One day after Election Day and everything is upside down on Capitol Hill. The market's knee-jerk reaction today was a drop in defense stocks and pharmaceuticals due to the Democrats contrarian stance on issues key to those industries.Another key Democratic issue that the markets seemed to overlook was the party's desire to reform the Federal minimum wage, which has not been raised from $5.15 per hour since September 1997. Notably, President Bush, who still holds veto rights on any bill passing through Congress, said today that minimum wage was an issue he could cooperate with Democratic leaders about. Additionally, six states (Arizona, Colorado, Missouri, Montana, Nevada and Ohio) approved minimum-wage hikes yesterday at a state level.
Most likely affected by a wage increase are fast food companies such as McDonald's (MCD), Wendy's (WEN) and Yum Brands (YUM); casual dining chains such as Applebee's (APPB) and Brinker International (EAT); and retail chains such as Wal-Mart (WMT), Target (TGT) and Federated (FD), to name a few.
Post provided by Eric Buscemi and TheFlyOnTheWall.com (subscription required).
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
Reader Comments (Page 1 of 1)
11-08-2006 @ 7:46PM
Jim Mooney said...
I seem to recall a study (sorry I can't cite it)that states where the minimum was raised only saw a very small increase in fast food prices or lost profitability. The fixed costs of plant and employees are so much greater that I tend to think a minor raise in the minimum is a boogeyman.
Besides, who eats at those fast food joints the most? People who make minimum wage. Duhh. And who buys at cheap Wal-Mart the most? People who make minimum wage. Double-duhh. Everyone forgets that Henry Ford paid a good wage so folks could afford to buy his automobiles.
Upscale stores are doing better, while Wal-Mart is suffering because their poorer customers are getting poorer. If the geniuses at Wal-Central could see the whole picture, they'd cheer a raise in the minimum.