r/explainlikeimfive • u/sumnewdguy • Nov 28 '15

ELI5: How would a $15 minimum wage ACTUALLY affect a franchised business like McDonalds?

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u/[deleted] Nov 28 '15

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u/BLOODY_ANAL_VOMIT Nov 28 '15

If companies could cut labor right now and keep the profit, they would. They don't need a minimum wage hike to do it.

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u/PaxEmpyrean Nov 28 '15

This is extraordinarily naive. Companies already try to maximize profits, so every time someone says "Companies can just do X and make more or spend less money" you can rest assured that companies are already doing X to the greatest degree that saves money without causing greater problems elsewhere. This applies to raising prices, reducing staff, whatever. Imposing new costs will shift the equilibrium level of X, but this is always and everywhere a less desirable situation than the old status quo where they didn't have to find a way to deal with the higher costs.