If minimum wage were raised ...

[itfitzme]

That link;

PERI_fast_food_wages

Has a very precise statement;

In what follows, we provide a step-by-step illustration of how the minimum wage impacts the business costs of fast-food restaurants to explain: (1) why a 44.8 percent federal minimum wage hike from $7.25 to $10.50 would result in a modest cost in-crease equal to 2.7 percent of its sales revenue for the average fast-food establishment, consistent with past research findings;

 

[itfitzme]

The supply and demand diagram for a no effective change would be something along these lines.



Quantity produced and consumed remains the same, before and after, while price goes up along with income.

I think that this, from the cited study,



show that the change wouldn't be simple a shift but would also cause the curves to change slope.

I'm pretty the demand curve would change as shown here;



At lower quantity, the demand price wouldn't change because minimum wage isn't increasing the lower volume, higher price end of the demand curve.

I"m not sure about the supply curve, though.

 

[Dragonlady]

That link;

PERI_fast_food_wages

Has a very precise statement;

In what follows, we provide a step-by-step illustration of how the minimum wage impacts the business costs of fast-food restaurants to explain: (1) why a 44.8 percent federal minimum wage hike from $7.25 to $10.50 would result in a modest cost in-crease equal to 2.7 percent of its sales revenue for the average fast-food establishment, consistent with past research findings;

I posted a link to this study up thread. Please note that the level of increase in the wages (44%) is substantial higher than the price increase to pay for it (2.7%). This is why the idea of a global price increase on all goods and services equal to the percentage increase in the minimum wage is a false rationale.

I saw a Republican businessman on TV on the weekend, who espoused the notion that an increase in the federal minimum wage to $12.50 per hour would result in a one-time increase in the cost of living of 0.7% - that's less than 1% across the board. He also said that such an increase would result in a cost savings in Medicare and food stamps, in the neighbourhood of $50 to $60 billion dollars.

But keep on believing that increasing the minimum wage would be the end of the world as you know it.

 

[itfitzme]

That link;

PERI_fast_food_wages

Has a very precise statement;

In what follows, we provide a step-by-step illustration of how the minimum wage impacts the business costs of fast-food restaurants to explain: (1) why a 44.8 percent federal minimum wage hike from $7.25 to $10.50 would result in a modest cost in-crease equal to 2.7 percent of its sales revenue for the average fast-food establishment, consistent with past research findings;

I posted a link to this study up thread. Please note that the level of increase in the wages (44%) is substantial higher than the price increase to pay for it (2.7%). This is why the idea of a global price increase on all goods and services equal to the percentage increase in the minimum wage is a false rationale.

I saw a Republican businessman on TV on the weekend, who espoused the notion that an increase in the federal minimum wage to $12.50 per hour would result in a one-time increase in the cost of living of 0.7% - that's less than 1% across the board. He also said that such an increase would result in a cost savings in Medicare and food stamps, in the neighbourhood of $50 to $60 billion dollars.

But keep on believing that increasing the minimum wage would be the end of the world as you know it.

I am pretty sure that we are in agreement on this. I think I positive rep'ed you on the linked study.

It supports other studies that show minimum wage hikes as compressing wages.

 

[Dragonlady]

I am pretty sure that we are in agreement on this. I think I positive rep'ed you on the linked study.

It supports other studies that show minimum wage hikes as compressing wages.

My apologies. My comments weren't directed at you but rather at those who continue to believe that raising minimum wages will result in huge price increases and job losses. I quoted your post because it confirmed and supported what I was saying, not because I wanted to respond to or refute it. Sorry I wasn't clear in that.

 

[KGB]

I've seen it posted here that if minimum wages were raised 20%, then fast food prices would have to be raised by 20% to pay for the increase, and prices on other goods and services would also have to rise by 20% and the minimum wage workers would be no better off. Posters further said that liberals were too stupid to understand this basic premise.

Well, I'm a liberal and the idea that raising minimum wages by 20% would cause fast food prices, or prices on anything would have to rise by 20% is so completely inaccurate, I question the intelligence of anyone who believes this and I can explaiin why. The cost of the labour to make the burger is not the ONLY cost which is factored into the price of the burger. In fact, it's only a small fraction of the price of the burger. There's the cost of the ingredients, the capital costs of the equipment, furniture and fixtures in the store, the costs of mortgage/rent and utilities for the store, franchise fees and profit - none of which is affected by the wage increase given to the staff cooking and serving the burgers.

This is not just true of the fast food industry, but of any business which employs people at minimum wage. Wages are just one component of the costs of goods and services sold, so that raises in wages may increase the cost of producing the item, but they're not the ONLY cost involved. This is a detailed study which says that raising the minimum wage to $10.50 per hour would lead to a price increase of only 2.7%, which is a far more realistic figure than 20%.

http://www.peri.umass.edu/fileadmin/pdf/research_brief/PERI_fast_food_wages.pdf

MacDonalds and Walmart are two of the most profitable corporations in the world. Both do business in countries where the minimum wage is much higher than in the US, and both are very profitable in those jurisdictions. If Walmart can be very profitable in Canada, where minimum wages are over $10 an hour, taxes are higher, and costs generally are higher, why can't they pay decent wages in the US? Why are American taxpayers subsidizing Walmart employees with food stamps, and Medicaid while Walmart is the 2nd most profitable company in the US, and why do right wingers think this is a GOOD thing?

