Last week I saw a HuffPo headline peppered on several facebook/twitter feeds/etc that claimed that "Doubling McDonald's Salaries Would Cause Your Big Mac To Cost Just 68¢ More." It was an interesting claim, but ultimately I didn't click on the link, as I tend to find most economic analysis pretty dubious from the get go. Now, I know nothing about economics, but as a systems person, I generally believe you can't change things dramatically in one area of a business (such as doubling salaries) and expect to fully know the results just by adding a few numbers (the cost of a Big Mac going up just $0.68).
I actually almost blogged about it, when I saw a snippet on Volokh about the lack of thought about the repercussions of such a change on the type of person McDonald's hired. Most people seemed to be assuming that all the poor folks currently working at McD's would get raises, but isn't it more likely the jobs would become more competitive and the population they hired would change? Interesting thought.
Well, I'm now glad I didn't post on any of it, because apparently the whole analysis was crap anyway. Apparently the guy who was looking at it left out the 80% of McDonald's that are franchises (but included the franchise fees as profits), and it excluded a bunch of other accounting issues I don't understand. Oh, and the "study" that had shown this originally was the work of an independent undergrad and the HuffPo didn't recheck it.
HuffPo has a retraction up in the place of the original article.
What baffles me most about their retraction is that they ask a blogger they have on their own staff to review it, and he calls BS immediately. How did that conversation not happen before you put up the sensational claim?