Quotulatiousness

July 16, 2024

Real world economic experiment to test Card & Krueger’s minimum wage theory

Filed under: Business, Economics, Government, USA — Tags: , , , , , — Nicholas @ 04:00

Tim Worstall points out that the California state government is — intentionally or not — running an interesting economic validation of the Card & Krueger study in New Jersey that seemed to show raising minimum wages didn’t have a negative impact on overall employment:

“Fast food” by Daniel Barcelona is licensed under CC BY 3.0 .

For think back to that New Jersey minimum wage study, Card and Krueger. That showed that acshully, employment in fast food joints rose when the minimum wage went up. Now, I’ve been saying for a long time now that I think there’s a fallacy of composition there.

“Fast food” isn’t “fast food”. There are — at least — two sectors here. There’re those big national chains, lots of advertising, franchisees, MaccyD’s and the like. Then there’s a vast hinterland of Mom and Pop places. The financial structures are entirely different. The chains are capital intensive. I think I’ve seen that buns for burgers come in pre-cut. Salad definitely arrives in bags, already shredded. There’s no prep – not even prep areas in those kitchens. Mom and Pop run differently. One reason I know is because I’ve owned and run one. There’s an awful lot of labour that goes into turning blocks of stuff into those sandwiches. Stuff is sliced, diced, soups are cooked on site, from identifiable ingredients, bread is sliced and on and on.

No, this isn’t to try and riff off The Bear. But there is a difference in economic structure between those who are large corporates vending fast food and not-large corporates vending fast food.

And I think — think, me, I do — that the problem with the Card and Krueger study was that it didn’t account for this. A change in the general labour rate might push people to the capital intensive end of this market. Certainly could do, it would be possible to model it that way. Which means that using only the data from the fast food chains, as C&K did, would pick up only part, perhaps half, of the reaction. The Mom and Pops shed labour, the capital intensive chains modestly pick it up, the net effect is — well, the net effect could be anywhere actually.

Which is what makes this CA minimum wage change so interesting. Because the $20 an hour applies only to those working for the big national chains — or their franchisees.

Mom and Pop have to pay the normal CA minimum wage, not the $20. So, the labour intensive part of the overall system has just been handed a competitive advantage against the capital intensive end of it. We would expect, could possibly measure, that the overall employment outcome is positive.

No, really. I’d be willing to defend the idea that it could be, certainly. Note that “could”. So, we’ve two sectors, capital intensive, labour intensive. We’ve just said that the capital using guys now have to pay more — much more — for their labour than the labour intensive guys. The capital intensive guys can only respond by higher prices or worse service (ie, fewer labour hours). The labour intensive sector might end up picking up so much of the traffic that they expand employment — expand employment so much as to actually increase overall fast food sector employment. By shifting from the capital to the labour intensive sectors.

This should be studied, right? Now, my actual economic skills — rather than ruminations — are zero so it’s not going to be me checking this out. But I recommend it as something for someone looking for a PhD subject to think about. Possibly even someone more senior than that looking for a point upon which to make their bones.

Does a higher minimum wage that only — only — applies to the capital intensive portion of an economic sector like fast food actually increase employment? By shifting the sector over to the more labour intensive sector not subject to that higher minimum wage?

Logically, it could, significant empirical work would be necessary to show it though.

June 25, 2024

In all places and at all times, the true minimum wage is zero

Filed under: Business, Economics, Food — Tags: , , , — Nicholas @ 03:00

Tim Worstall explains why fast food restaurants like McDonalds and Burger King are reported to be introducing new low-priced value meals to try and attract and keep more customers in the current economy:

“McDonald’s restaurant, Toledo OH, 1967” by DBduo Photography is licensed under CC BY-SA 2.0 .

It’s terribly unfashionable to say that minimum wage rises have any effects — other than that the minimum wage workers earn more, of course. It’s supposed to be one of those areas where only good things can come from poking a stick in the market. The justification is that the only jobs these folks can get are slinging fries (If that is the case then I’d probably start with education system reform so that grievance studies graduates are skilled enough to do something else but maybe that’s just me), therefore MaccyD’s and the like have a monopoly on employing them (a “monopsony”) and so omniscient and caring politicians and bureaucrats can correct this market error without there being any side effects.

