The glaring irony in the minimum wage debate is that it’s not inflation or rising labor costs that threaten corporate profits, but rather, stagnant consumer demand:
McDonald’s Corp. said its profit slipped in the second quarter as sales in the U.S. continued to flag.
The world’s biggest hamburger chain has been struggling to boost sales in its flagship market amid intensifying competition, changing eating habits and the persistent financial struggles of its lower-income customers.
In the U.S., sales at established locations fell 1.5 percent for the period fewer customers came into its restaurants. The company, based in Oak Brook, Illinois, hasn’t managed to raise the figure since October.
Real median wages declined 11 percent between 2002 and 2012, leaving low and middle income consumers with little discretionary income. Not even enough to spend on luxuries like McDonald’s.
It is lagging consumer demand that is holding back the US economy, and lagging demand is a direct result of lagging wages. Perhaps that’s why the 13 states that raised their minimum wage on January 1, are the 13 states with the fastest job growth since?