McDonalds.....Don't Eat the Food!

[smstonypoint]

Steve, My experience with the Heritage Foundation is they begin with a Libertarian premise and find a way to support it. The article you linked is very open about that in the the first paragraph, the intention is to "correct" "liberal" opinions. Of course, the majority of such foundations have their own agendas, right and left.

Dave, no argument from me that the various think tanks have their own philosophies -- I have no problem with that. I do quibble with the "Libertarian" label. As I understand it, the Heritage Foundation and libertarians part ways on some issues; e.g., foreign policy.

I'm not even sure that wages versus productivity is what really matters in the long run, but even their own interpretation shows wages now lagging productivity by 23% when they were previously on par. Given that numbers are tricky, "average compensation" does not distinguish between: several high wages and hundreds of low wages, and, mostly wages that are within a bell curve distribution of average. That matters in the context of a minimum wage discussion.

I need to go back and check on whether mean or median wages are used in the analysis. The median would be preferred if the distribution is, excuse my language, tail heavy.

Taking the point about wages plus benefits equaling total compensation, it's true mathematically. It may be far different though in free market outcomes. If private employers allocate more and more of total compensation to benefits, how is that not different than the government collecting taxes and providing more and more support?
In each case, the end consumer is being more isolated from free market pressures, those costs (and benefits) become more or less invisible from the employee's pocketbook perspective. Some say that is one reason why we have runaway health care costs.

Civil discourse seems to fly out the window these days when it comes to discussions of health insurance. You are always courteous, but too many are not.

I will say that I don't think employers have allocated more of their total compensation packages to benefits on a purely arbitrary basis. Private sector employers have had the ability to vary the composition of their compensation packages to attract and retain the types of employees they wanted.

Employers are able to claim their contributions to employee health insurance as an expense for income tax purposes. It's been awhile since I looked at the requirements that individuals must meet in order to itemize their medical expenses, but I believe there is a fairly high hurdle.

Steve

 

[Soundguy]

Employers are able to claim their contributions to employee health insurance as an expense for income tax purposes. It's been awhile since I looked at the requirements that individuals must meet in order to itemize their medical expenses, but I believe there is a fairly high hurdle.

Steve

that why it's nice for an individual to have a group policy thru work, so they can go section 125 cafeteria plan and pre tax their health insurance.. even if doing a short form....

 

[smstonypoint]

I think there are enough people in this country that don't know how to cook, or won't cook, and will continue to buy the drive thru food. I can't see a price increase causing a mass exodus.

The fast food industry spends a lot of effort (and money) in discovering the "right" prices for their products. I expect that if consumers were not that sensitive to price (i.e., demand was relatively less elastic), the companies would raise their prices accordingly.

Steve

 

[dave1949]

Civil discourse seems to fly out the window these days when it comes to discussions of health insurance. You are always courteous, but too many are not.

I will say that I don't think employers have allocated more of their total compensation packages to benefits on a purely arbitrary basis. Private sector employers have had the ability to vary the composition of their compensation packages to attract and retain the types of employees they wanted.

Employers are able to claim their contributions to employee health insurance as an expense for income tax purposes. It's been awhile since I looked at the requirements that individuals must meet in order to itemize their medical expenses, but I believe there is a fairly high hurdle.

Steve

I'm certainly not looking for a discussion about the politics of health care.

There is an oddity in how people look at these benefits as compensation that Soundguy's post brought to mind. How many employees would like to receive direct compensation instead of health insurance payments? I don't recall people saying much about that trade-off. Are there employers who will pay salary in-lieu of insurance if the employee opts out?

My assumption is that generally, outside of a group plan, the employee could not purchase equivalent coverage on their own for the same dollars--were they inclined to. Supposing they were a person within the employer group plan that contributes to its lower cost, but they would rather have the dollars than the insurance? Under the Health Care law, they could conceivably meet the requirement for insurance with a plan that costs less than the employer's benefit value.

Bottom line, not all compensation is created equal--even if it graphs well. :laughing:

 

[TomSeller]

The fast food industry spends a lot of effort (and money) in discovering the "right" prices for their products. I expect that if consumers were not that sensitive to price (i.e., demand was relatively less elastic), the companies would raise their prices accordingly.

Steve

At least there is some justice. Who would want to pay a lot of money for junk food?

Many states have excessive taxes in cigarettes, too bad the same couldn't easily be enforced on junk food.

 

[Soundguy]

. Are there employers who will pay salary in-lieu of insurance if the employee opts out?

I used to work for one.