Hmm. Seems unlikely but that is the story.

[…]

The standard economics of a minimum wage rise is — well, was before the progressive smokeblowing about monopsony — that the money’s got to come from somewhere. It could be that profits fall and therefore there’s less investment — even a move away from having invested in — that activity and so employment falls. Or, wages are higher for those fewer people employed and some lose their jobs — also known as rising productivity and also known as fewer jobs. Or, customers get to pay higher prices, fewer now buy the item and so employment falls as the sector shrinks.

Hmm, well, we can get all serious about monopsony but that one doesn’t work to my mind either as even if profits were excessive a fall in them will still lead to less investment in the sector and we’re back at option 1) above. But, many have convinced themselves.

But here we’ve got a general agreement that Americans are eating fast food less. They’re eating at home more. The only thing that’s changed in the varied cost structures is the price of fast food labour. Sorry, the only thing that’s changed in the *relative* cost structures is that labour as the minimum wage is pushed up. Whatever food inflation has been it’s been no better or worse for MaccyD’s than it has been in Albertsons or King Super. It’s also true that US real incomes have been rising so it’s not a general retreat on the part of consumers. The price of fast food relative to home prepared has risen, people are buying less fast food. The only cost pressure causing this is the pushing up of the minimum wage in recent years (for chains, in California, it’s now $20 an hour).

Myself I take that as being proof of the original and base minimum wage argument in standard economics. Trying to recoup that fall in sales is what is leading to these special offers — and don’t forget they’re special, not for all time and so should be considered advertising, not a long term change in price levels.

As a larger lesson I take it to mean that we should be very wary indeed of those claiming that there’s some special little economic trick that makes what they want to do anyway such a good idea. Why, yes, that does include any special little tricks I might want to claim. But many really did convince themselves that fast food wages were different, that pushing them up would have only good, not ill, effects.

Seems it ain’t so.

Over the weekend, there were a few stories about a small fancy coffee chain whose employees had successfully unionized to get better wages, only for the owners to shut down all three stores because even before the workers unionized, they were losing money on the business. Rather than the higher wages the employees were expecting (while keeping their unusually generous benefits for such entry-level jobs), all their jobs were lost and nobody won. Small businesses like restaurants operate on a far smaller profit margin than most people believe … according to Statistics Canada, the average restaurant of all types made a 4.3% profit in 2022.

June 17, 2024

5 Foods that Changed Fast Food Forever (ft. @mythicalkitchen)

Filed under: Food, Media, USA — Tags: , , , , , — Nicholas @ 02:00

Tasting History with Max Miller
Published Mar 8, 2024

The Mythical Kitchen Cookbook by Josh Scherer: https://amzn.to/49Se1qZ

Recipe at https://www.tastinghistory.com/recipes
(more…)

March 6, 2023

The Rise and Fall of Fast Food Architecture

Filed under: Architecture, Business, Food, History, USA — Tags: , , , — Nicholas @ 02:00

Stewart Hicks
Published 3 Nov 2022

What happened to McDonald’s? Their restaurants used to be so iconic. It was impossible to mistake one, for say, a Wendy’s. Distinguished architecture used to be an important part of a brand’s identity. But today, fast food restaurant’s all look the same. Bland grey boxes. The great convergence toward this standard has been called “Chipotle-ification”. In this video, we trace the changing restaurant designs of McDonald’s, from the iconic golden arch era to the soulless boxes of today. We break down the architecture and the forces at play in the great homogenization of fast food architecture.
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January 6, 2022

The war on “ultra-processed food”

Filed under: Britain, Business, Food, Health, Politics — Tags: , , , , , — Nicholas @ 05:00

Our self-imagined “elites” have a new crusade to prosecute — the crusade against “ultra-processed food”:

In “public health”, the name of the game is to interfere with people’s lives without having your own choices meddled with. This is straightforward with smoking since the philosopher kings of the nanny state don’t smoke. Alcohol is more tricky since most of them drink, but minimum pricing — which was introduced in Ireland yesterday — offers the perfect way to penalise ordinary people while leaving fine wine and craft beer unaffected.

