BUSINESS

McDonald's Stock Price Hammered After Obama's Minimum Wage Proposal

This May 2, 2012, photo shows a sign advertising job openings outside a McDonalds restaurant in Chesterland, Ohio. The number
This May 2, 2012, photo shows a sign advertising job openings outside a McDonalds restaurant in Chesterland, Ohio. The number of people seeking unemployment benefits fell last week by the most in more than three months, the Labor Department reported Thursday, May 3. The figure was a hopeful sign one day before the government releases the April jobs report. (AP Photo/Amy Sancetta)

Some investors apparently are not enthusiastic about President Barack Obama's proposal Tuesday to raise the federal minimum wage to $9 per hour.

The stock prices of low-wage employers including McDonald's, Burger King and Papa John's fell on Wednesday as the stock market rose. McDonald's stock price had plunged 1.55 percent as of early Wednesday afternoon.

But not all low-wage employers saw their stock prices plummet. Walmart's and Target's were roughly flat, and Wendy's stock price slightly declined.

Howard Silverblatt, senior index analyst for S&P Indices, told The Huffington Post that Obama's minimum wage proposal "definitely adds some kind of pressure" to the stock prices of fast food restaurants such as McDonald's, but cautioned, "I can't say there's a trend."

Silverblatt said that a higher minimum wage "would definitely push profits down. It would mean less money for shareholders."

He added that fast food restaurants probably would try to pass along the cost of higher wages to consumers by raising prices, but because their competition is so fierce, to some extent they would have to "eat it themselves."

HuffPost

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