McDonald's CEO Don Thompson just recently said that he supports a staggered increase in the US Federal Minimum Wage which is consistent with President Obama's proposal.
Just like top executives of very successful retailers like Costco, Starbucks and The Gap.....just to name 3 of the many.....the very bright former Hoosier and Purdue engineering grad Thompson understands not only that it is a matter of fairness, but also that it will ultimately benefit McDonald's and its shareholders by putting more spendable income in the hands of their employees who will almost immediately spend it, thereby substantially spurring increased US consumer spending which accounts for 70% of the US economy.
But there is another major economic benefit from a US Federal Minimum Wage Increase for retailers like McDonalds, which have a huge majority of its restaurants being franchised. McDonald's Corporation Franchise Revenues, both Rental and Service Fees, are based on a fairly high percentage of franchised sales, which will be markedly higher since US franchisees will increase their menu prices to compensate at least somewhat for the resultant higher payroll costs due to an increase in the US Federal Minimum Wage.
And as bright as Thompson and his financial lieutenants are, they should be able to come up with a fair way of splitting with its franchisees the very favorable economic consequences accruing to McDonald's Corporation due to a US Federal Minimum Wage Increase.
A US Federal Minimum Wage Increase is a win for all US retailers, but especially ones which have heavy franchising operations, and once the bright investment analysts figure it out, there should be a major benefit to the stock prices of heavy US franchising retailers.
Just like Ray Kroc, Fred Turner, Jim Cantalupo and Jim Skinner who have preceded him as McDonald's CEO, Thompson has shown that he belongs in the company of these 4 McDonalds Giants. With this historic position on a US Federal Minimum Wage Increase, Thompson has shown similar courage and vision as the other 4.
And yeah I think it's only fair that the US Government offer some economic benefits to all retailers, and especially to franchisees and to smaller retailers, in conjunction with an increase in the US Federal Minimum Wage. There's all kinds of creative ways to do this and still not have much of an increase in the US Debt. And frankly, if the CBO were to dynamically and realistically score an increase in the US Federal Minimum Wage, the projected US Deficit would drop precipitously. Just sayin!
