Question

You own a small retail food serving store (like a McDonalds) in July 2018. The government has raised the minimum wage in your state (Pennsylvania or New Jersey) from the current $7.25 to $13.25 to be in place in July of 2019. After then each year minimum wage will rise until in July 2022, we will hit their goal of $15.00 per hour in all jobs (you should do all your work in an spreadsheet).

What percent increase per hour is that?

You have 32 employees working 36 hours a week to cover the store hours. What was your total budget for salaries for these employees (hours by wage) at $7.25 per hour?

What is your budget if the employees work the same hours at the new wage of $13.25?

You and your co-partner have determined that you cannot afford that much and have to develop a plan going forward from this mandate. You decide to keep your current employees happy you raise the budget by 10% a year but have to cut jobs to break even. What is your new budget in year one at $13.25? then how many jobs (employees) would you have to cut to get to your new budget? You want to plan to keep your current employees working 36 hours (full time - no part time workers at this time).

In July 2020, the Minimum Wage rises to $13.75. Do the math for that year (budget and employees you can afford).

In July 2021, the Minimum Wage rises to $14.25. Do the math for that year.

In July 2022 you hit the government’s goal of $15.00 per hour. Do the math for that year.

What is your total net hours lost over this time due to having to cut employee hours to get to a balanced budget?

How do you meet customer needs of ordering their meals and serving peoples need with less people?

Give me a brief paragraph on if you think you can make it work.

McDonalds had to do this in their 13,837 restaurants. What would their total hours be required (total budgeted hours) in year one for the corporation with this many restaurants?

Store openings are expected to be 10% each year according to their long-term strategic marketing business plan. How many stores would they have by July 2022?

How many man hours would they have to cut to make this work?

This is a real-world problem. It happens when government interferes with the free trade. This could be your job to plan and execute or your own business. This exercise is meant to make you think about the question: Do you want a capitalistic society where you pay people to do the job at hand based on availability of workers in the market or one where the government tells you what you have to pay your employees no matter what their skills are? If the minimum wage goes from $7.25 to $15.00 what do you do with your managers who make the $15.00 an hour in year one? The new employees hired off the street will make the same as college educated trained managers.

Answer 1

Percentage increase from 7.25 to 13.25= 54.71%

Total Budget for the salarie sof these employess for the year 2019 = 32*36*$7.25

=$8352

New budget at the rate of 13.25 per hour =32*36*$13.25

=$15264

2019

New Budget with 10% increase= $8352 + $835

  =$9187

Number of employees that can be kept=>x*36*13.25=9187

=> x=9187/36*13.25

=>x=19.2 or 19

Therefore the number of employees to be laid off = Number of old employees- Number of new Employees

=32-19

= 13 Employees

2020

New Budget with 10% increase=$9187+ $919

=$10,106

Number of employees that can be kept=>x*36*13.75=10,106

=> x=10,106/36*13.75

=>x=20.4 or 20

Number of Employees needed=20 Emplyees

2021

New Budget with 10% increase=$10,106 + $1011

   = $11,117

Number of employees that can be kept=>x*36*14.25=11,117

=> x=11,117/36*14.25

=>x=21.6 or 22

Number of Employees needed=22 Emplyees

2022

New Budget with 10% increase=$11,117 + $1,112

   = $12,229

Number of employees that can be kept=>x*36*15.00=12,229

=> x=12,229/36*15

=>x=22.6 or 23

Number of Employees needed=23 Emplyees

Total Net hours lost = (Number of employees laid off * Hours per week)

= (13*36)+(12*36)+(10*36)+(9*36)

=468+432+360+324

=1584 Hours

In order to increase the efficiency of the order delivering speed, For the purpose of ordering the food self-ordering Kiosks can be set up so that people instead of standing in the long ques,place the order on self-ordering kiosks, Pre-ordering through the app can be encouraged throuugh some additional incentives, to minimize the timing of the food order process and avoid long ques in the restaurant. If people engage in the above mentioned steps then more staff can be deployed in the kitchen working station and only 2 counter assistants can be appointed at the ordering counter. More of the stuff can be prepared half-cooked in advance so that it reduces the cooking time.

Total Number of hours required in a year by all the restaurants = (Total Number of restaurants*Number of Employees*Total Number of hours spent by each employee)

=(13,837*32*36)

=1,59,40,224 Hours

Number of stores in 2022= 20,259 Stores

Working Note -

2018= 13,837

2019=(13,837+1,384)

=15,221

2020= (15,221+1,522)

=16,743

2021=(16,743+1,674)

= 18,417

2022=(18,417+1,842)

=20,259

Budgeted payment for the year 2018 = 1,59,40,224 Hours * $7.25

= $11,55,66,624

Number of employees in 2018=> (x*36*13,837)=$11,55,66,624

=>x=11,55,66,624/36*13,837

= 232 employees

Number of employees in 2022=> (x*36*20,259)=$11,55,66,624

=>x=11,55,66,624/36*20,259

= 158 employees

Number of Employees laid off =Number of employees in 2018-Number of employees in 2022

=(232-158)employees

=74 Employees

Number of man hours lost=74*36 hours

=2664 Hours

Yes, i would like a capitalistic society where people are paid according to the availability because that is more profitable from the business point of view. The fixed per hour wage leads to laying off of the employees which reduces the labor presenr to perform the task, but in the capitalistic society more people can be hired by increasing the budget by minimal percentage or even not increasig the proposed budget.

It will be better to hire college trained managers because by spending the same wage rate we are getting better trained and more effecient managers with required skill set and training.