I agree automation is coming for all of us. #Yang2020.
But I'm going to disagree with the idea that every penny of cost is passed to the consumer. It's just not true. Demand may go down with a higher price (or not) and you sometimes just simply see a squeezing of the profit margin. To regain that profit margin would then require cost cutting. But it isn't axiomatic that prices to the consumer go up when expenses go up. It's highly fluid depending on competition and friction in the market place.
Beyond that...businesses make their choices on many things beyond salary cost. In many cases, salary cost is nearly at the bottom of the pile. Predictability, repetition, stability, talent pool, infrastructure, etc all play into things at a higher rate for many industries than just salary cost. Tech for instance didn't accidentally end up in expensive ass California. Rock bottom Mississippi could be cheaper but couldn't support the other items.
I have no idea what the total cost per item at McDonalds is when calculating for a wage employee. But I would guess it's not very much compared to the cost of the supplies, machines, building, real estate, etc etc.
If I believe this study (fast google):
The current federal minimum wage is $7.25 per hour. Raising it to $15 (a 107% increase) would cause prices to rise an estimated 4.3%.
www.marketwatch.com
Doubling the wage worker would result in a 4% increase in fast food prices. Backwards math tells me that wages account for around 3-4% of the cost of the food item.
And because of all those other fixed costs, it's not linear. $15 isn't a terrible sweet spot on goods.
$15 106.9% 4.3%
$22 203.4% 25%
The other interesting thing about this study is the looking at turnover. Is there a capitalist argument and benefit to raising wages?
View attachment 27218
Turnover crashes. So as you increase wage salary you reduce expensive employee turnover absorbing some of that cost privately with a benefit.
Probably what I care about most here (beyond the human quality of life) is that all of this results in 106% less funding of these individuals (via medicaid, section 8, and food stamps) at the cost of only 4% increase. That won't be all of these individuals of course if they have multiple children. But it will be many of them. 4% increase in prices to decrease a MUCH larger tax roll cost. This is a great investment and moves the cost back into the free market instead of government subsidizing.