I'm always amused that increasing the minimum wage, no matter what amount, "raises prices" but the salaries of the highly paid (such as many on here) has nothing to do with the price of your product. Sheesh.
I don't think anyone is suggesting that. I'm certainly not. As I said in the OP, McDonalds is NOT raising prices. They are reducing labor headcount to reduce or maintain their total labor cost. Many people mistakenly believe that the government can raise the minimum wage without ANY consequences and that's demonstrably false, which is why I posted in the first place.
In many industries like fast food, the cost of labor is a huge percentage of total business expenses. Doubling the cost of minimum wage workers at a McDonalds may increase total expenses from 30% of revenue to 50% of revenue if headcount and hours worked remained constant. Not so in many other industries. Doubling the salary of middle management at Bank America might increase total expenses from 18% to 20%. A CEO at Bank America, for instance, makes less in salary than the rent on one of their office buildings so his salary doesn't affect the 'price' of their goods and services very much (it does some, of course).
Of course, highly paid folks are generally very educated, highly skilled and/or not very easily replaced. For the most part, the MARKET sets their wage rate. For those who are subject to minimum wage, the GOVERNMENT has set their wage rate. When the government sets the minimum wage rate artificially high, i.e., higher than what the market would dictate, Economics 101 says for profits to remain level, either prices must increase or the number of persons employed must decrease (to maintain the same total cost of labor). If the government mandates that businesses like McDonalds must pay their employees a minimum of $15/hour, McDonalds will still want and strive to make the same or more profit. Only two ways to do that given the same market share: raise prices, reduce headcount.
In other industries, such as direct personal services like law, if the government made a law that said all attorneys must be paid at least $500/hour, don't you think the cost of legal services would increase? Or consumers would find other methods of conducting their affairs without using attorneys except when completely necessary? If consumers did so, guess what? Either attorneys would raise their fees to make up for the reduced demand for their services (due to higher costs) or there would be a lot fewer attorneys running around because most of them couldn't make a living (reduced supply). Or both. Raising the minimum wage for jobs that require little to no education, specialized training or knowledge results in exactly the same thing.