I've been working 2 engineering jobs for quite a while. I have a decent benefits package at one.. ( vehicle, fuel, expense account, health insurance heavily subsidized..e tc.. a token life ins. plan.. vaca, sick time..e tc.. ) At my other job, I negotiated a pretty much straight pay setup. they offered insurance and vaca..e tc.. as well. I went straight pay. difference was significant in my favor. i worked that for 12 years untill that co lost a major contract and all but folded. I hired on with a client that also offers benefits.. but less negotiable. I already had health.. so that was a non reimbursed.. or recovered loss. for the reduced pay package. on the flip side. they DO have 401K.. so I'm a bit happy about that.

oh.. the point i forgot to get around to making. I believe the larger the corporate business.. the less negotiating you can do for pay vs benefits, unless you are in upper-upper ranks. the burger flipper, floor sweeper and food busser are likely made an offer similar to what 90% of the other poeple at the co will be offered in terms of benefits.. and that's it. if you are perhaps in management or executive management.. maybee something else is possible.

contrast that to a mom n pops shop where you 'might' be able to walk in and say, yeah.. i'd like the extra 5$ per hour and keep the group health insurance..e tc...

 

[farmgirl19]

At least there is some justice. Who would want to pay a lot of money for junk food?

Many states have excessive taxes in cigarettes, too bad the same couldn't easily be enforced on junk food.

And I'll bet people still smoke, and very few actually quit, due to the cost. I think fast/junk food would be the same. People just "want it now, not when I get it cooked", if they know how to cook a meal.

 

[dave1949]

The USDA has a set of tables showing food expenditures by type. USDA ERS - Food Expenditures

The tables are data at the monthly level, so no annual totals or summary data, but it is an xls file that can be worked with.

Looking at a sampling of monthly data, consumers typically spend ~85% for food away from home, of what is spent for food at home; i.e. for every $1 spent for food at home, $0.85 is spent away from home. I'm not sure where things like delivered pizza fit in there, but a handful of large colleges could alter the national picture depending on how it is counted. :laughing:

It seems people are not averse to spending money on food away from home. Changing the minimum wage for restaurant employees does not alter the relative competitive positions of the food outlets; BK and McD's are paying the same minimum wage. Whatever movement occurs between competitors would be due to other factors such as location, marketing and quality. I don't know if economic models such as own-price elasticity take competitors into account?

As TomSeller pointed out, people may expect more quality if they pay more. At some point perhaps, they would see the product as not a good value and seek alternatives. I think there would be a rapid response to that trend within the fast food business.

If consumers move back to more home food, then employment related to grocery stores would increase. It would not be a simple loss of restaurant employment with no offsets somewhere else. Food is only marginally discretionary.

 

[dave1949]

And I'll bet people still smoke, and very few actually quit, due to the cost. I think fast/junk food would be the same. People just "want it now, not when I get it cooked", if they know how to cook a meal.

The high cost of smoking probably discourages young people from taking up the habit, but I think you are correct about the cost not convincing many current smokers to quit. They may reduce their smoking.

On the other hand, some recent article claimed more high school students smoke MJ than tobacco. Maybe they reason if it is going to be that expensive, they will upgrade their drugs. :laughing:

People like the idea of cooking. Think about the money spent on home kitchens as a percentage of total house costs now and earlier. When people spend extravagantly on a home, the kitchen and appliances are near the top of the list.

 

[dave1949]

I used to work for one.

I've been working 2 engineering jobs for quite a while. I have a decent benefits package at one.. ( vehicle, fuel, expense account, health insurance heavily subsidized..e tc.. a token life ins. plan.. vaca, sick time..e tc.. ) At my other job, I negotiated a pretty much straight pay setup. they offered insurance and vaca..e tc.. as well. I went straight pay. difference was significant in my favor. i worked that for 12 years untill that co lost a major contract and all but folded. I hired on with a client that also offers benefits.. but less negotiable. I already had health.. so that was a non reimbursed.. or recovered loss. for the reduced pay package. on the flip side. they DO have 401K.. so I'm a bit happy about that.

oh.. the point i forgot to get around to making. I believe the larger the corporate business.. the less negotiating you can do for pay vs benefits, unless you are in upper-upper ranks. the burger flipper, floor sweeper and food busser are likely made an offer similar to what 90% of the other poeple at the co will be offered in terms of benefits.. and that's it. if you are perhaps in management or executive management.. maybee something else is possible.

contrast that to a mom n pops shop where you 'might' be able to walk in and say, yeah.. i'd like the extra 5$ per hour and keep the group health insurance..e tc...

That sounds about right.