The war on food poses the trickiest problem since its pretext — obesity — is the result of over-consumption and physical inactivity rather than the consumption of any specific type of food. “Junk food” is too narrow since most people interpret it to mean “fast food” from a handful of restaurant chains. And so, in the absence of an obvious dietary culprit, the “public health” lobby is shifting towards a crusade against “ultra-processed food”.

Most people don’t know what this means, but it sounds bad if you have an instinctive objection to industry and modernity. Perhaps it evokes thoughts of “chemicals” and “E numbers”. Certainly, it sounds like the opposite of the “natural”, “organic” and “home made” food so beloved of those who think they are superior to other people. It is, however, a classic “public health” bait and switch. Just as people didn’t realise that a ban on “junk food” advertising would result in adverts for cheese and butter being banned, people won’t realise what a war on ultra-processed food means for them until it is too late.

In a deranged op-ed in BMJ Global Health, some of Mike Bloomberg’s minions from Vital Strategies call for tobacco-style regulation of “ultra-processed food”, starting with warning labels.

    Simply put, ultra-processed foods are foods that can’t be made in your home kitchen because they have been chemically or physically transformed using industrial processes. They are recognisable on the supermarket shelf as packaged foods that are ready-to-eat, contain more than five ingredients and have a long shelf-life. The industrial processing, as well as the cocktail of additives, flavours, emulsifiers and colours they contain to give flavour and texture, make the final product hyper-palatable or more appealing and potentially addictive, which in turn leads to poor dietary patterns.

    With more than half the total calories consumed in high-income countries coming from ultra-processed foods and rapid increases in low- and middle-income countries, these products are exposing billions of people to a higher risk of type 2 diabetes, heart disease, stroke, depression and death.

Scary stuff, eh? Alas, they don’t give any examples of ultra-processed foods so let us instead turn to a recently published study about them …

    Baked goods, including cakes, pastries, industrial breads, and soft drinks ranked among the top contributors to sales of UPFDs [ultra-processed food and drinks]

According to the the British Heart Foundation, ultra-processed foods include …

    Ice cream, ham, sausages, crisps, mass-produced bread, breakfast cereals, biscuits, carbonated drinks, fruit-flavoured yogurts, instant soups, and some alcoholic drinks including whisky, gin, and rum.

I’m not sure how hard liquor made the cut, but I suppose if you’re going be a fun sponge you might as well go all the way.

July 8, 2021

The initial findings of our months-long dietary natural experiment

Filed under: Britain, Food, Health — Tags: , , , , — Nicholas @ 05:00

As we’ve all been told many, many times by the food nannies, access to fast food restaurants makes us fat. The food is too greasy, too salty, too tasty for our feeble wills to fight so we just engorge ourselves on those bad calories. We eat too much fast food and we get fat. Case closed. Well, that’s what we’ve been told. Our recent fast food deprivation diets say something else again:

“Camden Fast Food” by It’s No Game is licensed under CC BY 2.0

OK, well, we’ve just had a grand experiment, haven’t we? Peeps haven’t been able to queue at Maccy D’s to get their greaseburger. People have had to – and have had time to – buy actual food and then prepare it for themselves at home.

Which is something that does rather kill the case about those burgers. Because what has been happening is that we’ve been – in the absence of greaseburgers – been eating more.

No, really:

    Using data on millions of food and non-alcoholic drink purchases from shops, takeaways and restaurants, the study found that the pandemic led to calories from restaurant meals falling to zero during the UK’s first national lockdown. That increased somewhat over the summer and declined again as restrictions in the hospitality sector were reintroduced in the autumn.

    However, this was more than offset by a large increase in calories from takeaways, which peaked at more than double the usual levels in the UK’s second national lockdown in November 2020.

    Overall, people increased their calories from raw ingredients by more than those from ready-to-eat meals and snacks and treats, with the pandemic leading to a shift in the balance of calories towards foods that required home preparation.

It’s that last paragraph that’s important. More home food preparation was being done from raw ingredients. And yet calorie consumption rose.

The report said the most plausible explanation for the sustained increase over the pandemic was higher consumption rather than changes in household composition, food waste or stocking up.

