Minimum Wage Increase: They Never Talks About the SALES

[Anathema]

You can do whatever YOU want, but when the MW goes up, suddenly the highest energy spenders (with the longest list of things they need to buy) go out and spend like hotcakes. Common sense.

Which is why I won't do business with any company paying these people $10+ an hour. I can live without McDonald's or going to Honey Farms mini markets.

 

[thereisnospoon]

Just now, I saw another report about the topic of minimum wage increase. This one was on CNN, hosted by Julie Banderas. She was talking to Scott Gamm, of HelpSaveMyDollars.com, a financial website focused on helping consumers save and learn about money. They were talking about the recent 14-1 vote by the city of Los Angeles to raise the minimum wage to $15 by 2020.

Scott might be well versed on various aspects pertaining to consumer finances but, on the minimum wage raise, he is waaay off the mark. He said three things about the minimum wage raise topic. And he was WRONG on all three. Gamm merely recited the 3 most commonly heard (and programmed) descriptions about minimum wage raises.

1. He said it would cause jobs to be lost. FALSE! Employers function with a number of employees that bring them the most income/profit. They CANNOT reduce staff. Any more or less employees results in SALES and income reduction. Layoffs result in losses, not gains.

2. He (and Banderas too) said prices would be raised (or fees created) to compensate for the wage losses, and these losses would just be "passed on" to the customers. More FALSE! scare talk. Businesses CANNOT raise prices because they are already fixed at a market price, related to maximization of sales/income. Any change in price (up or down) results in reduction of SALES and income.

3. He said businesses will move away from LA. FALSE! (in most cases). Does Gamm think that closing down a business and moving to another location can be done scott (no pun intended) free ? Depending on the business, moving costs can vary from just barely economical, to completely UNeconomical, and the latter is much more often the case. Imagine a machine shop with over 100 large production machines, having to pack then all up and move miles away. Some businesses could do it. Not many.

So here's the real crux of all this. As in 1000 other media reports I've seen on minimum wage increases, the most important aspect of this is NEVER MENTIONED. Not a word. That is the increase in DISPOSABLE INCOME resulting in INCREASES SALES$$$. All businesses get this, and generally it far outweighs labor increases, since the number of wage raised consumers (not just those at the minimum wage) by far outnumbers any one employer's workers who are getting wage increases.

Then there's also the fact that many business, while receiving this big SALES boost, do NOT have any wage loss at all. These are businesses who are mom & pop and have no employees, those whose workers are all working just on sales commission (car lots, furniture, real estate, insurance, etc), and third, those with skilled workers (ex. machine shops) whose workers all already get well over $15 hour, or whatever the MW would be raised to.

I think back to when I owned a business. I paid my commission salespeople $350/hour (in 2015 dollars), and they still were only receiving 15% of the sale. In all, I made fine profits and expanded the business. Biggest downer ? All the people who called in and said > "Sorry. I can't afford it." Of course they can't. Not one somebody out there is paying them a low minimum wage. To be successful in business, you have a lot fo things to do. But you can't do anything, if the public around you doesn't have money in their pockets to buy what you're trying to sell.

This is why Conservatives who support raising the MW nationwide, outnumber Conservatives who don't, 54% to 44%.

Ok...Businesses cannot increase their prices. Now can they reduce staff or hours....
Hmm. Soooooooooooooooo.....The money comes from......where?

 

[thereisnospoon]

Just now, I saw another report about the topic of minimum wage increase. This one was on CNN, hosted by Julie Banderas. She was talking to Scott Gamm, of HelpSaveMyDollars.com, a financial website focused on helping consumers save and learn about money. They were talking about the recent 14-1 vote by the city of Los Angeles to raise the minimum wage to $15 by 2020.

Scott might be well versed on various aspects pertaining to consumer finances but, on the minimum wage raise, he is waaay off the mark. He said three things about the minimum wage raise topic. And he was WRONG on all three. Gamm merely recited the 3 most commonly heard (and programmed) descriptions about minimum wage raises.

1. He said it would cause jobs to be lost. FALSE! Employers function with a number of employees that bring them the most income/profit. They CANNOT reduce staff. Any more or less employees results in SALES and income reduction. Layoffs result in losses, not gains.

2. He (and Banderas too) said prices would be raised (or fees created) to compensate for the wage losses, and these losses would just be "passed on" to the customers. More FALSE! scare talk. Businesses CANNOT raise prices because they are already fixed at a market price, related to maximization of sales/income. Any change in price (up or down) results in reduction of SALES and income.