Shouldn't Walmart and MacDonalds (another of the most profitable corporations in the US whose employees heavily rely on government programs) be required to pay their employees enough in wages to keep their employees off public assistance?

my suggestion to you is to pick up a book on earned value & read it. Companies hire/fire people based on the profit margin that person produces. For example, on an engineering project, my engineers produce profit for me with the hours they put in. They also do so at different rates, so a senior engineer (who I pay more) might cut more so into my profit margin than a junior one. That isn't to say that I just use junior guys, since I might need a senior engineer to handle a tricky piece of the project. Ok, cost of doing business. Anyway, when you raise the minimum wage, you aren't getting 20% more profitability out of the same employee, you are just getting 20% more cost.

Restaurants price food items down to the ingredient. These prices rise & fall over time so they are not a constant. They also portion meals accordingly so they aren't wasting their profit margin. Watch any episode of Restaurant Impossible & you'll see what I am talking about.

Back to why McDonalds & Walmart make a profit in places like Canada with higher social costs. Simple. The earned value per employee allows them to do so. Plus, they might have different procedures on containing food costs, shipping fees, leases, etc. In other words, the business climate is different. However, the earned value margin gives them the flexibility to do this & still make a profit.

 

[Dragonlady]

You've missed my entire point and your post on earned value shows a total ignorance of the realities of economics.

My parents owned a restaurant. I know how the economics work. I was a bank manager for many years before I went to work with lawyers.

Your post ignores the supply and demand of wage pricing which is what really drives wages. Those whose skills are in short supply, will always get higher wages as employers compete to hire them and retain their services. As soon as there is a glut of such individuals, their value will fall.

When the NAFTA deal was signed, furniture and cabinet manufacturers moved out of Canada to the US and thousand of tradesmen were thrown out of work. The trade paid about $15 per hr. at the time for shop work. Competition for the few jobs that were available was fierce but the work, which hadn't changed, and the earned value of which hadn't changed, now paid $8 per hr. That's how the job market really works.

Walmart and MacDonalds are two of the most profitable corporations in America. Both could easily afford to pay higher wages to their employees and still be very profitable companies. Both pay their top executives salaries in excess of $15 million. And both encourage and assist their employees in obtaining food stamps and other federal assistance.

These companies could afford to raise wages to their minimum wage employees to levels where they would no longer qualify for federal assistance and still be very profitable. Each dollar of additional wages paid would only cost them 65 cents since the remaining 35 would be a reduction of the company's federal taxes on profits.

It's time for the government to stop subsidizing these companies low wages.

 

[Mac1958]

.

Good conversation above, adding some badly needed nuance.

I'd need to see the data on dynamic scoring rather than static scoring.

Raise someone from $8 an hour to $10 an hour, that's a 25% raise, and that increase could probably be absorbed. That's static scoring.

But what about those making $9, $10, $11, $12 and up? You're not going to give them raises too? How can you get away with that? How does wage pricing justify that? At what point is it "fair" to stop the domino effect of arbitrary wage increases? And who, pray tell, is going to decide that?

Are we really sure that just plopping more arbitrary regulations and cost increases on companies is the only answer for people who choose not to improve their own lives? I'd also like to know when we went from understanding that the purpose of a corporation being to maximize shareholder value to, instead, taking care of its employees' financial needs based on completely arbitrary platitudes like "living wage".

This topic is perfectly reasonable. But show me that data, justify the wage pricing using dynamic scoring, consider and address the cultural effect (if you think there could be any), and then we can have a realistic conversation, that would be interesting, fascinating. But most conversations I see on this topic are terribly simplistic.

.

 

[Dragonlady]

This topic is perfectly reasonable. But show me that data, justify the wage pricing using dynamic scoring, consider and address the cultural effect (if you think there could be any), and then we can have a realistic conversation, that would be interesting, fascinating. But most conversations I see on this topic are terribly simplistic.

.

Because the effect on other wages cannot be modelled or predicted, it's difficult to get reliable statistics and therefore difficult to create models, so we have to go for the more simplistic studies and discussions. We do know that in the past, when the minimum wage was increased, unemployment did not go up, it went down, and prices didn't rise appreciably.

One thing is certain: The cost of food stamps and Medicaid given to low income earners is much higher than the value of assistance received because of administration costs for these programs. It would be much cheaper for Walmart and MacDonalds (and other high volume minimum wage employers) to pay their employees a wage high enough to disqualify their workers from receiving assistance, than it is for the government to supplement their wages with income assistance programs because of the costs of qualifying the recipients and administering their assistance.

