The underperformance serves as a warning of how ESG names and their friends in the growth stock sector may fare when the Federal Reserve raises interest rates to fight the hottest inflation seen in four decades. The iShares MSCI USA ESG Select ETF (SUSA), one of the most popular ESG funds, is down nearly 9% so far this year-a sight worse than the S&P 500’s year-to-date loss. Tesla’s rough spot is representative of the larger ESG investing trend, which has struggled to find its footing in 2022.
Production delays have pushed back the debut of its much-hyped Cybertruck, higher costs have hurt the company’s bottom line and established auto giants have made real progress with their own electric vehicles. Tesla dropped 11% in one notable session in January, and the stock is down more than 13% year to date. ( TSLA) enjoyed a remarkable run during the global Covid-19 pandemic, the company has spent most of 2022 stalling out. A $15 minimum wage proposal has even reached Congress.Even though shares of Tesla Inc. San Francisco, Seattle, and Los Angeles have raised their minimum wages to that level, while fast food workers across the state of New York notched a recent victory that means they will likely be guaranteed that minimum. The research showing that the fast food industry has ways to cope with a $15 minimum wage comes as workers in that industry, who have staged widespread strikes over the past three years demanding they be paid at least that much, have experienced recent victories. A major review of all the available research on how minimum wage increases impact job growth found that it’s close to zero, and state-level reviews found that those that have raised wages over recent decades haven’t hurt job growth. In the face of a planned minimum wage increase in Georgia and Alabama, for example, fast food restaurants were going to respond by raising employees’ performance standards. Real world evidence also supports the idea that fast food would deal with higher wages without cutting jobs. Other research has found that all employers could react to higher minimum wage costs in the same way - through savings from reduced turnover, higher prices, improved efficiency, and increased demand - and therefore avoid layoffs. That study also found that between the extra money from higher prices, savings from lower turnover, and greater overall economic growth, the fast food industry could easily cover the increased costs of having to pay a $15 minimum wage without reducing any jobs and still have money left over. A previous study found that for every 10 percent increase in the minimum wage, turnover drops by 2.2 percent, and a $15 wage would come with $5.2 billion in savings for the fast food industry. In 2013, the turnover rate for franchises was 93 percent, and it can cost $4,700 per worker who leaves. I don’t think we answered the question of whether that reduces turnover,” Richard Ghiselli, professor and head of the School of Hospitality and Tourism Management, said in a press release. “People often hypothesize that if you raise pay and offer benefits, turnover will go down. The study notes that it doesn’t take into account the costs of turnover or any savings gained from higher wages.
The price increases would be a good deal larger if the minimum wage were raised to $22 an hour, or average private sector pay: the authors found they would increase by 25 percent, raising the price of a Big Mac by about a dollar. The study from Purdue University’s School of Hospitality and Tourism Management also found that in order to compensate for the higher cost of employee compensation at limited-service restaurants, or those without table service or tipping, if they decided to change food sizes rather than prices, the Big Mac would shrink somewhere between 12 and 70 percent. That would mean a McDonald’s Big Mac, which currently goes for $3.99, would cost about 17 cents more, or $4.16. If the minimum wage were increased to $15 an hour, prices at fast food restaurants would rise by an estimated 4.3 percent, according to a new study.
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