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How Will White Castle Respond to the Increased Minimum Wage?

LowDown

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With the increased minimum wage, White Castle, the burger chain, is in a quandary. Their one of their biggest costs is the payroll for hourly workers. They have the choice of passing the cost on to the customer or cutting employees. They would have to increase the menu costs by 50% in order to make of the difference, and that would be a disaster, they think. They've seen big effects from even small increases in prices. People would just stop coming to eat there and would go to the grocery store instead. So much of the pain will be borne by lower level employees. More young people will be unable to find word, to take a step up to the first rug of the latter. White Castle promotes from within and there are many success stories about people who started out at the bottom, but there will be a lot less of that. White Castle has stayed in distressed neighborhoods where such jobs are really needed. Too bad. The 40% or more unemployment among young poor people will just get a little higher. Even worse is the danger that stores will have to close entirely if the new business model doesn't work.

The liberals who did this won't care because they won't see or realized the damage they did. I suspect that they are happier with more people dependent on the government. To paraphrase the chief financial officer of Venezuela, they don't want people earning their way into the middle class because those people are more likely to become Republicans.

New York Minimum Wage -- White Castle Adjusts, Entry-Level Workers Lose Out

To put it another way, the real minimum wage is always zero. That's what more people will be getting now.
 
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MrT

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The negative impact on employment will be negligible because the increased spending power of the minimum wage employees will yield increased demand in the other businesses that are flexible enough to adjust in the new landscape.

Businesses will adjust their business models or they will die. Nothing new to see here.

Although I don't have access to White Castle here in Georgia, so in terms of your question, maybe they will expand into Krystal's territory (states without the 15$ minimum wage) in order to compensate the overall revenue while they eventually adjust their business model.
 
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justabubba

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a couple of points need to be addressed

white castle's competition will also be subject to the higher wage rate. why would the competitors not be affected in the same manner as is white castle

you offer cutting employees as a means to offset the increased hourly wage rate. a business that employs more labor/employees than it actually needs is a poorly managed operation
which then allows me to speculate that white castle currently uses the number of labor hours that it needs. if my assumption is correct, any cut in labor would result in the business operating with inadequate labor. a stupid business practice
 

Grand Mal

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With the increased minimum wage, White Castle, the burger chain, is in a quandary. Their one of their biggest costs is the payroll for hourly workers. They have the choice of passing the cost on to the customer or cutting employees. They would have to increase the menu costs by 50% in order to make of the difference, and that would be a disaster, they think. They've seen big effects from even small increases in prices. People would just stop coming to eat there and would go to the grocery store instead. So much of the pain will be borne by lower level employees. More young people will be unable to find word, to take a step up to the first rug of the latter. White Castle promotes from within and there are many success stories about people who started out at the bottom, but there will be a lot less of that. White Castle has stayed in distressed neighborhoods where such jobs are really needed. Too bad. The 40% or more unemployment among young poor people will just get a little higher. Even worse is the danger that stores will have to close entirely if the new business model doesn't work.

The liberals who did this won't care because they won't see or realized the damage they did. I suspect that they are happier with more people dependent on the government. To paraphrase the chief financial officer of Venezuela, they don't want people earning their way into the middle class because those people are more likely to become Republicans.

New York Minimum Wage -- White Castle Adjusts, Entry-Level Workers Lose Out

To put it another way, the real minimum wage is always zero. That's what more people will be getting now.

If they can't pay a minimum wage and make a profit, they'll be replaced by better-run competition. Simple.
As for the neocon pablum I bolded, it doesn't matter how often you repeat it or how many of you believe it, you can't turn it into the truth.
 

Beaudreaux

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The negative impact on employment will be negligible because the increased spending power of the minimum wage employees will yield increased demand in the other businesses that are flexible enough to adjust in the new landscape.

Businesses will adjust their business models or they will die. Nothing new to see here.

Although I don't have access to White Castle here in Georgia, so in terms of your question, maybe they will expand into Krystal's territory (states without the 15$ minimum wage) in order to compensate the overall revenue while they eventually adjust their business model.

I keep reading about "purchasing power" increasing due to increases in minimum wage as being the offset to help companies recover costs associated with increased minimum wage.

You see, the problem with that is, it's BS. Increases in minimum wage have a devastating micro-economic effect targeted only on companies where labor costs are critical and the majority of their overhead costs, while increased purchasing power of the few people (relatively speaking compared to the size of the total workforce) has a minimal macro-economic effect since the small amount of cash infusion into the economy by increasing the income level of such a small number of people is spread across all spectrums of the economy, and not returned proportionally to those companies that are affected by the wage increase in any amount capable of offsetting the impact of the increased costs. So, again, its BS and not founded on economic fact.
 