Currently every US taxpayer subsidizes Walmart to the tune of $2500 per year, whether you shop there or not. Walmart's minimum wage employees don't pay federal income taxes. If Walmart paid them $100 per week more, the employees would no longer qualify for government assistance, and would be paying federal income tax. Walmart's profits would fall from $15B per year to $10B per year, which means they wouldn't be the second most profitable company in the US but they would still be very profitable.

It's way past time for the American taxpayer to stop subsidizing the Walton family. Those people don't need the money.

 

[BillyZane]

I've seen it posted here that if minimum wages were raised 20%, then fast food prices would have to be raised by 20% to pay for the increase, and prices on other goods and services would also have to rise by 20% and the minimum wage workers would be no better off. Posters further said that liberals were too stupid to understand this basic premise.

Well, I'm a liberal and the idea that raising minimum wages by 20% would cause fast food prices, or prices on anything would have to rise by 20% is so completely inaccurate, I question the intelligence of anyone who believes this and I can explaiin why. The cost of the labour to make the burger is not the ONLY cost which is factored into the price of the burger. In fact, it's only a small fraction of the price of the burger. There's the cost of the ingredients, the capital costs of the equipment, furniture and fixtures in the store, the costs of mortgage/rent and utilities for the store, franchise fees and profit - none of which is affected by the wage increase given to the staff cooking and serving the burgers.

This is not just true of the fast food industry, but of any business which employs people at minimum wage. Wages are just one component of the costs of goods and services sold, so that raises in wages may increase the cost of producing the item, but they're not the ONLY cost involved. This is a detailed study which says that raising the minimum wage to $10.50 per hour would lead to a price increase of only 2.7%, which is a far more realistic figure than 20%.

http://www.peri.umass.edu/fileadmin/pdf/research_brief/PERI_fast_food_wages.pdf

MacDonalds and Walmart are two of the most profitable corporations in the world. Both do business in countries where the minimum wage is much higher than in the US, and both are very profitable in those jurisdictions. If Walmart can be very profitable in Canada, where minimum wages are over $10 an hour, taxes are higher, and costs generally are higher, why can't they pay decent wages in the US? Why are American taxpayers subsidizing Walmart employees with food stamps, and Medicaid while Walmart is the 2nd most profitable company in the US, and why do right wingers think this is a GOOD thing?

Shouldn't Walmart and MacDonalds (another of the most profitable corporations in the US whose employees heavily rely on government programs) be required to pay their employees enough in wages to keep their employees off public assistance?

my suggestion to you is to pick up a book on earned value & read it. Companies hire/fire people based on the profit margin that person produces. For example, on an engineering project, my engineers produce profit for me with the hours they put in. They also do so at different rates, so a senior engineer (who I pay more) might cut more so into my profit margin than a junior one. That isn't to say that I just use junior guys, since I might need a senior engineer to handle a tricky piece of the project. Ok, cost of doing business. Anyway, when you raise the minimum wage, you aren't getting 20% more profitability out of the same employee, you are just getting 20% more cost.

Restaurants price food items down to the ingredient. These prices rise & fall over time so they are not a constant. They also portion meals accordingly so they aren't wasting their profit margin. Watch any episode of Restaurant Impossible & you'll see what I am talking about.

Back to why McDonalds & Walmart make a profit in places like Canada with higher social costs. Simple. The earned value per employee allows them to do so. Plus, they might have different procedures on containing food costs, shipping fees, leases, etc. In other words, the business climate is different. However, the earned value margin gives them the flexibility to do this & still make a profit.

And all that is relative and you know it. We could own two identical companies and each decide that we want to earn more profit off each employee's labor.

ALL the minimum wage law does is set a bare maximum on how much profit an employer can make from an employee and it is PROVEN that without such a constraint some companies WILL take advantage.

The historical numbers prove beyond a doubt that companies somehow manage to survive, nay even thrive when the minimum wage is raised. The crying otherwise is just that, crying.

 

[BillyZane]

.

Good conversation above, adding some badly needed nuance.

I'd need to see the data on dynamic scoring rather than static scoring.

Raise someone from $8 an hour to $10 an hour, that's a 25% raise, and that increase could probably be absorbed. That's static scoring.

But what about those making $9, $10, $11, $12 and up? You're not going to give them raises too? How can you get away with that? How does wage pricing justify that? At what point is it "fair" to stop the domino effect of arbitrary wage increases? And who, pray tell, is going to decide that?

Are we really sure that just plopping more arbitrary regulations and cost increases on companies is the only answer for people who choose not to improve their own lives? I'd also like to know when we went from understanding that the purpose of a corporation being to maximize shareholder value to, instead, taking care of its employees' financial needs based on completely arbitrary platitudes like "living wage".

This topic is perfectly reasonable. But show me that data, justify the wage pricing using dynamic scoring, consider and address the cultural effect (if you think there could be any), and then we can have a realistic conversation, that would be interesting, fascinating. But most conversations I see on this topic are terribly simplistic.

.

I don't know if companies will give those making $12,$15 an hour a raise or not, and frankly I don't care. Those people aren't on welfare so none of my business what they make.

