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Elizabeth Warren Proposes Tripling Labor Costs for American Small Business

Posted By Daniel Greenfield On March 18, 2013 @ 6:49 pm In The Point | 34 Comments

The headline could just as easily read, Elizabeth Warren Proposes Putting Every Small Business Out of Business. But on the Prog side, the headline of course is “Elizabeth Warren Suggests $22 Minimum Wage.”

Warren was billed as some kind of hard luck story, but I have to wonder if this woman has ever lived in the real world.

Sen. Elizabeth Warren, Massachusetts Democrat, suggested raising the minimum wage to $22 per hour is only logical if you look at the numbers.

“If we started in 1960, and we said [that] as productivity goes up … then the minimum wage was going to go up the same … if that were the case, the minimum wage today would be about $22 an hour,” the senator said

The current minimum wage is $7.25 per hour. Ms. Warren wondered: “What happened to the other $14.75?”

She answered her own question: “It sure didn’t go to the worker.”

Much of it went to the government which used it to pay six figure salaries to fake working class heroes like Warren. But let’s look at what raising the minimum wage to $22 would actually do.

It would triple labor costs for any minimum wage business. With labor costs running to between 25 to 35 percent at eateries and a lot of retail, tripling that would turn labor costs into the majority of business cost and would put many of them out of business.

“During my Senate campaign, I [frequently] ate a Number 11 at McDonald’s. It cost $7.19,” she said. “If we raised the minimum wage to $10.10 over three years, the price increase on that item would be to about $7.23. Are you telling me that’s unsustainable?”

Pocahontas is trying to show what a “Woman of the People” she is. But she doesn’t actually know that the majority of McDonald’s fast food joints are franchisees.

Franchisees have to pay a 45,000 dollar franchise fee back to McD’s plus 12.5 percent of sales. The price of meat keeps going up thanks to Obama’s environmental games. Here’s what a typical breakdown looks like.

Typically, food costs range from about 25%-28% of sales, while cooking oil and condiments cost 3%-4%. Labor costs vary from 25% to over 30%, not including management.

Now perhaps Elizabeth “Number 11″ Warren can explain how her McDonald’s franchise is sustainable now that it’s paying out 90% of its sales to the workers, not including management.

What exactly is going to go into her Number 11? Rat? Nope. They can’t even afford rat at that point.

But let’s stick to $10.10. McD’s will stay in business. Its labor costs will go up. It will raise prices, but not enough to compensate. Some franchises will fold. Others will cut staff and hours. There will be more poor people who will have less money to spend at McDonald’s. Everyone will be poorer and the economy will be flimsier, but those workers who hang on to their jobs will have a few dollars more, which they will save, rather than spend, because the economy is insecure.

Warren will demand more aid for the people. Taxes will go up. Businesses will close, etc, until there’s a government elite and a vast horde of the poor… and no middle class left.

And that is the new Democratic Party’s plan.


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