30.7.13

IN THE ABSENCE OF ANY ELASTICITIES?

THE HUFFINGTON POST suggests, based on an incompletely documented academic study, that increasing the pay of McDonald's employees would have a relatively small effect on the price of gutbombs.
[University of Kansas researcher Arnobio] Morelix looked at McDonald's 2012 annual report and discovered that only 17.1 percent of the fast-food giant's revenue goes toward salaries and benefits. In other words, for every dollar McDonald's earns, a little more than 17 cents goes toward the income and benefits of its more than 500,000 U.S. employees.

Thus, if McDonald's executives wanted to double the salaries of all of its employees and keep profits and other expenses the same, it would need to increase prices by just 17 cents per dollar, according to Morelix.
Neglecting capital-labor substitution, or consumers who respond to incentives, yes.

SECOND SECTION.  Just One Minute links, and elaborates.

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