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a couple of points need to be addressed

white castle's competition will also be subject to the higher wage rate. why would the competitors not be affected in the same manner as is white castle

If you'd read the article, you'd note that White Castle's competition includes things like "Leftovers from last night" and "supermarkets". People are not forced to eat a certain % of their meals at fast food joints.

You offer cutting employees as a means to offset the increased hourly wage rate. a business that employs more labor/employees than it actually needs is a poorly managed operation

Artificially creating price floors on labor changes how many labor/employees a place needs.

For example, at an average rate of $8.25 an hour, it may be worth my while to have two order-takers up front, with a surge order-taker doing something else. Shift to $15 an hour, and suddenly it's worth my while to purchase:


15 wage.jpg


Automation wasn't the cheaper, wiser option before. But now, under the new prices, it is.


Worth additionally noting is that the kind of people I hire is also going to change. Folks who will not be attracted to market-entry at $8.25/hour are likely to become so at $15/hour. So the makeup of my remaining workforce will also change as educated second-income-earners and college students begin to compete with push out high school students or dropouts. Meaning that those individuals, who are least educated and least skilled, become cut-off from any hope of ever getting the skills necessary to improve themselves in the marketplace.

There are options to hiring inner-city high school dropouts, and those options become increasingly more affordable as the price of the dropout rises, effectively shutting the poorest of our poor out of the workforce.

Good job, everybody. :applaud we've ****ed over the poor again.
 

Casper

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With the increased minimum wage, White Castle, the burger chain, is in a quandary. Their one of their biggest costs is the payroll for hourly workers. They have the choice of passing the cost on to the customer or cutting employees. They would have to increase the menu costs by 50% in order to make of the difference, and that would be a disaster, they think. They've seen big effects from even small increases in prices. People would just stop coming to eat there and would go to the grocery store instead. So much of the pain will be borne by lower level employees. More young people will be unable to find word, to take a step up to the first rug of the latter. White Castle promotes from within and there are many success stories about people who started out at the bottom, but there will be a lot less of that. White Castle has stayed in distressed neighborhoods where such jobs are really needed. Too bad. The 40% or more unemployment among young poor people will just get a little higher. Even worse is the danger that stores will have to close entirely if the new business model doesn't work.

The liberals who did this won't care because they won't see or realized the damage they did. I suspect that they are happier with more people dependent on the government. To paraphrase the chief financial officer of Venezuela, they don't want people earning their way into the middle class because those people are more likely to become Republicans.

New York Minimum Wage -- White Castle Adjusts, Entry-Level Workers Lose Out

To put it another way, the real minimum wage is always zero. That's what more people will be getting now.

Just curious, does everyone at White Castle make minimum wage? If so, it must be an awful place to work. They messed up they little burgers years ago and I quit buying them when I was in KC, we do not have them around here in N Texas and do not miss them.
 

Beaudreaux

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a couple of points need to be addressed

white castle's competition will also be subject to the higher wage rate. why would the competitors not be affected in the same manner as is white castle

you offer cutting employees as a means to offset the increased hourly wage rate. a business that employs more labor/employees than it actually needs is a poorly managed operation
which then allows me to speculate that white castle currently uses the number of labor hours that it needs. if my assumption is correct, any cut in labor would result in the business operating with inadequate labor. a stupid business practice

The argument in the article is that right now White Castle food is cheap and convenient enough to counter the potential for their customer base going to the grocery store to buy and then cook their own food. They predict that if they are required to raise their price point to the level required to recoup the increase in costs from the higher minimum wage, then the cost of their product (even with convenience) would not deter their customer base from going to grocery stores and cooking their own food. Grocery stores are the competition they are concerned with, not McDonalds, or Jack in the Box, or Carl's Jr.
 

disneydude

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Hopefully they'll go out of business. White Castle is nasty!
 

MrT

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I keep reading about "purchasing power" increasing due to increases in minimum wage as being the offset to help companies recover costs associated with increased minimum wage.

You see, the problem with that is, it's BS. Increases in minimum wage have a devastating micro-economic effect targeted only on companies where labor costs are critical and the majority of their overhead costs, while increased purchasing power of the few people (relatively speaking compared to the size of the total workforce) has a minimal macro-economic effect since the small amount of cash infusion into the economy by increasing the income level of such a small number of people is spread across all spectrums of the economy, and not returned proportionally to those companies that are affected by the wage increase in any amount capable of offsetting the impact of the increased costs. So, again, its BS and not founded on economic fact.

Your argument does not negate my conclusion that the impact on unemployment will be negligible - only that the increase in minimum wage may be not incredibly beneficial. The research on this issue also supports the position that the question is murky at best.
 

