Saturday, July 12, 2014

Maybe we should pay wages through AAA-rated structured investment vehicles

"Credit rating agency sounds the alarm on raising the minimum wage" screamed the Fox News scroll bar during Bulls and Bears today. Indeed an agency did, it was Fitch. Punchline --

Higher labor costs due to rising minimum wages and health insurance requirements under the 2010 federal Affordable Care Act will pressure already low profit margins, which for [restaurant] operators range in the low-to-mid single digits on a pre-tax basis, translating into price increases and potential job losses.

So it's not just minimum wage laws that are the problem, it's also Obamacare! But not management salaries, cost of inputs, or even changing consumer patterns.

Amazing what these credit rating agencies -- which benefit from legal protections on what they say -- find time to comment on.