Half a million California fast food workers will now earn $20 per hour | Hacker News Reader

Half a million California fast food workers will now earn $20 per hour

cnn.com

19 pointspaulpauper28 comments

So that works out to $800 for a 40-hour week.

Back in 1963, blue-collar production-line workers had reached $100 per week. The buying power of the US Dollar has declined to about a fiftieth since then, meaning that blue-collar production-line workers should be receiving $5000 for a 40-hour week to maintain their buying power in the 2020s that they used to have in the 1960s.

That increase to $800 a week? Merely a sixth of what it should be to maintain the buying power of a baseline worker.

That is why the US economy is dragging. Nobody has any money to spend to raise the economy to the heights it had in the 1960s.

> blue-collar production-line workers should be receiving $5000 for a 40-hour week to maintain their buying power in the 2020s that they used to have in the 1960s.

$5,000/week * 52 weeks/year = $260k/year.

If this is true, then a union factory job then is on par with a rather good SWE job now.

BLS puts it at 10, not 50.

https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=100&year1=1963...

Do your own buying-power comparisons rather than accept 'official figures'.

Gold in 1963 was $35 an ounce, what is it today?

You could buy a new Rolex Oyster in 1970-odd for $210. What does one cost today?

Also compare car and/or house prices of 1960-odd and today.

That 'ten' is nowhere near where it should be.

In the 60s, a blue-collar production worker could afford a good house, a good car, a good holiday every year and could afford to have his non-working wife looking after the kids at home. Today many people have both husband and wife working and still can't make ends meet.

Ah yes, the cost of a high end item that technological change turned into a pure status signalling luxury item.

Housing and vehicles have certainly increased in cost. Housing is a policy failure, and vehicles are a mixed bag.

There are policy choices in vehicles (many required emissions and safety systems), and the reliability, performance and durability has changed dramatically. So the price is higher, but value hasn't stayed the same at all.

I wonder if people compare like to like housing when they compare price. Homes have more than doubled in size and have way more features than they did in the 50s.

> The buying power of the US Dollar has declined to about a fiftieth since then

This shows the buying power decline since 1963 as about 1/10, not 1/50.

https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1&year1=196301...

Attempting some quick math:

Avg hours per year: 1560h (30h * 52 weeks), delta avg +$4 per hour

500,000 * US$4 * 1560h = US$3,120,000,000 net increase.

Gross company + franchise operating expenses were $2,706,000,000 in 2023 [1].

115 Big Macs sold / day in California / restaurant [2] (45 restaurants?). About 1250 restaurants in CA.

Big Mac about $5.19 * 115BM/d * 1250r * 365d = $272,312,500 per year revenue for Big Macs.

So... $60 Big Mac? (corrected, see below)

[1] https://corporate.mcdonalds.com/content/dam/sites/corp/nfl/p...

[2] https://goldenstatemcd.com/

So you think they make less than $4 an hour now then? That is the only way your estimate makes any sense.

$4 avg increase per worker

What are you even calculating?

You took 500,000 workers from across the entire state and then picked a single company's expenses. The old wages for those 500,000 people at $16/h and your 1560h/y estimate would already be over $12bn.

You have 500,000 employees working at 1250 McD, so an average of 400 actively employed workers per McD location?

I thought no one wanted to work anymore?!

Thanks for the correction! I read that poorly:

>> The new rate applies to restaurant chains with more than 60 nationwide locations.

So just with McDonalds, about 70,000 employees, but this includes managers [1].

[1] https://corporate.mcdonalds.com/corpmcd/our-stories/article/...

So net operations increase = 70,000w * US$4/h * 1560h/w = US$436,800,000

Which means a Big Mac, if the price absorbed the wage increase alone would need to go up net approximately $8.33. $8.33 * 115BM/d * 1250r * 365d = US$437,064,687

$8.33 + $5.19 = $13.52 for a Big Mac (again, prices could be spread more evenly).

In my brief time at McDonald's, I was paid the then minimum wage, $1.60 per hour. That summer, $1.60 would buy a bit more than five gallons of gas. By that measure, $20 per hour in California is about keeping up with inflation.

On the other hand, about 125 hours of $1.60 would cover a year's in-state tuition at a public university then. It takes more like 700 hours at $20/hour to cover California in-state tuition now.

mcdonald's single hashbrown is now $3.99 in the app. A year ago it was $1.99 i think

If the workers can't afford to live the food is under-priced.

Pretty simple.