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a couple of points need to be addressed

white castle's competition will also be subject to the higher wage rate. why would the competitors not be affected in the same manner as is white castle

you offer cutting employees as a means to offset the increased hourly wage rate. a business that employs more labor/employees than it actually needs is a poorly managed operation
which then allows me to speculate that white castle currently uses the number of labor hours that it needs. if my assumption is correct, any cut in labor would result in the business operating with inadequate labor. a stupid business practice

I dont think you have ever run a retail business. You can always run a business with less labor by cutting certain corners and it could take months or even years to see the negative downsides of it, that doesnt mean you would be better served cutting that labor or that you are having "stupid business practices" by having that labor
 

ludin

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The negative impact on employment will be negligible because the increased spending power of the minimum wage employees will yield increased demand in the other businesses that are flexible enough to adjust in the new landscape.

Businesses will adjust their business models or they will die. Nothing new to see here.

Although I don't have access to White Castle here in Georgia, so in terms of your question, maybe they will expand into Krystal's territory (states without the 15$ minimum wage) in order to compensate the overall revenue while they eventually adjust their business model.

it only increases spending power for people that keep their jobs or can find one.
if you lose your job or you can't find one then your spending power is 0.
it only increases their spending power if they make more money. if I work you less hours and you keep
the same amount that you were making your spending power did not increase.

or they will close those white castles in places that it is not longer financial sound to operate in.
then they will move in on krystals which I can honestly say would be a huge improvement.

you will see more and more businesses respond to these unreasonable demands.

I feel for all the millions of people that just had their job devalued.
 
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ludin

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a couple of points need to be addressed

white castle's competition will also be subject to the higher wage rate. why would the competitors not be affected in the same manner as is white castle

you offer cutting employees as a means to offset the increased hourly wage rate. a business that employs more labor/employees than it actually needs is a poorly managed operation
which then allows me to speculate that white castle currently uses the number of labor hours that it needs. if my assumption is correct, any cut in labor would result in the business operating with inadequate labor. a stupid business practice

nope that or they update their places with automated ordering machines.
then they can free up labor pools somewhat.

that doesn't mean they can't fire people or work people less hours.
 

ludin

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If they can't pay a minimum wage and make a profit, they'll be replaced by better-run competition. Simple.
As for the neocon pablum I bolded, it doesn't matter how often you repeat it or how many of you believe it, you can't turn it into the truth.

well they are paying minimum wage. what they can't afford is an almost 100% jump in minimum wage or in CA a 50% jump in minimum wage.
there will cuts no doubt about it and they will come at the expense of people working there.

if you don't need government assistance then liberal lose about 80% of their argument.
people being self sufficient causes the government to lose power.
they then realize that the real takers are coming for what they actually earn.
 

justabubba

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The argument in the article is that right now White Castle food is cheap and convenient enough to counter the potential for their customer base going to the grocery store to buy and then cook their own food. They predict that if they are required to raise their price point to the level required to recoup the increase in costs from the higher minimum wage, then the cost of their product (even with convenience) would not deter their customer base from going to grocery stores and cooking their own food. Grocery stores are the competition they are concerned with, not McDonalds, or Jack in the Box, or Carl's Jr.

and i would say that is a bogus analysis
this is a convenience fast food seller in a convenience fast food industry
the substitution of any fast food product for grocery store goods exists for all enterprises within the convenience fast food industry
 

Thorgasm

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I would guess their labor percent is around 25%. If it doubled, that would not mean that prices would also have to double. They may need to increase prices, but it certainly wouldn't be 100%. If sales are $4,000 and COL is $1,000, then doubling COL would make it $2,000.Sales would only have to increase an extra $1,000 which would be 25%.

This isn't considering that a substantial portion of people will get a raise and have more expendable income and will likely eat out more, not less.
 

Grand Mal

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well they are paying minimum wage. what they can't afford is an almost 100% jump in minimum wage or in CA a 50% jump in minimum wage.
there will cuts no doubt about it and they will come at the expense of people working there.

Raising the Minimum Wage Boosts Growth and Does Not Cause Unemployment
The evidence is clear: increasing the minimum wage doesn't cost jobs | Dave Oliver | Opinion | The Guardian
https://www.dol.gov/featured/minimum-wage/mythbuster

And if those are too 'leftist' for you,...

How Minimum Wage Impacts Unemployment | Investopedia

if you don't need government assistance then liberal lose about 80% of their argument.
people being self sufficient causes the government to lose power.
they then realize that the real takers are coming for what they actually earn.

This is mindless pap, plain and simple. Empty words, meaningless pap that conservatives like to say to each other but makes everyone else cringe at how adults can be convinced to parrot such blather.
 

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Any company that isnt healthy enough to pay their employees a fair wage should just shutter the doors and go to work for someone else.