And you are absolutely right, it is the job of a corporation to make money for the stock holders and nothing else.

This is why we have a myriad of regulations which tell corporations "no you can't do that" for example, wouldn't it be cheaper to just throw your garbage out on the street than it would be to pay someone to haul it off? Of course it would be, so a company solely driven by profit would NOT pay someone to haul off the trash if the government didn't make them. And so on and so forth.

 

[Tresha91203]

Other than the sudden change of meaning lately for words like "subsidy" and "loophole," I agree with this. Federal minimum wage has been raised many times. Nothing catastrophic happened. It does narrow the gap slightly. It does slightly negatively impact middle earners. While I dont think I agree with the concept, and I think there should be a better way, this is not a hill to die on for me ... maybe a paper cut.

Because the effect on other wages cannot be modelled or predicted, it's difficult to get reliable statistics and therefore difficult to create models, so we have to go for the more simplistic studies and discussions. We do know that in the past, when the minimum wage was increased, unemployment did not go up, it went down, and prices didn't rise appreciably.

One thing is certain: The cost of food stamps and Medicaid given to low income earners is much higher than the value of assistance received because of administration costs for these programs. It would be much cheaper for Walmart and MacDonalds (and other high volume minimum wage employers) to pay their employees a wage high enough to disqualify their workers from receiving assistance, than it is for the government to supplement their wages with income assistance programs because of the costs of qualifying the recipients and administering their assistance.

Currently every US taxpayer subsidizes Walmart to the tune of $2500 per year, whether you shop there or not. Walmart's minimum wage employees don't pay federal income taxes. If Walmart paid them $100 per week more, the employees would no longer qualify for government assistance, and would be paying federal income tax. Walmart's profits would fall from $15B per year to $10B per year, which means they wouldn't be the second most profitable company in the US but they would still be very profitable.

It's way past time for the American taxpayer to stop subsidizing the Walton family. Those people don't need the money.

 

[Foxfyre]

.

Good conversation above, adding some badly needed nuance.

I'd need to see the data on dynamic scoring rather than static scoring.

Raise someone from $8 an hour to $10 an hour, that's a 25% raise, and that increase could probably be absorbed. That's static scoring.

But what about those making $9, $10, $11, $12 and up? You're not going to give them raises too? How can you get away with that? How does wage pricing justify that? At what point is it "fair" to stop the domino effect of arbitrary wage increases? And who, pray tell, is going to decide that?

Are we really sure that just plopping more arbitrary regulations and cost increases on companies is the only answer for people who choose not to improve their own lives? I'd also like to know when we went from understanding that the purpose of a corporation being to maximize shareholder value to, instead, taking care of its employees' financial needs based on completely arbitrary platitudes like "living wage".

This topic is perfectly reasonable. But show me that data, justify the wage pricing using dynamic scoring, consider and address the cultural effect (if you think there could be any), and then we can have a realistic conversation, that would be interesting, fascinating. But most conversations I see on this topic are terribly simplistic.

.

That is the crux of the problem. Your current employees who started at minimum wage and have merited raises to $10 - $12 - $15/hour will certainly feel their worth diminished if you start the untrained, inexperienced newbie at the wage they are making. That is a dynamic that the charts, graphs, and other numbers don't reflect. But that dynamic is why a raise in the minimum wage invariably drives up other wages as well.

Also those charts and graphs of raw wages don't reflect the additional cost to the employer in FICA contributions, SUTA, FUTA, work comp, and in many cases general liability premiums and, for some businesses, the cost of bonding, E&O, and other general costs of doing business.

Nor do they reflect the additional costs in many other products and services the employer must use in the business. It is those inflationary pressures that reduce the buying power of the minimum wage year by year just as all of us see our dollars buying less each year than they did the year before.

Less than 3% of American workers are paid minimum wage and few of those stay at minimum wage for prolonged periods. There is no advantage to them or any of us to artificially raise wages and increase the costs of living and doing business by an even greater amount. Let the free market set the wages as well as the price of everything else, and it is almost certain that our dollars will buy more than they do now.

 

[Dragonlady]

Less than 3% of American workers are paid minimum wage and few of those stay at minimum wage for prolonged periods. There is no advantage to them or any of us to artificially raise wages and increase the costs of living and doing business by an even greater amount. Let the free market set the wages as well as the price of everything else, and it is almost certain that our dollars will buy more than they do now.

While less than 3% of workers are paid minimum wage, it's not true that few stay at minimum wage for prolonged periods. Most minimum wage earners are over 25 and many are supporting families.

The free market is setting wages, and they're doing so by encouraging their employees to apply for SNAP and Medicaid which are paid for by taxpayers. In effect, they're asking taxpayers to subsidize their cheap labour costs so they can maximize their profits. You seem to have no problem with that. I wouldn't want to give the Walton Family $2500 per year, but you seem fine with it. The same holds true of MacDonald's. I'm saying make these big corporations pay for their own employees wages and benefits, just like every other small business in the country. Stop giving subsidies to the most profitable corporations in America.

