Living Wages and Big Macs

According to Forbes, a student at the University of Kansas School of Business did a little financial modeling based on annual reports from McDonald’s to see how much menu food items would rise in the theoretical case where employees were paid $15 an hour. The results: Big Macs would increase by 68 cents to $4.67, and items on the dollar menu would see price increases of 17 cents. Of course, this is highly theoretical, and an economics professor from the school calls it “a leap of faith” because that kind of wage increase would have huge, unforeseen effects (besides, you know, changing the lives of everyone who works at McDonald’s for the better).

Update: I just spoke on the phone with Austin Falley, the communications director at the University of Kansas School of Business, who wanted to make it clear that the financial modeling from the student wasn’t peer-reviewed, nor closely examined by any of his professors, and should no way represent the business school, so the highly theoretical financial model is likely to be completely theoretical. When George Bittlingmayer, the economics professor told the Forbes reporter that the work is a “leap of faith,” he was surely being kind, because it’s just wrong. CJR has more.

Photo: Wikimedia Commons

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