The study is specific to Britain, but it’s highly likely that the same results will be observed in Canada, the United States, Australia, and many other places. But I wouldn’t expect it will be given much coverage, like so much these days that contravenes the messaging that our dying media all seem to prefer to spread.

June 24, 2021

The Founder | Based on a True Story

Filed under: Business, Food, History, Media, USA — Tags: , , , , , — Nicholas @ 02:00

The Cynical Historian
Published 27 Jul 2017

This one is a contender for best historical film of 2016. The Founder is an amazing movie about the beginning of the McDonald’s food chain. Seriously, more films should take cues from this.
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references:
http://www.historyvshollywood.com/ree…​

http://time.com/money/4602541/the-fou…​

http://content.time.com/time/magazine…​

https://www.bustle.com/p/how-accurate…​

https://www.washingtonpost.com/entert…​

https://www.theatlantic.com/entertain…​

https://www.nytimes.com/2016/05/20/bu…​

http://www.abc.net.au/news/2016-11-24…​

http://www.cbsnews.com/news/the-real-…​

https://en.wikipedia.org/wiki/Ray_Kroc​
https://en.wikipedia.org/wiki/Richard…​
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contribute to my Patreon:
https://www.patreon.com/CynicalHistorian​

LET’S CONNECT:
https://twitter.com/Cynical_History​
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Wiki:
The Founder is a 2016 American biographical drama film directed by John Lee Hancock and written by Robert Siegel. The film stars Michael Keaton as businessman Ray Kroc, and portrays the story of his creation of the McDonald’s fast food chain. Nick Offerman and John Carroll Lynch co-star as McDonald’s founders Richard and Maurice McDonald.

The film premiered at Arclight Hollywood on December 7, 2016 and was released in the United States on January 20, 2017, by The Weinstein Company. It grossed $23 million worldwide and received generally positive reviews from critics, with praise for Keaton’s performance.
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Hashtags: #History​ #TheFounder​ #McDonalds​ #Review​ #BasedOnATrueStory​ #RayKroc

May 13, 2021

Canada’s (subdued-but-real) class system

Filed under: Cancon, Economics, History — Tags: , , , , , — Nicholas @ 03:00

In The Line, Howard Anglin offers some observations on how Canada’s class system developed and how it can be very roughly delineated:

This comfortably flat image of our social hierarchy, however, belies a more complicated series of gradations that, while clearly marked, are rarely observed and almost never described accurately. Peter C. Newman mapped some of the terrain in his three volumes on The Canadian Establishment, but his account was already dated when he began it in 1975 and it was a work of history rather than social commentary by the time he finished in 1998. [Line editor Jen] Gerson’s own description of the Canadian class system explains why it can be hard for outsiders, and even insiders, to see it: “[W]e manage the cognitive dissonance presented by the haves and have-nots of housing,” she says, “by requiring our rich people to keep quiet. They should wear clothes that are well-cut and well-designed, but not flash. Buy the multi-millionaires car, but paint it in a sedate hue.”

Social sorting is intrinsic to human nature, perhaps even necessary — as the Bard has Ulysses remind us: “Take but degree away … and, hark, what discord follows!” — and it’s here in Canada too, if you look for it. Like the United States, Canadians early on replaced a class system based on titles with one based on the more easily-acquired currency of, well, currency. And, as in America, this immediately created a new opportunity for class to subtly reassert itself.

I used to joke that the only meaningful class division in Canada is whether you use “summer” as a noun or as a verb; lately I’ve developed the Starbucks test. In this analogy, Starbucks is Canada’s middle class, with Tim Hortons and fast food franchise coffee below, and specialty cafes and boutique chains (Matchstick, Phil & Sebastian, Bridgehead) above.

Unlike the crude measure of income, coffee choice better replicates a traditional class system because it carries an implicit sense of social solidarity, cultural assumptions and biases. During the days of the Harper government, Tim Hortons became a symbol to a certain sort of conservative as iconic as the Greek fisherman’s cap is to aging Marxists. The Maple Leaf red cup represented the honest values of rural and suburban working families, in contrast to the globalist elites with their overpriced green Starbucks. Starbucks was sipped at dog parks and served in board rooms; Tim Hortons got the job done on a cold winter morning: it was Don Cherry in a mug.

