McDonald's, Chipotle increases prices after California raises fast-food min wage

> That across most companies across all the states in the country they've all decided to be evil and greedy together...and in the last few years in particular they've all decided together, in a grand conspiracy, to unanimously raise prices at the same time

Not necessarily accurate - the current situation (high prices) could be a result of seeing one company do it successfully, without blowback (initially), and copying it. I'm not clear why it would require explicit co-operation. Additionally, companies can change prices within a single quarter based on their observation of the market.

> wouldn't the best way for a company to make money in this world of greedy corporations be to just keep lower prices, which would result in stealing all of the business from the companies that raised prices, and thereby making more money?

Only under the rational economic model of consumers, where people change their buying habits due to price increases. But store loyalty/convenience/location/familiarity is sticky, and there were few other options out there. The stores that cut prices would face lower margins as well, so they would have to do more work for similar-ish profit, which increases wage cost.

Either way, as you said, this is insanely politicized and I'm pretty sure any one person's interpretation reflects more about their own biases than any explanatory power of the price increase phenomenon.

You’re inserting the word “grand” into what is otherwise standard collusion, which is easy to do with plausible deniability or even unspokenly when there are few competitors (at least for large franchises fast food)

> If all these companies were so greedy, wouldn't the best way for a company to make money in this world of greedy corporations be to just keep lower prices, which would result in stealing all of the business from the companies that raised prices, and thereby making more money?

This is a good thinking. Further if they wanted to make even more money they could keep prices low until gaining a large amount of market share and then jack up prices once competition is scarce.

Thankfully as you’ve pointed out this either never happens or is not a sign of a greedy company.

That only makes sense if the wage price spiral that can drive inflation is also dismissed as an impossible grand conspiracy amongst workers.

What we have currently, however, has components of a profit price spiral, which posts like this one are trying to dismiss as a grand conspiracy.

Neither type of price spiral should be dismissed as “impossible grand conspiracies” but yeah people like hand waving away inconvenient issues by claiming they’d require grand conspiracies.

Ref on profit price spiral: https://www.marketplace.org/2023/07/28/do-corporations-take-...

They’re colluding to keep low effort consumption down.

The only meme the meat based cassette tapes of the US accept is “market charges what it must not heat you can afford.” Inflation deflates low effort buying power.

CEOs are not ignorant of the waste generated by the industrial pipelines their companies rely on. It’s why Trump and My Pillow types are freaking out so hard. Drop off in retail can hit online orders. Subsidized leisure travel and replacing shitty cheap pillows often are under threat if people buy items that last and save for fewer, nicer vacations.

Collusion is NOT a prerequisite to raising prices. No conspiracy is required. It also helps a lot that these large corporations have driven out their competition.

> What's being proposed is a grand conspiracy theory. That across most companies across all the states in the country they've all decided to be evil and greedy together...

To quote the late George Carlin "you don't need a formal conspiracy when interests converge."

https://youtube.com/watch?v=VAFd4FdbJxs

That’s just punishing businesses that are labor intensive and rewarding companies that can offload as much as possible to contractors

I don't think this is sustainable either, especially since most McDonalds are franchises and the "CEO" of their franchise probably only barely clears 6 figures.

I'm pretty sure the price changes are guidance to franchisees, and some will have prices that are more or less. There are also some corporate stores to consider (I used to work for a corporate store when I was in HS/first two years of college).

And why is this weird? Have you seen McDonalds pricing in Switzerland?

Minimum wage is a red herring. Everything other than unionization is a red herring. Countries with strong labor don't even need a minimum wage. Think about a place you consider to have strong workers rights. You might think of northern European countries like Germany, Denmark, Switzerland, etc. Many are surprised to learn that these countries don't (or didn't until recently) have a minimum wage. In many ways, requiring a minimum wage is a sign that your labor pool doesn't have enough leverage at the bargaining table. Without bargaining power, management is always going to find a way to screw you.

That is just a convoluted price floor, i.e. a convoluted minimum wage.

Prices in Swedish McD's are comparable to US prices, even though minimum wage there is about US$22/hour.

Yes. There are a lot of factors that cause price increases but it's convenient to blame it on the workers.

... And if the CEO is paid $1.00 yearly salary?

That sounds like a way of narrative distortion - convincing people that higher prices are somehow a good thing, when all this does is hurt the working poor more than anyone else. Shame on NPR.

I used to believe the wage price spiral when I was a teenager. As I grew up and lived through the 2008 financial crisis, I realized that increasing wages were only a fraction of the problem compared to the monstrous amounts of wet ink money being piped into investment firms and banks.

Now we are seeing monopolistic practices driving prices of basic needs to the moon and then blaming it on workers wanting to make enough to barely live? I'm not buying it.

> Workers shouldn't be demanding a minimum wage increase. They should be looking for ways to increase their value to businesses, which will always increase their wages, regardless of government intervention.

Nah. The minimum wage is "we would pay you less if we could, but we cannot." The business will extract as much as possible regardless of the value workers deliver. They are not going to magically pay you more because you are more efficient or deliver more value, but you might get a pizza party.

https://www.macrotrends.net/stocks/charts/MCD/mcdonalds/gros...

> McDonald's gross profit for the twelve months ending June 30, 2023 was $13.900B, a 6.55% increase year-over-year.

https://www.macrotrends.net/stocks/charts/CMG/chipotle-mexic...

> Chipotle Mexican Grill gross profit for the twelve months ending June 30, 2023 was $2.383B, a 30.05% increase year-over-year.

Shareholders and management will need to make peace with lower go forward returns and comp, respectively. Workers deserve a living wage and are enabled to get it in the current macro (structural demographics and executive branch posture, NLRB specifically). Robust labor policy and labor organizing is the only antidote for corporate sociopathy.

> A Special Report on Greedflation: How Corporations Are Making Record Profits On The Backs of American Families

https://www.casey.senate.gov/imo/media/doc/greedflation1.pdf

This is such a naive view of the situation. It's so easy to blame minimum wage workers for all the issues when really it's corporate greed eating into the economy

This is empirically incorrect.

Even if you assume that the value of fast food workers has not increased but has remained flat, the Federal minimum wage has declined over time in real dollars. So this is just an overdue correction. The companies chose to raise prices rather than reduce executive compensation (which has soared in recent decades), despite the lack of any evidence that executive value to the business has actually increased. It makes more sense economically to attribute the price increase to the rise in executive pay than it does to blame the minimum wage.

The ability of automation to drive the worker contributions lower and lower will far outpace the workers “hustle” in this regard

Worker productivity versus wage graphs show that false.

This is simply the result of greed from the owners. McDonald's in Denmark has had lower/same prices as the US depending on currency exchange rate while giving full benefits and higher salaries to their workers. McDonald's Denmark is rated among the best places to work.

The difference is that the franchise taker doesn't get to underpay workers to prop up their own compensation. If they want higher compensation, they'll have to work for it and expand.

This guy has Stockholm syndrome.

Doesn't matter how much value you generate for The Company. They're perfectly happy to take it from you for free if they can get away with it. Without bargaining power and leverage, either through unions or scarcity of labour, there's no natural limit to how little a company will pay it's employees.

Used to be that knowledge workers were scarce, now everyone is getting degrees. The scarcity of the engineering labour pool that meant people could get good jobs without a union is gone. If you want a good job, get a union.