The Minimum Wage: A Case Study in Laughable Liberal Logic

In the wake of comments on an earlier post, The Minimum Wage and Liberal Math, I thought to look at the results of raising the Minimum Wage at a real company.

I chose Dunkin’ Donuts, a company Liberals highlighted in a recent email campaign as only paying its workers the minimum wage of $7.25 an hour.

A web search for my Zip Code showed 6 stores, all open at least 16 hours daily. For the post I’m assuming 16 hour days per store and just 1 worker per 8 hour shift. The company website says there were 7015 US stores at the end of 2011.

The $2.85 hourly increase in question, $7.25 to $10.10, adds $45.60 to a store’s daily cost of business. Over 7015 stores, that’s $319,884 daily, $2.24M weekly and $116.76M a year.

Add 8.5%, or $9.92M, for employee costs to get a yearly increase of $126.68M.

2011′s net profit for the corporation was only $34.4M. This wage increase puts the company in a $92.28M hole at the start of 2012; well over 2.5 times 2011 profits. To compensate, the company needs $1.7 billion in sales with the same profit margin and no other increased costs. By way of comparison, total sales corporate wide, not just US sales, were only $628.2M for 2011 and that in a 53 week period.

Clearly, a $2.85 increase depends on drastic operational changes and unrealistic growth projections. Yet if Democrats win, that’s exactly what will be forced on American businesses.

What can they afford? 7015 stores generate 40,967,600 annual man hours. Applied to profits of $34.4M, that allows an $0.84 raise.

Except they don’t have $0.84 either. We haven’t talked about corporate staff raises yet. Or store management. That takes from our $0.84. So do natural increases in costs for everything from coffee to landscaping. There are all manner of expense increases. Obamacare, anyone?

http://joeforamerica.com/2013/03/the-minimum-wage-a-case-study-in-laughable-liberal-logic/