What if Tipping Became the Norm at McDonald's?
By Art Carden
Tuesday’s article about McDonald’s and minimum wages got a decent amount of attention and a lot of comments of varying quality.
Before my article appeared, Forbes staff writer Clare O’Connor had published a piece borrowing estimates from the University of Kansas’s Arnobio Morelix saying that if McDonald’s paid $15 per hour, a Big Mac would cost $4.67 and the items on the “dollar menu” would go to $1.17. She quotes Morelix as saying that he “will be happy to pay 17 cents more for my Dollar Menu so that fast food workers can have a living wage, and I believe people deserve to know that price hikes would not be as high as it is often portrayed.” This raises two questions:
First, if you’re concerned about McDonald’s workers and their wages, why not just tip?
Second, if you do tip, who will be the likely beneficiaries? Please answer in the comments. I’ll select the best answers and post an answer next week (actually, this looks like a great exam question). If you absolutely must know RIGHT NOW, here are pages 205 and 206 of the 7th edition of Stephen Landsburg’s Price Theory, from which I used to teach micro.