The Starbucks test is a silly heuristic, but it reveals something about the complex nature of class: an aristocrat may be penniless, and a billionaire may love his Tims. It also puts the middle class back in its traditional place as the uneasy middle-child of the social order.

In the old British system, there was pride in being working class. There was a bond of mutual support that grew out of the shared experience of hard labour and was reinforced by institutions like working men’s clubs, the British Legion, and the trade union movement. The middle-class striver with his airs and pretensions, his flash new car and his evolving accent, was a figure of general mockery, even more to the working men he left behind than to the upper classes he aspired to join. Class was about more than money; it was an identity. And there was nothing that gave you away as middle class more than worrying about being middle class — an anxiety exploited by Nancy Mitford in her tongue-in-cheek guide to “U” and “Non-U” language and behaviour. The Starbucks test reveals something similar, something more reflective of Canada’s reality than the Liberal vision of one big happy middle-class family.

Tim Worstall explained that the British middle class is still despised by the upper class and hated by the lower class. Not a model for encouraging aspirational working class folks to “move up”.

October 16, 2018

Fast food outlets cluster in poorer areas – because they’re low-margin businesses

Filed under: Business, Food, Health — Tags: , , , — Nicholas @ 03:00

Tim Worstall debunks the “fast food restaurants are preying on the poor” myth:

Contrary to the musings of Rod Liddle in the Sunday Times there is a cause and effect going on over the placings of fast food restaurants or outlets in British towns. The provision of burnt chicken and maybemeatburgers to the hoi polloi is a hugely competitive business. This means that it is also low margin. So, where do you put the places that are in a low margin line of business?

[…] this is about clustering of those nosh joints. Why are they in the poor areas? Well, for the same reason the poor are in the poor areas. They’re cheap. This being rather the defining point about poor people, they look for cheap places to live. The two are therefore synonymous, poor and cheap. And what is it we’ve just said about nosh? That it’s a low margin business. Therefore purveyors of the deep fried and battered saveloy – that joy of the ages – are going to be clustered in the poor part of town where they can afford the rents.

And that’s our cause and effect. Some poor people are poor because they’re, or have been, ill. They’re in the cheap part of town because they’re poor. Fried gut shops are in poor areas because they don’t make much money therefore they’re in the poor part of town. Absolutely any analysis of the phenomenon which doesn’t account for this is wrong. And no analysis done by anyone does take account of it – therefore all current analyses of the point are indeed wrong.

There are also other factors to consider, including the fact that poor people are less likely to have the ability or facilities to prepare their own meals (or the habit of cooking for themselves), so the easy availability of high-calorie fast food or snacks is rather important to them. When you’re hungry and don’t have a fridge or freezer full of food at home, a burger or fried chicken has a much stronger appeal than it does to more wealthy folks with well-stocked pantries. If you’ve been raised on high-fat/high-salt foods, the “healthier” alternatives may not appeal, as they also are less flavourful than their fast food options.

February 12, 2018

Australia’s unique contribution to hamburger culture – beetroot

Filed under: Australia, Food, History, USA, WW2 — Tags: , — Nicholas @ 03:00

On one of my mailing lists, an Australian member made a bit of a to-do about the only “proper” burger having “beetroot” on it, along with other (one assumes lesser) condiments. Having been pranked more than once by Aussie friends, I was sure he was just doing his bit to wind up the American burger purists on the list. Yet, a very cursory search produced this article from back in 2014 that appears to fully back the original assertion:

Australian hamburger sightings started during the ’30s: a by-product, no doubt, of our blossoming post-first world war relationship with America, but it wasn’t until the 1940s that beetroot began regularly appearing alongside tomato, lettuce and onion on burgers. That was thanks largely to the openings of the Edgell and Golden Circle canneries in 1926 and 1947 respectively – but one of the more interesting theories, however, suggests the trend has its origins in pranking US troops ashore on R&R.