 

[Foxfyre]

Less than 3% of American workers are paid minimum wage and few of those stay at minimum wage for prolonged periods. There is no advantage to them or any of us to artificially raise wages and increase the costs of living and doing business by an even greater amount. Let the free market set the wages as well as the price of everything else, and it is almost certain that our dollars will buy more than they do now.

While less than 3% of workers are paid minimum wage, it's not true that few stay at minimum wage for prolonged periods. Most minimum wage earners are over 25 and many are supporting families.

The free market is setting wages, and they're doing so by encouraging their employees to apply for SNAP and Medicaid which are paid for by taxpayers. In effect, they're asking taxpayers to subsidize their cheap labour costs so they can maximize their profits. You seem to have no problem with that. I wouldn't want to give the Walton Family $2500 per year, but you seem fine with it. The same holds true of MacDonald's. I'm saying make these big corporations pay for their own employees wages and benefits, just like every other small business in the country. Stop giving subsidies to the most profitable corporations in America.

You have no basis to say what I am or am not fine with unless I tell you, so please put that non sequitur straw man back on the shelf. Nobody forces anybody to work for the Waltons and what agreement the Waltons have with those who choose to work for them should be nobody's business but theirs.

I happen to believe in the concept of unalienable rights that the Constitution was designed to recognize and protect, and I am opposed to the federal government making anybody do anything other than what is absolutely essential to protect those rights and allow the various states to function as one nation. I know that is a concept that all liberals and even some conservatives are incapable of understanding, let alone embracing, but you might as well not go the big government solution route because you'll get the same answer from me every time.

Anybody raising a family on minimum wage on purpose is an irresponsible idiot. Unexpected circumstances do happen. Because I married a man who go transferred a lot, I have had to start over many times, often at minimum wage or less, in a new place. But I was happy to get those jobs because I knew that once I got my foot in the door, I could prove my worth to an employer and earn a much better salary. And if that didn't happen, it was a good platform from which to net a better job with somebody else. A hand up to those who are having a hard time through no fault of their own is fine but is something that should be handled at the state, local, or private level. But start a family before capable of supporting one? Not something that should be condoned or encouraged or subsidized by mandate ever.

Let the free market set the wages and stop worrying about anybody having it better than somebody else. That way everybody has a chance to do better. As long as the government tries to achieve more equality by fiat, the underachievement will continue to be rewarded and therefore achievement discouraged. And the income equalities will only get worse.

 

[BillyZane]

Less than 3% of American workers are paid minimum wage and few of those stay at minimum wage for prolonged periods. There is no advantage to them or any of us to artificially raise wages and increase the costs of living and doing business by an even greater amount. Let the free market set the wages as well as the price of everything else, and it is almost certain that our dollars will buy more than they do now.

While less than 3% of workers are paid minimum wage, it's not true that few stay at minimum wage for prolonged periods. Most minimum wage earners are over 25 and many are supporting families.

The free market is setting wages, and they're doing so by encouraging their employees to apply for SNAP and Medicaid which are paid for by taxpayers. In effect, they're asking taxpayers to subsidize their cheap labour costs so they can maximize their profits. You seem to have no problem with that. I wouldn't want to give the Walton Family $2500 per year, but you seem fine with it. The same holds true of MacDonald's. I'm saying make these big corporations pay for their own employees wages and benefits, just like every other small business in the country. Stop giving subsidies to the most profitable corporations in America.

You have no basis to say what I am or am not fine with unless I tell you, so please put that non sequitur straw man back on the shelf. Nobody forces anybody to work for the Waltons and what agreement the Waltons have with those who choose to work for them should be nobody's business but theirs.

I happen to believe in the concept of unalienable rights that the Constitution was designed to recognize and protect, and I am opposed to the federal government making anybody do anything other than what is absolutely essential to protect those rights and allow the various states to function as one nation. I know that is a concept that liberals are incapable of understanding, let alone embracing, but you might as well not go there because you'll get the same answer from me every time.

Anybody raising a family on minimum wage on purpose is an irresponsible idiot. Unexpected circumstances do happen. Because I married a man who go transferred a lot, I have had to start over many times, often at minimum wage or less, in a new place. But I was happy to get those jobs because I knew that once I got my foot in the door, I could prove my worth to an employer and earn a much better salary. And if that didn't happen, it was a good platform from which to net a better job with somebody else. But start a family before capable of supporting one? Not something that should be condoned or encouraged or subsidized by mandate ever.

Nobody owes me a dang thing other than to allow me my unalienable rights that infringe on nobody else's rights. You should not be responsible for providing me with shelter, food, clothing, healthcare, transportation, recreation, or anything elsel.

So then obviously your proposal would be to do away with all labor related laws and just let employees fend for themselves......

Fortunately we learned our lesson when we tried that the first time.

Here's my problem with all this rah rah let the free market bs

Some of yall are for it, when you're for it, and no other time.

