Then there's the fact that raising prices will still lose fast food places customers: For every person not buying it because it doesn't fit their budget, there's someone who just barely fits it into their budget that will stop buying it when prices rise.
This isn't theoretical: Companies analyze the price elasticity of their customers and understand roughly how raising prices X% will lose them Y% customers, and the amount of revenue Y customers represent, and whether that is higher or lower than the revenue generated by X. I don't work in the food industry or retail, but I have run that analysis myself in my own field.
I'm all for a living wage, but simply paying low paid workers more & raising prices to cover it is by no means a complete solution. Raising minimum wages is a bandaid solution. (And I'm not saying we shouldn't do that-- only that it's short term, and we need more comprehensive answers)
The reductive "race to the bottom" can go both directions
If you're getting into the everyone-deserves-a-living-wage side of things, that's a different conversation, one I tend to agree with, but is much more complex than the current discussion about whether current business could manage this if they operate with low margins and moderate customer-facing labor costs.
I'm sure the economics of paying for work on plantations also did not add up.
I think these are useful conversations to have, but this is not a problem that submits to easy one-size-fits-all solutions. I'm all for a living wage, but simply raising minimum wages without doing anything else is a short term solution that will bring things back to roughly where they are now over a period of time as prices for people with newly increased hourly pay rise to the point where it is, once again, no longer a living wage. Sure, go ahead and do that anyway, but only if you have other plans in the works to stop that cycle.
As a side not, emotional appeals to slavery do not help promote a reasonable conversation either. Having to work two jobs to make ends meet is a far cry from slavery. We don't need to look far in the world to find people living in conditions that are actually identical to or not far different from actual slavery. A person in the US working a low paying job 60 hours a week that can barely pay there rent or afford unexpected expenses is nowhere close to those conditions, especially when "barely getting by" in the US still mostly includes the bare bones amenities of living in a modern western country that are significantly better than conditions in many developing nations. Comparisons of this sort simply inflame tensions instead of conversation.
The amount of low-effort populistic comments on HN starts to be worrying.
Surely you appreciate how that’s a problem?
Demand is probably slightly elastic, but not that much (there are plenty of restaurants in France, despite very high cost of employment)
As for demand, it is always elastic. A lot of people eat fast food, and a lot of those people are going to be in a position where they're just barely fitting it into they're budget. Raise prices, and they're gone. That's not even getting to the actual elastic part where people actually have the money to decide either way if they're willing to pay at one price but not another-- that bottom group is simply gone.
Also you shouldn't focus just on the one example I chose. I happened to choose a discretionary spending activity because I knew fast food #'s off the top of my head, but the same thing applies to every single business with low margins and moderate labor costs. Even if you were right and every single one of them could raise prices without losing customers, that would also mean that the exact people we're trying to pay a living wage then have significant increases in their cost of living as everything around them raises prices.
[1] France may also not be the best example to compare to the US. Despite staggeringly astronomical wealth inequality in the US, it still has a lower poverty rate than France. Canada would probably be a better example. https://en.wikipedia.org/wiki/List_of_countries_by_percentag...
And the French definition of poverty is equally useless, it’s just a percentage of the median income
That's really going to depend on the business. Plenty of businesses-- specifically ones with a lot of customer-facing staff-- would not be able to sustain labor cost increases up to 20%.
To take an easy example where I already know the #'s in the US, labor costs at a fast-food restaurant are around 25% of costs. Net profit margins range from 5% up to around 20%, but that top end is for McDonalds, the rest are on that lower end.
Increasing labor costs by 20% means a 5% increase in absolute operating costs. Sure, McDonalds may still run at 15%, but other places that increase for many others would erase profitability.
Even with a McDonalds, those franchises don't go for less than $1million each, often a lot more, and 20% profit on them seems to be about $150,000/year. So an owner is already looking at 7+ years to recoup their investment, and that's before accounting for any additional capex costs McDonalds may require when they roll out mandatory renovations.
Certainly there are many more businesses than fast food, so the above equation won't hold for every thing. But any low margin business with moderate customer-facing labor costs won't be able to manage this without raising prices, and then we're just shifting the money around to different piles. In fact as a result of those increased prices, the lower paid workers, while they may be able to work less hours and may work for a business that didn't cut their pay, they're still paying the price for that decision in their overall increase in cost of living.