“Maybe it was our desire not to be Americanised?” ponders Warren Fahey, Australian folklore collector and author of Australian food history compendium, Tucker Track. “For some reason the idea of hamburger wrapping stained by beetroot juice was accepted as the sign of a great hamburger. People get quite emotional over the subject of Australian hamburgers. Some say a real hamburger must have slices of canned beetroot and others still declare its inclusion as a travesty.”

According to Fahey, beetroot on burgers had its heyday in the ’50s and ’60s. Following the simultaneous 1971 arrival of fast food’s big two – the first McDonald’s opened in the Sydney suburb of Yagoona, while Hungry Jacks, the Aussie nom de plume of Burger King, began its Aussie campaign in Innaloo, just north of Perth – the combination’s popularity began to wane, as did that of milk bars, beachside kiosks and other traditional hamburger vendors.

Despite the sustained growth of American franchises, however, Australia’s burger-with-beetroot population remains stable. Even once the big players pull their seasonal go-Aussie burgers after 26 January, the odds of finding a beetroot-enriched specimen at a neighbourhood lunch bar or new-wave “gourmet” hamburger chain remain good.

[…] the country’s last Australian-owned cannery shut in 2013. Fortunately, the signs are promising that farmers in Queensland’s Lockyer Valley might soon have a processing facility to call their own. It’s a cause we can all get behind, not just for the sake of a rural Australian community, but in the name of national pride: an Aussie hamburger made using beetroot processed overseas just doesn’t seem fair dinkum.

A New Zealand member of the list also chimed in, saying that beetroot was an essential component of Kiwi hamburgers as well. While it might sound weird, it’s probably no more so than pickles or relish as a burger topping, once you get used to it.

Update: In 2017, New Zealand McDonald’s re-introduced the Kiwiburger, including beetroot:

So, you can get your beetroot burger fix in both Australia and New Zealand (for a limited time, anyway).

January 27, 2018

Burger King swings and misses in their first attempt at entering political discussions

Filed under: Business, Food, Politics, Technology, USA — Tags: , , , — Nicholas @ 03:00

Tho Bishop explains why the second-rate burger business fails to convince:

For one, Burger King does not have a “Whopper neutrality” policy – and for good reason. If a family of five places a large order, while the next customer simply orders an ice cream cone, most Burger King employees will not refuse to serve up the dessert until after they fulfill the first order. The aim is to serve as many customers, as quickly as possible.

Similarly, a Whopper meal comes in various sizes – all with different prices – all so that customers have more flexibility based on having their food desires met. Imagine if a government regulator decided that since Americans have a right to have their thirst quenched – no matter its size – all fast food restaurants had to price all drink sizes the same? The result would be the prices for small drinks going up, while restaurants having to submit to occasional inspections by government agents to make sure no one was violating beverage neutrality laws. (This of course would still manage to not be the worst soda-related policy that’s been proposed.)

Additionally, Burger King certainly has the right to not prioritize delivering their customers food in a timely matter, just as customers have a right to avoid their services as a result. Whether or not the customers in the video were authentic or not, their reaction to the absurd fictional policy is how you’d expect someone to act. The video suggests that none of them would be excited about returning to Burger King if this had become actual franchise operating procedure. Once again, the market has its own ways of punishing bad actors.

Which is precisely why I will be avoiding Whoppers myself for the foreseeable future.

At Reason, Nick Gillespie comments on the video:

The joke in the video is that customers must pay $26 to get a Whopper “hyperfast.” If they go with the standard price, it takes forever. Because you know, Net Neutrality rules that were formalized in 2015 somehow magically altered the way internet service providers (ISPs) delivered data to their customers. Before 2015, the internet was a morass of shakedown artists who forced all of us to pay extra for this or that site. And now that Net Neutrality has been repealed, the ‘net has reverted to a Hobbesian world in which access is nasty, brutish, and metered.

Oh wait, in fact, the average speed and number of internet connections kept growing regardless of the regulatory regime. The FCC’s most recent Internet Access Services Report counted 104 million fixed internet connections, a new high. That number doesn’t count mobile or satellite connections. Eighty percent of census tracts had at three or more ISPs offering connections of 10 Mbps downstream and 1 Mbps upstream and another 17 percent had two ISPs doing the same (figure 4). So 97 percent of America can go elsewhere when it comes to basic internet connections that allow the sort of streaming, surfing, and gaming we want. Just as customers do with Burger King, we can say, “Screw it, I’m going to McDonald’s.” In 2016, 56 million residential connections offered at least 25 Mbps upstream speeds. That’s up from about 22 million in 2013 (figure 8). How did that progress happen before the 2015 open internet order?