For example, in a truly free market there would be nothing preventing even minimum wage employees from forming a union and exerting some pressure to have a say in what they earn, but some of yall, and I don't know where you stood on this particular issue, rant and rave anytime a minimum wage worker suggest forming a union or boycotting until they get better pay, or scream bloody murder any time they even ASK for a raise.

You see, the free market is not a company telling employees what they will pay, a free market is both sitting down and coming to a reasonable agreement on wages between them. One that makes both parties happy

Unfortunately, people are greedy , which only is a problem when one person has more power than another. When you have one thousand people applying for 100 jobs, there is no free market because in a free market each of those 1000 might demand a better wage, but when each of those knows there is only a 10% chance of them getting the job, they have no power to demand a higher wage if they want ANY chance of getting a job

It would be like if I owned a gas station in the middle of nowhere and you showed up , and were obviously in trouble and I immediately doubled the price of my gas. You would have NO power to debate that issue with me. Pay what I ask or go without . If however , there are several gas stations selling gas in my area, my power is less.

 

[Mac1958]

.

Good conversation above, adding some badly needed nuance.

I'd need to see the data on dynamic scoring rather than static scoring.

Raise someone from $8 an hour to $10 an hour, that's a 25% raise, and that increase could probably be absorbed. That's static scoring.

But what about those making $9, $10, $11, $12 and up? You're not going to give them raises too? How can you get away with that? How does wage pricing justify that? At what point is it "fair" to stop the domino effect of arbitrary wage increases? And who, pray tell, is going to decide that?

Are we really sure that just plopping more arbitrary regulations and cost increases on companies is the only answer for people who choose not to improve their own lives? I'd also like to know when we went from understanding that the purpose of a corporation being to maximize shareholder value to, instead, taking care of its employees' financial needs based on completely arbitrary platitudes like "living wage".

This topic is perfectly reasonable. But show me that data, justify the wage pricing using dynamic scoring, consider and address the cultural effect (if you think there could be any), and then we can have a realistic conversation, that would be interesting, fascinating. But most conversations I see on this topic are terribly simplistic.

.

That is the crux of the problem. Your current employees who started at minimum wage and have merited raises to $10 - $12 - $15/hour will certainly feel their worth diminished if you start the untrained, inexperienced newbie at the wage they are making. That is a dynamic that the charts, graphs, and other numbers don't reflect. But that dynamic is why a raise in the minimum wage invariably drives up other wages as well.

Also those charts and graphs of raw wages don't reflect the additional cost to the employer in FICA contributions, SUTA, FUTA, work comp, and in many cases general liability premiums and, for some businesses, the cost of bonding, E&O, and other general costs of doing business.

Nor do they reflect the additional costs in many other products and services the employer must use in the business. It is those inflationary pressures that reduce the buying power of the minimum wage year by year just as all of us see our dollars buying less each year than they did the year before.

Less than 3% of American workers are paid minimum wage and few of those stay at minimum wage for prolonged periods. There is no advantage to them or any of us to artificially raise wages and increase the costs of living and doing business by an even greater amount. Let the free market set the wages as well as the price of everything else, and it is almost certain that our dollars will buy more than they do now.

If we're going to have a serious conversation on this topic, these issues have to be addressed. Simplistic platitudes like "living wage" and "the business has enough money" do nothing to add to the conversation, and betray an abject lack of understanding of fundamental macro business economics. They also do nothing to address the cultural issue of increasing pay for no reason other than "fairness".

I agree that there is a significant problem. I also agree that having to publicly support people who aren't making enough money on their job is not a good thing. But just arbitrarily slapping more costs and regulations on business with virtually no attention paid to their ramifications, and completely ignoring the capacity of the individual to improve their own lives, is either naive or intellectually dishonest. Or both.

.

 

[BillyZane]

.

Good conversation above, adding some badly needed nuance.

I'd need to see the data on dynamic scoring rather than static scoring.

Raise someone from $8 an hour to $10 an hour, that's a 25% raise, and that increase could probably be absorbed. That's static scoring.

But what about those making $9, $10, $11, $12 and up? You're not going to give them raises too? How can you get away with that? How does wage pricing justify that? At what point is it "fair" to stop the domino effect of arbitrary wage increases? And who, pray tell, is going to decide that?

Are we really sure that just plopping more arbitrary regulations and cost increases on companies is the only answer for people who choose not to improve their own lives? I'd also like to know when we went from understanding that the purpose of a corporation being to maximize shareholder value to, instead, taking care of its employees' financial needs based on completely arbitrary platitudes like "living wage".

This topic is perfectly reasonable. But show me that data, justify the wage pricing using dynamic scoring, consider and address the cultural effect (if you think there could be any), and then we can have a realistic conversation, that would be interesting, fascinating. But most conversations I see on this topic are terribly simplistic.

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That is the crux of the problem. Your current employees who started at minimum wage and have merited raises to $10 - $12 - $15/hour will certainly feel their worth diminished if you start the untrained, inexperienced newbie at the wage they are making. That is a dynamic that the charts, graphs, and other numbers don't reflect. But that dynamic is why a raise in the minimum wage invariably drives up other wages as well.

