Rising wages and supply costs resulting from the labor shortage and supply chain issue facing the country led McDonald’s to bump up menu prices significantly. The fast-food giant states that it is facing great difficulty in recruiting employees, despite increasing wages.
Corporate officials say that menu prices have been increased by around 6 percent so far in 2021 compared to last year, with no reduction in sight anytime soon. This year, wages are up at least 10 percent, and supply costs for essential production items like food and paper are expected to increase at least 4 percent.
Many of McDonald’s leading suppliers have also seen price increases, including Coca-Cola and Kraft Heinz. The announced price increases came soon after the company reported better than expected sales numbers for the third quarter that just concluded. Same-store sales are up 9.6 percent compared to last year.
McDonald’s attributed the increased revenue to the price increases and product launches, including a new crispy chicken sandwich.
Progressives argue that any increase in wages paid to unskilled workers will always benefit lower and middle-income persons. However, conservatives argue that when wages go up, prices on average will increase to compensate for the additional labor expense.
This year’s price increases at McDonald’s appear to be directly attributable to increased labor expenses. There are, of course, other negative economic factors in play in the Biden economy leading to increased production costs.
Generally, increased price inflation has disrupted multiple industries this year. In a memo issued last week by a Republican Study Committee, Rep. Jim Banks (R-IN) stated that indiscriminate pumping of money into the economy has “spurred inflation” that has exacerbated the supply chain crisis.
The memo added that Americans are rational to respond to 5.4 percent annual price inflation by spending currency that is going down in value. That increased spending places additional pressure on the national supply chain facing significant bottlenecks and further increasing inflation.