Labor is one of the inputs into a Big Mac, not the only one. If the cost of beef or buns went up, that would also increase the minimum price at which a hamburger is profitable to make.
Technically speaking, this is true. An economy in which one person owns everything and nobody else owns anything won’t be a consumer-based economy. However, what has that got to do with anything? In a real economy, if consumers can’t afford to consume then vendors are not able to sell. This can lead to two consequences:
- If the vendors can afford to sell for less and stay in business, they would do that and live with the lower profits. They might have to cut staff, pressure their suppliers to drop prices, etc.
- If the vendors cannot afford to sell for less and stay in business, they would go out of the business.
If #2 is actually happening, we’d expect the range of goods and services available for sale to shrink. Is that happening? We could buy tablets five years ago, but there aren’t any available in the store anymore? When your factory-made shirt wears out you’d have to sew your own because they’re no longer on sale? If not, then I think we still have a consumer-based economy.
I don’t know what the meme author is trying to push, but if it is a higher minimum wage then there is another Economics 101 issue. When the cost of something goes up, demand for it goes down. This includes unskilled labor.
h/t Eric Gustafson
There are a number of issues with this meme. First, the wrong facts:
- The $16/hour figure is inflated. The Australian minimum wage is 16.87 A$/hr., which is less than 15 US$/hr. as less than writing this. Click the link for the figure based on today’s exchange rate.
- “Big Mac” isn’t the same thing. In Australia, it is 201 grams. In the US, it is 215. So about a 6.5% difference.
Next, the misleading ones:
- This minimum wage starts at age 21, which means it only applies to about 70% of the US fast food work force. I couldn’t find statistics about the age of Australian fast food workers.
- Big macs are only part of the cost of living picture. If you look at the whole picture, Australia is an expensive place to live.
There are a lot of other differences between the US economy and the Australian economy, but these are the ones that spring to mind with a short search.
Edit: I’ve been informed that a Big Mac costs less than $4.62 in the US. I apologize for the mistake and plead vegetarianism as the excuse for my ignorance.