Watching the responses by customers helps explain why Net Neutrality rules as mandated by the FCC under Tom Wheeler were unnecessary. After all, for all the hysteria kicked up around the need for such rules, proponents went begging for examples of ISPs throttlng traffic or blocking sites in systematic ways. ISPs don’t actually enjoy pure-monopoly conditions, but even if they did, customers would raise holy hell if they were treated as poorly as Burger King acts in this video.

January 13, 2018

Fast Food – Would You Like Capitalism With That? I THE COLD WAR

Filed under: Business, Economics, Food, History — Tags: , , — Nicholas @ 02:00

IT’S HISTORY
Published on 8 Jul 2015

A city that is not plastered with branches of US Fast Food chains is a rare sight nowadays. That wasn’t always the case. Fast Food, as we know it today, is a child of the economic boom after World War 2. Taking your new car for a ride to the Drive-In restaurant and getting a fresh burger; that’s the American Dream right there. Ultimately the concept of identical taste and identical manufacturing steps is one thing: pure capitalism. Food chains keep wages and costs as low as possible and that is why Fast Food is not nearly as glamorous today as it once was. So put down that Hamburger and find out all about the history of Fast Food with Guy on IT’S HISTORY.

Big Mac Index: http://bit.ly/TheBIGMACIndex

October 12, 2016

This generation gap thingy is bigger than I thought

Filed under: Business, Food — Tags: , , , — Nicholas @ 04:00

I’m far from a McDonalds fan … I darken their doors less than yearly, although I’ve had a long-running “joke” that I need to have a Big Mac at least once a year, if only to remind me why I don’t eat at McDonalds more often. But is the iconic Big Mac a victim of its own success? Has it stopped being relevant in the fast food world? Colby Cosh investigates:

The Wall Street Journal reports that a big McDonald’s franchise owner did some market research recently and stumbled upon a surprising fact: only one in five Americans of “millennial” age has ever tried a Big Mac. Those of you who follow me on Twitter know what my reaction was to this news: a paroxysm of skeptical eye-rolling.

The Big Mac might easily be described as the single most successful consumer product of the 20th century. Of all the various kinds of sandwiches that the human imagination has conceived since the lifetime of the 4th Earl of Sandwich (peace be upon him), the Big Mac might be the specific sandwich that has been prepared and eaten the most. It has a recipe that children everywhere can recite by heart. How is it possible that an entire generation has collectively skipped it, never thinking it might have some merit?

Well, whether or not I would have imagined it, the reactions I got when I asked around convinced me quickly that it is probably true. (Big surprise: a businessman’s expensively gathered information about his customer base turns out to be more accurate than some jackass’s wild guess.) Dozens of young people immediately told me that they have never tried a Big Mac. Plenty of these sandwich-spurners were careful to specify, all with evident shame, that they do visit McDonald’s often; at least one had worked there. A few correspondents had specific reasons for avoiding the Big Mac, but for the most part, the prevailing attitude toward the item seemed to be apathy, rather than hostility.

[…]

As it happens, I was raised in the boonies, and we would visit McDonald’s just a few times a year. I have to acknowledge that my fondness for Big Macs is a matter of generational and circumstantial happenstance. They are, even though I’ve certainly had a thousand of the things, still attainably glamorous — a dream of childhood now indulged at will.

Fortunately, my inherited cheapness protects me from a nightmare of special-sauce overdose. I can never order a Big Mac without an inner Presbyterian voice — Socrates’ daimon, with my grandfather’s accent — grumbling that this damned thing should really cost about $2. What the Wall Street Journal has me wondering is how long the Big Mac can remain on the menu at all, if it has really been bypassed by progress and fashion in the manner of marmalade or pickled eggs. If I knew my next Big Mac was my last — though any one might be! — I might pay more like $50.

