Thursday, March 29, 2012

MY RESPONSE TO: Subway Kills Five-Dollar Footlongs in S.F. Due to "Higher Cost of Doing Business"

The $10/hr minimum wage hurts San Francisco fast food stores -- only -- because San Francisco is so affluent that raising the minimum wage doesn't raise demand at the same time. In my more typical Chicago middle class neighborhood a few years back, a quick rise from $5.15/hr to $8.00/hr saw business in my local McDonald's visibly pick up (others agreed with me) mostly in the Mexican end.

A nationwide jump to $15/hr (doubling!) would add all of 3 1/2% inflation* (about what we grow every two years, normally!) and give half the country a raise -- a good time to invest in McDonald's.

Enter $1.60/Linkhr in 1968 -- LBJ's minimum wage -- in the BLS online inflation calculator below and you will get $10.40/hr in today's money (in average U.S. prices, not S.F.'s higher prices). Per capita income has almost doubled since 1968, from $15,000/yr to $28,000/yr.

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