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Fast Food Stock Prices Going Belly Up

Is Obama's minimum wage hike proposal partly to blame?

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by Dain Fitzgerald

Staff Writer t +

Image: Universal Studios

Stock prices for fast food companies shot downward in the last day or so, and analysts are chalking it up to a host of factors, including Obama's call for an increase in the federal minimum wage.

Business Insider reports on the dipping stock prices of McDonald's and similar eateries, and points to the payroll tax hike, higher gas prices, and flagging consumer demand among other reasons for the drop in investor confidence on the fast food front. But the minimum wage proposal from the POTUS is also on the list of reasons for the fast food stock drop. And for that reason, it's efficacy in boosting economic prosperity for less-skilled workers is being called into question.

Harvard economist Greg Mankiw observed in 2006 that no consensus exists among those in his profession on the impact of the minimum wage: 52% supported it (of whom 38% wanted it raised), while 47% believed it should be eliminated.

Via Business Insider and Greg Mankiw.
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Do you think Obama's call for a minimum wage hike has anything to do with the drop in fast food stock?

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74 Comments (view in Forum)

  • InjusticeSucks
    !
    @DARSB hell lets Blame Obama...after all we all know that everything including the Falling sky is his Fault.if he was White and a repug they would be Cheering him as a GOD.
  • stephen
    !
    king obama know alot about buiness in the united states. he had the best jobs, ran the biggest companies in the country. he understands that the government is the true reason free market systems work. he knows through first hand from his vast experence.. he knows all and the american people is just fools..." not"..
  • frigginhell
    !
    because a successful business man would do better? because the last guy was a business man but his success was pretty much non-existant. although cheney was on the other hand a quite successful businessman. Look at all the billions of dollars his company got from taxpayers with no-bid contracts. Oh yeah, sure they ran to the middle east when they got the money to protect it from taxes from the country they were taking it from. Sure they did a poor job and had huge cost over runs. But like you implied, we're so much better off with a businessman in office running things. Well, until the collapsed the economy of course. Don't worry, his buddies are all still rich and so is he.
  • Fishbone345
    !
    If their customers are choosing to be poisoned, knowing full well the results, who is really to blame?
    It's like Jim Gaffigan said, "People get mad at McDonalds for not having healthier choices on their menu and McDonalds is like "We make burgers....."
    McDonald's is the giant it is, because of its clientele. People that seek out their product, of their own accord, and buy plenty also of their own accord.
    No one is making those people consume outrageous amounts of unhealthy food.
  • jessejaymes
    !
    @Fishbone345 You're on a roll. Have story for you. I'm in a church's chicken standing in line with a 2 year old. Ahead of us is a woman who weighed at least 400 lbs. In the obligatory dirty white stretch pants. the two year old is looking at that monster butt and looking at me and pointing and I give her the shhh sign and she just standing there looking. All of sudden the woman's beeper goes off and the two year old bolts for the door screaming at the top of her voice. LOOK OUT SHE'S BACKING UP!!!
  • thatgirl
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    @Fishbone345 People have NO idea what the additives even are that are in processed food. Do you know why most of the additives that are in US fast food are outlawed in the rest of the world?

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  • Denizen_Kate
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    Increased minimum wage = more spending money = more goods and services purchased = more new jobs = more tax revenue = less debt and budget deficit = everyone wins.
  • SAS86
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    @Denizen_Kate Your arguments and logic are faulty. Anytime more wages are paid the cost goes up even though you get a small percentage of increased taxes, plus employers will reduce hours or lay off workers because they can't compete with increasing their salary payout.
  • Starsplash
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    @SAS86 They are doing that anyways.

    These companies even with the tax hikes are still going to be rich as fuck. They will fire and reduce hours because they are greedy and they can't stand loosing a couple of dollars even though they are still going to be rich as fuck.
  • SAS86
    !
    @Denizen_Kate Wait & see. Already here in Albuquerque when the MW was raised from $6.50 to $7.50 several business have cut hours, some have laid off employees, and some have closed. Your economic experts are what has bankrupted this country already!
  • wonka45ACP
    !
    What a rush to put something as stupid as this on a post. its not hardly 24 hrs,
    raising minimum wage will hurt the economy, but dont blame this on the fall of anything
  • DARSB
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    If the stock prices have been fluctuating for a couple of days and the President's call for a minimum wage is less than 24 hours old it's pretty tough to make a case for the two events being connected.
  • marine1
    !
    goverments inability to manage goverment and function within a budget speaks volumes as to why GOVERMENT should NOT interfere with business
  • jessejaymes
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    Here's another thing that just irritates the hell out of me. Wall Street has consistently made record profits year after year during the Obama administration while main street suffers. Obama gave money away like it was free for the taking (which it was). And couldn't even be bothered to write agreements that guaranteed that the taxpayer got their money back. And every time Wall Street hiccups the right winger come SCREAMING "OBAMA IS SCREWING WALL STREET". No he is not and Wall Street thanked him for his largeness by giving him the same money for his campaign that they gave Romney. WALL STREET OWNS AMERICA. THEY DON'T GIVE A DAMN WHAT A PRESIDENT SAYS PEOPLE. GET A FREAKING GRIP WOULD YA?
  • Fishbone345
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    I love how personal responsibility is the call of those who are against Welfare, but taking personal responsibility for a companies losses is unheard of. Don't blame the guys in charge! Surely its not their fault!
  • sylehrman
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    One might suggest that people are a bit tired of high priced burgers that are boring. It could just be that they like something else. I know some folks who have not patronized sudh establishments in years.
  • Chromalord
    !
    well, first the article states it MAY be PART of the reason for stocks abating.
    I don't agree that its any part at all. People will spend their last $5 at McDonalds. The demand will not diminish for fast food, especially in this country. There are too many chains, mainly in rural areas, however rural population has been slowly on the decline over the past few decades in favor of urban and suburban ones, where typically fast food eateries are less frequented. If anything, the market was reacting to updated data that just got released that reflects that demographic shift.
    This may also be some sort of political ploy to lobby against the DEMs.
    There are other factors more in play with the inflation of fast food prices such as fuel costs ( for delivery, refrigeration and HVAC) and paper and plastic costs. If the general public is earning more money, that also signifies they are working, i.e. busier and will be more apt to frequent fast food places out of schedule and convenience concerns.
  • Arumizy
    !
    Only thing that raising the minimum wage will do is raise the COGS, or Cost OF Goods Sold, which in turn will raise the prices on everything. From lettuce to burger and beyond. Right now is not the time for such a high increase, it will not help but to make everything else more expensive.
  • DrFunkenstein
    !
    The main reason these places make money is because they pay their employees chicken feed. Too many Americans are stuck working these jobs and they cannot support a family on these pathetic wages. Boohoo for the millionaire owners and executives that can't freely exploit these workers.
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