Also those charts and graphs of raw wages don't reflect the additional cost to the employer in FICA contributions, SUTA, FUTA, work comp, and in many cases general liability premiums and, for some businesses, the cost of bonding, E&O, and other general costs of doing business.

Nor do they reflect the additional costs in many other products and services the employer must use in the business. It is those inflationary pressures that reduce the buying power of the minimum wage year by year just as all of us see our dollars buying less each year than they did the year before.

Less than 3% of American workers are paid minimum wage and few of those stay at minimum wage for prolonged periods. There is no advantage to them or any of us to artificially raise wages and increase the costs of living and doing business by an even greater amount. Let the free market set the wages as well as the price of everything else, and it is almost certain that our dollars will buy more than they do now.

If we're going to have a serious conversation on this topic, these issues have to be addressed. Simplistic platitudes like "living wage" and "the business has enough money" do nothing to add to the conversation, and betray an abject lack of understanding of fundamental macro business economics. They also do nothing to address the cultural issue of increasing pay for no reason other than "fairness".

I agree that there is a significant problem. I also agree that having to publicly support people who aren't making enough money on their job is not a good thing. But just arbitrarily slapping more costs and regulations on business with virtually no attention paid to their ramifications, and completely ignoring the capacity of the individual to improve their own lives, is either naive or intellectually dishonest. Or both.

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Absolutely! There are people on BOTH sides of this issue who simply aren't thinking. They are primarily for or against this based on nothing more than which political party supports it and which opposes it.

A raise to $15 or higher would be catastrophic, it would result in the total destruction of our economy, but $10 would not. Yet the majority of people simply won't admit that the middle position is the best course for everyone. I don't understand the refusal to look at facts before rendering an opinion. At $10 an hour you're looking at an extra $90 a week per employee (full time that is) Let's look at say a typical McDonalds which averages $2,400,000 in sales per year

Biggest Fast Food Companies in Industry by Average Unit Volume - QSR magazine

A normal staff at a McDonalds is around 30 non management employees. Now worst, case we assume ALL of them are minimum wage employees and so they are all IMMEDIATELY moved up to $10 an hour. That's an extra $90 per person * 30 persons for an extra $2700 a week * 52 weeks (again we're talking worst case scenario for the franchise owner) and we come up with an extra $140,400 in payroll. Or .05% of sales.

Now someone explain to me how anyone could be illogical enough to believe that prices would have to rise by 20% or MORE to cover an extra 1/2% in costs relative to sales?

McDonalds Corp themselves sales a franchise owner can expect to earn a 10% profit on gross sales per year which is $240K per year in profit for the owner. Even if he absorbed the ENTIRE cost of the hike in the worst case scenario his profit would only drop to $228K a year. I mean come on , this BS about prices having to go up so much is so easily dispelled.

 

[itfitzme]

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Good conversation above, adding some badly needed nuance.

I'd need to see the data on dynamic scoring rather than static scoring.

Raise someone from $8 an hour to $10 an hour, that's a 25% raise, and that increase could probably be absorbed. That's static scoring.

But what about those making $9, $10, $11, $12 and up? You're not going to give them raises too? How can you get away with that? How does wage pricing justify that? At what point is it "fair" to stop the domino effect of arbitrary wage increases? And who, pray tell, is going to decide that?

Are we really sure that just plopping more arbitrary regulations and cost increases on companies is the only answer for people who choose not to improve their own lives? I'd also like to know when we went from understanding that the purpose of a corporation being to maximize shareholder value to, instead, taking care of its employees' financial needs based on completely arbitrary platitudes like "living wage".

This topic is perfectly reasonable. But show me that data, justify the wage pricing using dynamic scoring, consider and address the cultural effect (if you think there could be any), and then we can have a realistic conversation, that would be interesting, fascinating. But most conversations I see on this topic are terribly simplistic.

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The current conversation about raising the minimum wage is in no way arbitrary.

The convo has brought forth a few good sources of info on the subject, sources which are not "terribly simplistic". These include;

Minimum wage - Wikipedia, the free encyclopedia

http://www.cepr.net/documents/publications/min-wage-2013-02.pdf

and

http://www.peri.umass.edu/fileadmin/pdf/research_brief/PERI_fast_food_wages.pdf

Increasing the minimum wage has the positive effect of increasing wages that above minimum. It isn't an unlimited "domino effect" that continues up the scale in an unlimited fashion. It adjusts the slope of the wage curve with current estimates being that the marginal change goes to zero at about $12.00 per hour. Adjusting the minimum wage is all that is necessary as the market sorts out the rest.

There is no "rule" that "the purpose of a corporation being to maximize shareholder value". Indeed, the purpose of any company is to provide a living for the people that work for the company. In other words, the primary purpose of a company or corporation is and always has been that of "taking care of its employees' financial needs". It is called "wages" and "salary". If corporations simply "maximized shareholder value" and didn't pay anyone wages, no one would work for the company and it would cease to exist.

