Oklahoma Representative Markwayne Mullin (R), last seen at a town hall meeting alleging that a “fit couple” was fraudulently using food stamps in a DC-area grocery store, is once again making the news for bizarre comments. When a constituent asked him about raising the minimum wage to ten dollars an hour, he fired back with the question “You guys wanna pay $20 for a hamburger at McDonald’s?” Mullin’s math assumes that a 38 percent increase in a worker’s wages will somehow translate into charging twenty dollars for a McDonald’s hamburger, a 2000 percent increase over the 99 cents a McDonald’s hamburger costs in Grove, Oklahoma a small town located in Mullin’s Congressional District. Wow, if McDonald’s needs to increase food prices 2000 percent to accommodate a 38 percent pay raise, they must have a horrible business model.
Apparently, Congressman Mullin has not heard of the California based chain In-N-Out burgers which start all their employees at ten dollars an hour or above. The burgers remain competitively priced despite the higher employee wages. While critics might be tempted to dismiss their success story as something that might not work in less affluent parts of the country, that too would be incorrect. A Detroit area fast food restaurant Moo Cluck Moo pays their employees twelve dollars an hour and remains profitable. Twelve dollars an hour bordering economically depressed Detroit, and yet customers can still afford their hamburgers and chicken sandwiches. A burger there comes with all the fixings for three dollars, a far cry shy of Mullin’s “twenty dollar hamburger” nightmare scenario.
At most, a 38 percent wage increase would result in the cost of a hamburger going up an identical 38 percent to $1.37. However, realistically this type of price increase would not be necessary, because the company would save costs through lower turnover, less employee theft and higher productivity. As the Harvard Business Review noted in a study, the retailer Costco, which pays its employees on average 17 dollars an hour, enjoyed a much lower turnover rate, less theft and higher productivity than Sam’s Club or Wal-Mart. Although Costco employees were paid 70 percent higher wages, the company was still profitable because it could save costs on training and loss prevention that its competitors were forced to pay as a result of problems associated with paying low wages.
The Republican arguments against raising the minimum wage assume that businesses would have to charge exorbitant prices to stay afloat if they were forced to pay their employees more. However, the success of fast food chains like In-N-Out and Moo Cluck Moo and retailer Costco suggest that it is possible to run a profitable business and still pay your employees well above the federal minimum wage. Markwayne Mullin’s assumption that a modest wage increase will lead America down the slippery slope to a twenty dollar McDonald’s hamburger is simply not grounded in reality. Some fast food chains are already paying their entry level employees a wage that is forty percent or more above the federal minimum wage and those companies are doing just fine. It is time for McDonald’s and the other chains to do the same. Fast food chains can afford a minimum wage increase and so can consumers, but fast food workers cannot afford to continue to live off of less than eight dollars an hour.