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You are the owner of Billie’s Burger Barn, a chain of 12 fast food restaurants in a medium sized metropolitan city of around 250,000 people and an unemployment rate of about 3.5%.
Billie’s employs nearly 250 people with around 20 at each establishment including a full time manager and two assistant managers with the rest of the employees working less than 30 hours per week. Most of the employees earn the minimum wage of $7.25/hour but employees receive a $.75 raise after one year. For those who have more than three years of service, pay is $9.50/hour.
As with most businesses of this type many of the employees are high school and college students and turnover is relatively high (around the industry average of 44% (2)). Only a small proportion of your employees have been with the business more than three years. In recent years your workforce has become somewhat older and more diverse, however, with 25% of the employees now over 25 years old. Your labor costs are approximately 35% of total sales with about 28% of that tied to hourly employees. Food costs account for about one-third of expenses and your profit margin is around 5-7 percent. If the minimum wage increased to $9.40 per hour, Billie’s expenses would increase by approximately 10%.
There is a proposal being considered in the City Council to increase the minimum wage in the city from the current federal minimum wage ($7.25) to $9.40 immediately and $11.00 in $0.40 increments over the next 4 years. This will surely impact your business should it pass.
Discuss whether you believe government has a moral obligation to establish (and adjust) a minimum wage or whether the market should determine the level of compensation for any particular job.
Assuming the minimum wage proposal passes:
a. What feasible options might you consider in the operation of your business in response to the increase in labor costs, weighing such factors as profit margin, price increases, and layoffs?
b. What ethical and practical issues would you consider in terms of your own financial well-being, the welfare of your employees, and the impact on your customers as you contemplate your options for responding to a minimum wage increase?
Taking into account your answers to the questions above, discuss what you would do (in operating your business) in response to the increase in the minimum wage, and explain the reasons for your decisions.
Please follow the guidelines below in addressing this year’s ethics case:
• Format: Double‑spaced, Times New Roman 12 pt. font, 1″ margins, minimum of 4 pages and a maximum of 8 pages.
• Address each of the questions asked as part of this case analysis.
• Your case analysis should incorporate a variety of resources including outside resources, full citations, references and appendices as needed. Additionally, you may incorporate your own academic and/or work experiences. You must cite all sources used in your submission