
different states. Now, Kamiński wasn't this was a call with investors. The point here is to reassure
investors it's not that comes Linskey wants higher minimum wages. It's not that McDonald's
is now on for the fight for 15 or this is merely a CEO talking to investors and saying, listen,
twenty nine states already have higher wages than the federal minimum and we're doing just
fine. And this is what a four year analysis by a team of economists found for McDonald's that
in applicable markets where wages have gone up. And as I talked to you about before, D.C.
is already 15 bucks an hour. McDonald's is doing fine. California's 13 to 14 an hour. McDonald's
is doing fine in California. Washington state is I believe it's 13 nine. McDonald's is doing fine
in Washington state and on and on and on. He was just reassuring investors of what we already know.
And it is true it is true that when the minimum wage goes up,
the cost of products go up. But this is them. This is such a key finding. The study found that when
the the minimum wage goes up 10 percent, the cost of a of a Big Mac goes up one point four percent.
Why would it be that if you have a bigger increase to the wage, the cost of the food only goes up a
tiny bit? It's because just as I said last week, labor is only a fraction of the total cost. You've
got rent for these really expensive locations that McDonald's often operate out of. You have the cost
of all of the capital. You have the cost of the food itself. You have insurance, you have all
these different things. And yes, you have labor. And what we again learn is that labor is only
one input and you can do wage increases that are meaningful to the employees. And they have only a
minor impact on the cost of a big of a Big Mac. Now, clueless people like Lauren Bobert
have been able to scam their way into positions of legislative power by attaching themselves to
really bad ideas, not based in science. Like if the minimum wage goes from eight to ten,
then that's 25 percent. That means the food will all cost twenty five percent more and
suddenly tons of people can't afford the food. That's not the reality. The reality
is that meaningful minimum wage increases will have a tiny effect on the food, which, yes, the
food will be a tiny bit more expensive. But way more employees now have money with which they
can go to other local businesses and buy things. That's called demand side stimulus. So nothing
of what I'm telling you today is new. We did this analysis last week,
but hearing it straight from the horse's mouth, the McDonald's CEO saying we've
done the analysis. We have twenty nine states where minimum wages have gone up. It's fine.
It's fine. And it leads to this tiny, tiny increase to the cost of a Big Mac. Now,
I know that there will be the thousand dollar an hour troll's, as I call them.
But but, David, if fifteen dollars is better than eight, why not pay everybody a hundred
dollars an hour? If more money is good, pay everybody a thousand dollars an hour.
We'll know a thousand dollars an hour is not a cost of living equilibrium. Minimum wage.
A thousand dollars an hour is not an industry balanced minimum wage. There is no metric that
justifies a thousand dollars an hour for people working at McDonald's. It is not a productivity
adjusted wage. It is not an inflation adjusted wage. That would not make any sense. If you made
the minimum wage at McDonald's a thousand dollars an hour, you would have doctors in many cases
saying I'm better off working at McDonald's. No, nobody's saying that. We're talking about fifteen.
Some more expensive places in the country would justify, you know, eighteen, twenty one in New
York City or whatever. Nobody's talking about a thousand. That's called reductio ad absurdum.
It's a slippery slope. It's a red herring. It's a lot of different things. So again,
a lot of what I'm saying here, we said last week, but now even the McDonald's CEO,
when the CEO reassures investors we're doing fine with higher minimum wages,
you know, that they're doing fine with higher minimum wages. So we'll keep talking about
this. And this is part of a bigger focus that I think it's important to have on workplace issues,
democratization of the workplace, gig economy stuff. I read some interesting articles over the
weekend about different issues facing gig economy workers and how tech companies that are sort of
exhibiting predatory behavior are taking advantage of them. We're going to keep talking about this.
But as a baseline, we have to first build kind of the base of the pyramid. A lot of the stuff
being said by the right about the minimum wage is merely disinformation, not supported by left
wing or even many right wing economists. And we'll have more about it. Send me your thoughts.
I'm on Twitter at David Pakman. We will take a quick break and be back after
this. It's February. It's incredibly February and much to discuss today.