Wages are supposed to "cost companies". In fact, all money that circulates in the economy pays for labor at some point up the supply chain. The Earth doesn't charge for resources. The cost of obtaining those resources is the cost of the labor that extracts it. The ocean doesn't charge for the fish. The Sun doesn't charge for the sunlight. The Earth doesn't charge for the oil. At some point up the supply chain; it is labor that builds the fishing boat; builds the oil rig; plants, waters, and picks the corn. The entire economy is all about paying wages to members of households so they can buy the goods, pay the rents, and obtain the services that are needed for their lives.

The notion that people making minimum wage “choose not to improve their own lives" is simply ungrounded, not based on data or anecdotal evidence. All evidence says quite the opposite, that the overwhelming majority of people do everything that they can to improve their own lives." The single factor that stands in their way is the realities of opportunities. We do not live in a world unfettered by other people where everything that is available is available for our taking.

The reality of the free market that is fundamental to micro and macro economics is that, at the very least, individual companies and workers are price takers. The "invisible hand" of the market place sets wages and prices. And, there is no rule that presupposes that the wages and prices set by the markets are, in any way, "fair". A significant part of the markets is that there is typically an imbalance of market power. And that imbalance never leans in the direction of low wage workers. A quantitiative measure of market power is in wage and price elasticity.

 

[midcan5]

Discussions about minimum wage seem irrelevant given the reality of trade and especially trade with third world nations. We now have billion of dollar deficits with Vietnam - if you can really believe that. No worry about jobs you just simply won't have a job.

NAFTA moved jobs out, all trade agreements move jobs to third world, cheap labor, slave labor, places, helps the bottom line. Now TPP is poised to do the same. Unreal. Even the Japanese don't like this so called agreement.

See excerpt from a book everyone should read below links to info on TPP.

https://www.commondreams.org/headline/2014/01/15

https://www.commondreams.org/view/2012/07/03-0

https://www.commondreams.org/view/2014/01/17-7


"The lesson they have drawn is clear: if lesser civilizations will assume the hands-on work, the more advanced West can concentrate on working with its brain. Thanks to the proliferation of business schools, this self-interested approach has almost instantaneously been converted into a philosophical rationale. Rosabeth Moss Kanter at the Harvard Business School writes as a leading thinker of the "post-entrepreneurial company," as if this were an intended and welcome result of business evolution. She sees companies marrying "the best of the creative, entrepreneurial approach with the discipline, focus and teamwork of an agile innovative corporation." She writes confidently of "the coming demise of bureaucracy and hierarchy."

Kanter's critique of the big, old American corporations is in many ways accurate. But the changes she imagines are dependent on the fact that much of the entrepreneurial and unbeatable competition from the Third World owes its success to social injustice. This does "not seem to have made an impact on the intellect of management thinkers or of managers in general. In their exciting role as capitalists they talk endlessly about the innate value of competition. To be competitive is their equivalent of morality. They treat competition as if it were a universal value enshrined within a single definition. Thus they miss the essential relativity of competition. Of course a nation which uses nineteenth-century social standards as a basis for industrial production will produce cheaper goods than one which uses middle-class standards. But even the rolling back of social policy sought by the New Right in the United States and Britain will not reduce production costs to Third World levels.

For example, heavy industries, such as steel, have been hard hit by Korean production. In 1979, the American industry employed 435,000 people. Ten years later, it employed 169,000. Why is Korean steel so much cheaper? Before the recent worker protests, Koreans were putting in the longest average work week in the world - fifty-seven hours. In return they earned 10 percent of a Western salary. Since the Korean cost of living is quite high, the workers live in slum conditions. Unions have been virtually banned and strikes forbidden. The work conditions are reminiscent of nineteenth-century England. In 1986, 1,660 workers were killed on the job; 141,809 were injured.
Given the modern manager's devotion to an international "standard" of competition, the effect of the marginal improvement in social conditions brought about in Korea by persistent and violent street demonstrations has been to weaken Korea's attractiveness as a capitalist producer. The citizen who listens to the modern rhetoric of free markets and free men would assume that a bit more social justice and democracy are good things. The cause of Western civilization has been advanced. The manager, however, sets aside rhetoric when it comes to specifics. From his point of view, Korea is now less competitive.

For those companies that wish to sell in the North American market, it is now far more competitive to produce goods by using the southern American States and northern Mexico in tandem. Social standards in the American South were never high, but they are now being reinstitutionalized at a low level by industrial investors in search of cheap, unsecured, and unprotected labour. A few hours farther south, across the border, is a massive assembly area called the Maquiladora zone. The southern American states function at half the wage levels of the north, of Canada and of Europe. The Maquiladora zone functions at mid-nineteenth-century levels of child labour laws and factory safety regulations. Wages are a tenth those of the developed world. Dangerous chemicals and explosives can be processed there without the expense of protection for the worker or the environment. A product manufactured between Tennessee and Mexico is now more competitive than one manufactured in Asia."

pp 366,367 'Voltaire's Bastards: The Dictatorship of Reason in the West' John Ralston Saul