This endless drone about the poor rich and corporations not being able to afford to pay employees a living wages is pure horsecrap. They just dont want to pay and want to pocket additional profit. If they cant pay then close the doors NO ONE HAS to work for you for peanuts, nor should they
 

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What it all boils down to is the biggest response from most businesses will be to raise prices. This won't really effect their bottom line too much because most all competitors will be raising their prices too. The only real effect will be that not too far down the road those making minimum wage will start to realize that they are not making a "living wage" after all, they will still be making minimum wage because due to those increased prices everywhere they will discover that a minimum wage is still a minimum wage and they will then be clamoring for more because $15 per hour will not be a living wage. But, the middle class will disappear because they will no longer be middle class but the working poor because they will see no raise in their income levels while they have to fork out more money for everyday expenses. Liberal policies will wind up making the poor poorer and the rich richer and the middle class will turn into the poor class.
 

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The Gov't forcing forcing businesses to pay people to do nothing,aka minumum wage laws, just doesn't seem like a good a idea
 

lpast

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a couple of points need to be addressed

white castle's competition will also be subject to the higher wage rate. why would the competitors not be affected in the same manner as is white castle

you offer cutting employees as a means to offset the increased hourly wage rate. a business that employs more labor/employees than it actually needs is a poorly managed operation
which then allows me to speculate that white castle currently uses the number of labor hours that it needs. if my assumption is correct, any cut in labor would result in the business operating with inadequate labor. a stupid business practice

A stupid practice that cost walmart its biggest retailer in the world status. Alibaba has over taken them.

Walmart went on a campaign across the country to cut employees and make fulltime employees part time. They had registers closed and idled while people waited in line forever. The end result

People by the hundreds were just leaving their full carts in the register lines that were open because they were waiting that long in a long line to check out.

Walmart lost business across the country and poll after poll indicated waiting on line and not being able to find an employee to ask a question of was the biggest reason. Finally the morons woke up and went on a hiring campaign and filled the registers. Now they are back again to empty registers. The same thing happened in sams clubs and they will lose more business again
 

justabubba

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The Gov't forcing forcing businesses to pay people to do nothing,aka minumum wage laws, just doesn't seem like a good a idea

well, there you have it
minimum wage employees do nothing to earn their money
i look forward to your next economics lesson
 

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I call shenanigans.

White Castle has stagnated for years -- in part because they promote from within, are reluctant to change their product line, and haven't done well when they did so. It's family owned and private, so there is no way to verify anyone's claims about labor costs. They are pretty much the lowest of the low, serving awful low-grade burgers that are 2" x 2" -- and have holes in them.

article-2541318-1ABEBBD500000578-747_634x410.jpg


A White Castle Slider costs 72 cents. "Increasing costs by 50%" means it would go up to about $1.00.

White Castle is not exactly something to be proud of on one's resume. That may be connected to the fact that they serve terrible food in small portions for a low price.

We should note that if they haven't raised their wages in the past few years to adjust for inflation, then that means they are effectively paying their employees less for the same work.

If their business model is so weak that they can't afford to pay their line employees enough to stay in line with inflation, then minimum wages are the least of their issues.

I mean, really, what's going to happen here? Is White Castle going to go out of business, because they had to raise their prices by 30¢? Will those jobs -- which conservatives normally rail against as crappy low-wage service jobs -- evaporate, never to be seen? Will people eat less food because WC bit the big one?

This is the same garbage we've heard for years and years, and yet we never hear about companies closing up shop or engaging in mass layoffs because of minimum wage hikes. We do occasionally hear about big employers like Walmart increasing wages because of problems with retention and morale, yet for some odd reason that never brings those corporations to their knees, nor does it utterly ravage their profitability.

It's BS, touted by companies that do not want to pay their employees a decent wage -- and typically only get away with it because those wages are low enough that they can rely on the tattered shreds remaining of our safety nets. Seems to me that the ones who are fostering dependency and handing the bill to the government are the ones fighting against minimum wages.
 

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I would guess their labor percent is around 25%. If it doubled, that would not mean that prices would also have to double. They may need to increase prices, but it certainly wouldn't be 100%. If sales are $4,000 and COL is $1,000, then doubling COL would make it $2,000.Sales would only have to increase an extra $1,000 which would be 25%.

This isn't considering that a substantial portion of people will get a raise and have more expendable income and will likely eat out more, not less.

The White Castle owner said that 30% of his revenue goes to hourly workers and that it would require an increase of menu prices of 50% to offset the increase in minimum wage. He foresees a big drop in customer numbers with an increase like that.

I suspect that many marginal businesses will end up closing.

New York has made hiring people for minimum wage jobs more expensive. This means businesses will do less of it.

What good is a higher wage if everything within your reach is going to cost more? I suspect prices will go up at all sorts of businesses poor people rely on. Fast food, grocery stores, Wal Mart, etc. That will hurt, especially if they are the ones who have no job at all.
 
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