Colby and I are of a similar generational group, but I’d probably top out at $25 for my “very last” Big Mac.

August 11, 2015

The range and striking power of the Card and Krueger study

Filed under: Business, Economics, Food, Politics — Tags: , , , , — Nicholas @ 05:00

At Coyote Blog, Warren Meyer explains how one particular economic study wields far more influence in the fast food/minimum wage debate than any other similar study:

Pick a progressive on the street, and in the unlikely event they can name any economic study, that study will probably be Card and Krueger’s study of the effect of a minimum wage increase in New Jersey. Sixty bazillion studies have confirmed what most of us know in our bones to be true, that raising the price of labor decreases demand for that labor. Card and Krueger said it did not — and that a minimum wage increase may have even increased demand for labor — which pretty much has made it the economic bible of the Progressive Left.

What intrigues me is that Card and Krueger specifically looked at the effect of the minimum wage on large chain fast food stores. In this study (I will explain the likely reason in a moment) they found that when the minimum wage increased for all businesses in New Jersey, the employment at large chain fast food restaurants went up.

So I wonder if the Progressives making this ruling in New York thought to themselves — “we want to raise the minimum wage. Well, the one place where we KNOW it will have no negative effect from Card and Krueger is on large fast food chains, so…”

By the way, there are a lot of critiques of Card & Krueger’s study. The most powerful in my mind is that when a minimum wage is raised, often the largest volume and highest productivity companies in any given business will absorb it the best. One explanation of the Card & Krueger result is that the minimum wage slammed employment in small ma and pa restaurants, driving business to the larger volume restaurants and chains. As a whole, in this theory, the industry saw a net loss in employment and a shift in employment from smaller to larger firms. By measuring only the effect on larger firms, Card and Krueger completely missed what was going on.

June 3, 2015

The great Los Angeles minimum wage experiment

Filed under: Business, Economics, USA — Tags: , , , , , — Nicholas @ 02:00

I missed this post a few weeks back from Kevin Drum at Mother Jones, pointing out that we won’t really know the full impact of the Los Angeles experiment with significantly higher minimum wages:

So my near neighbor of Los Angeles is poised to raise the minimum wage to $15. How should we think of that?

Personally, I’m thrilled. Not because I think it’s a slam-dunk good idea, but because along with Seattle and San Francisco it will give us a great set of natural experiments to figure out what happens when you raise the minimum wage a lot. We can argue all we want; we can extrapolate from other countries; and we can create complex Greek-letter models to predict the effects — but we can’t know until someone actually does it.

So what do I think will happen? Several things:

In the tradeable sector, such as clothing piece work and agriculture, the results are very likely to be devastating. Luckily, LA doesn’t have much agriculture left, but it does have a lot of apparel manufacture. That could evaporate completely (worst case) or perhaps migrate just across the borders into Ventura, San Bernardino, and other nearby counties. Heavier manufacturing will likely be unaffected since most workers already make more than $15.

In the food sector, people still need to eat, and they need to eat in Los Angeles. So there will probably be little damage there from outside competition. However, the higher minimum wage will almost certainly increase the incentive for fast food places to try to automate further and cut back on jobs. How many jobs this will affect is entirely speculative at this point.

Other service industries, including everything from nail salons to education to health care will probably not be affected much. They pretty much have to stay in place in order to serve their local clientele, so they’ll just raise wages and pass the higher prices on to customers.

Likewise, retail, real estate, the arts, and professional services probably won’t be affected too much. Retail has no place to go (though they might be able to automate some jobs away) while the others mostly pay more than $15 already. The hotel industry, by contrast, could easily become less competitive for convention business and end up shedding jobs.

While I’m certainly in favour of people being able to afford to live on their base income, I’m afraid that this experiment is going to hurt a lot of already at-risk poor people who will have few other options if their jobs go away. I’m especially amused that LA-area union reps are now reported to be pushing to exempt the businesses where their members work (so that unions will have an effective monopoly on low-wage jobs because non-unionized companies would have to pay a higher wage). That, after putting all their organizational muscle behind getting the minimum wage raised in the first place. That’s a high grade of cynicism.

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