If nobody can afford to buy the food, then the workers preparing and serving the food would be out of a job due to a lack of revenue from the restaurant.

Pretty simple.

Yes, that is how businesses work.

If paying the workers enough for them to live makes the product too expensive for the prices to be competitive on the market, the business is unsustainable and shouldn't continue to operate.

Have you considered why the cost of living is so high? If everyone in the community made a million dollars a year but the housing supply was artificially restricted so that way people had to pay six-figure monthly rents due to supply-and-demand factors, then even a million a year wouldn’t be enough. Under your logic, that community would be completely devoid of any businesses except those that could pay even higher multi-million salaries, since “the business is unsustainable.”

Where there are definitely cases where people are being underpaid and exploited, the high cost of living isn’t caused by people being underpaid. In fact, higher wages without an increase in the amount of goods available to purchase means that prices will go up. It’s the dog chasing its own tail.

We need to address the high cost of living not by giving everybody a raise, but by fighting NIMBYism, building more housing, and stopping policies that erode the value of our currency, making it harder and harder for people to keep up.

Note that not everyone is getting a raise, only those making minimum wage.

True, only the minimum wage employees will get a raise by law but the reality is that shift supervisors will want a raise since they will want a premium for having more responsibility and managers will want more, and up it goes up the chain. Some minimum wage workers will get a raise but in time everyone will get a raise. Anyone making under $20 will short changed and will not tolerate being paid less. It's human nature.

This isn't meant to solve the cost of living crisis for everyone all at once.

This is meant to help fast food workers survive.

Every single cost, labor or otherwise, is being passed on to customers. It's wild that people still eat McDonald's at 2020 prices let alone 2024 prices and beyond. There used to be a contract that the worst food would come with a proportional discount but that's out the window.

I don't eat there much anymore. Only once every few months

As a Californian I only eat out whenever I have to these days, such as while traveling, and even then it is more cost-effective to eat bologna sandwiches than to eat fast food. The prices are outrageous, and these minimum wage hikes will prove Sisyphean since those hikes will be eaten away by even higher costs, assuming they don’t get their hours reduced or face a layoff. Then we’ll have the same discussion a few years later when the minimum wage is $25 or even $30 per hour.

To piggyback off another poster’s comments, it used to be that we traded away quality and our health in exchange for cheap, convenient, reasonably tasty food. But nowadays even a basic combo meal costs at least $10. A decent meal at a non-fast food place is easily $20-25 after tax and tip. It’s understandable; housing prices have went through the roof, supply chain disruptions during COVID led to dramatic price spikes that haven’t fully recovered, and then there’s the effects of low interest rates and stimulus spending. But it’s painful: I’ve been getting by with 2-3% annual merit increases while I’ve had to deal with double-digit annual increases in the prices of food and other necessities. I also missed out on homeownership, first with the ultra-competitive market in 2021 when I was constantly outbid, and in 2022 onward with interest rates rising while home prices remaining stubbornly high, thus pricing me out the market. But I should count myself lucky that I haven’t been laid off like so many people have. So I make do by substituting McDonald’s for Costco food court items and for makeshift sandwiches, even while traveling.

We truly need better monetary, fiscal, and housing policies. No more deficit spending (even if this means tax hikes), no more artificially-low interest rates, and much looser zoning laws. Unfortunately I’m very pessimistic with American politics. While I do see some progress being made with increased housing construction and with zoning reform, both parties are addicted to deficit spending and easy money.

> The prices are outrageous, and these minimum wage hikes will prove Sisyphean since those hikes will be eaten away by even higher costs, assuming they don’t get their hours reduced or face a layoff. Then we’ll have the same discussion a few years later when the minimum wage is $25 or even $30 per hour.

It's all a symptom of the absolute cancer that is real estate investing.

Every $100 increase in the rent means an extra $30-50 needed in wages if you still want to maintain housing costs being 30-50% of your wage.

And nearly all rent increases are just simply price gouging. You have people that are barely treading water paying their rent, and as soon as minimum wage goes up, those absolute leeches we call landlords will just suck that extra money right up via a rent increase.

I just don't know what the solution is. Rent controls have a myriad of unintended consequences. Simply creating more housing doesn't necessarily work, since it all gets bought up by investors that maintain the same high rent.

The return on investment goes down if there is more housing.

Especially if the demand for housing is more or less satisfied. Buying incremental new units at that point is going to mostly be cost.

Virtue signaling. Let’s see the unintended consequences.

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