EDITORIAL: When the minimum wage becomes a weapon

McDonald’s wants to supersize its competitors’ wages.

In many states, restaurants are allowed to pay tipped employees a rate below the minimum wage. For instance, in Utah, a waitress can receive as little as $2.13 an hour from her employer. But the tips she earns can boost her pay well past the minimum wage. Nevada doesn’t allow this; all employees must be paid $12 an hour, the current minimum wage.

As wage floor laws have pushed entry-level pay higher, prices have risen in the fast-food industry. McDonald’s used to offer affordable food. In 1974, its signature Big Mac cost 85 cents in New York. In 2008, the burger cost $3.79 in the Big Apple. In 2024, McDonald’s said it cost $5.29. In 2023, a viral photo showed a Big Mac combo at a rest stop costing $17.59.

“Today, too often, if you’re that consumer, you’re driving up to the restaurant and you’re seeing combo meals priced over $10,” McDonald’s CEO Chris Kempczinski told investors recently. “That absolutely is shaping value perceptions in a negative way.”

McDonald’s has gotten so expensive that some customers are turning to sit-down restaurants, such as Chili’s, which have comparable prices. Those restaurants can pay some of their employees the substantially lower tipped minimum wage.

“If you are a restaurant that allows tips or has tips as part of your equation, you’re essentially getting the customer to pay for your labor,” Mr. Kempczinski said.

One solution would be to reduce minimum wage mandates. Even with self-ordering kiosks and mobile ordering, labor costs remain a significant part of McDonald’s store operating expenses. In California, the minimum wage for fast-food workers is $20 an hour.

It’s hard to sell a cheeseburger for 39 cents when the cook is making $20 an hour.

Instead, McDonald’s has joined the rent seekers and is fighting to eliminate the tipped minimum wage option for its competitors. It even withdrew from the National Restaurant Association over this.

The left often attacks corporations as greedy. It’s true that businesses want to make money. Yet what progressives miss is that, in a free market, companies make money by serving their customers well and providing a product or service they want or need. But in a world of big government, companies can use government regulations to hamstring their competitors — as McDonald’s wants to do.

McDonald’s should be pushing for fewer wage edicts, not demanding more in order to cripple the competition. The special sauce of America’s economy is the free market, not the corporatism that McDonald’s is pushing.