3. He said businesses will move away from LA. FALSE! (in most cases). Does Gamm think that closing down a business and moving to another location can be done scott (no pun intended) free ? Depending on the business, moving costs can vary from just barely economical, to completely UNeconomical, and the latter is much more often the case. Imagine a machine shop with over 100 large production machines, having to pack then all up and move miles away. Some businesses could do it. Not many.

So here's the real crux of all this. As in 1000 other media reports I've seen on minimum wage increases, the most important aspect of this is NEVER MENTIONED. Not a word. That is the increase in DISPOSABLE INCOME resulting in INCREASES SALES$$$. All businesses get this, and generally it far outweighs labor increases, since the number of wage raised consumers (not just those at the minimum wage) by far outnumbers any one employer's workers who are getting wage increases.

Then there's also the fact that many business, while receiving this big SALES boost, do NOT have any wage loss at all. These are businesses who are mom & pop and have no employees, those whose workers are all working just on sales commission (car lots, furniture, real estate, insurance, etc), and third, those with skilled workers (ex. machine shops) whose workers all already get well over $15 hour, or whatever the MW would be raised to.

I think back to when I owned a business. I paid my commission salespeople $350/hour (in 2015 dollars), and they still were only receiving 15% of the sale. In all, I made fine profits and expanded the business. Biggest downer ? All the people who called in and said > "Sorry. I can't afford it." Of course they can't. Not one somebody out there is paying them a low minimum wage. To be successful in business, you have a lot fo things to do. But you can't do anything, if the public around you doesn't have money in their pockets to buy what you're trying to sell.

This is why Conservatives who support raising the MW nationwide, outnumber Conservatives who don't, 54% to 44%.

The problem with conservatives -including many on this board - is that they are too immature to admit they were wrong. Years back it may have been conventional wisdom to keep the minimum wage where it is, but the evidence of the economic benefits of raising it are undeniable. It it is crucial if we want to signficantly increase consumer spending - the driving force of our whole economy.

The same can be said about climate change. Their pathetic pride keeps them from seeing the truth.

Wrong? About what?

 

[thereisnospoon]

Just now, I saw another report about the topic of minimum wage increase. This one was on CNN, hosted by Julie Banderas. She was talking to Scott Gamm, of HelpSaveMyDollars.com, a financial website focused on helping consumers save and learn about money. They were talking about the recent 14-1 vote by the city of Los Angeles to raise the minimum wage to $15 by 2020.

Scott might be well versed on various aspects pertaining to consumer finances but, on the minimum wage raise, he is waaay off the mark. He said three things about the minimum wage raise topic. And he was WRONG on all three. Gamm merely recited the 3 most commonly heard (and programmed) descriptions about minimum wage raises.

1. He said it would cause jobs to be lost. FALSE! Employers function with a number of employees that bring them the most income/profit. They CANNOT reduce staff. Any more or less employees results in SALES and income reduction. Layoffs result in losses, not gains.

2. He (and Banderas too) said prices would be raised (or fees created) to compensate for the wage losses, and these losses would just be "passed on" to the customers. More FALSE! scare talk. Businesses CANNOT raise prices because they are already fixed at a market price, related to maximization of sales/income. Any change in price (up or down) results in reduction of SALES and income.

3. He said businesses will move away from LA. FALSE! (in most cases). Does Gamm think that closing down a business and moving to another location can be done scott (no pun intended) free ? Depending on the business, moving costs can vary from just barely economical, to completely UNeconomical, and the latter is much more often the case. Imagine a machine shop with over 100 large production machines, having to pack then all up and move miles away. Some businesses could do it. Not many.

So here's the real crux of all this. As in 1000 other media reports I've seen on minimum wage increases, the most important aspect of this is NEVER MENTIONED. Not a word. That is the increase in DISPOSABLE INCOME resulting in INCREASES SALES$$$. All businesses get this, and generally it far outweighs labor increases, since the number of wage raised consumers (not just those at the minimum wage) by far outnumbers any one employer's workers who are getting wage increases.

Then there's also the fact that many business, while receiving this big SALES boost, do NOT have any wage loss at all. These are businesses who are mom & pop and have no employees, those whose workers are all working just on sales commission (car lots, furniture, real estate, insurance, etc), and third, those with skilled workers (ex. machine shops) whose workers all already get well over $15 hour, or whatever the MW would be raised to.

I think back to when I owned a business. I paid my commission salespeople $350/hour (in 2015 dollars), and they still were only receiving 15% of the sale. In all, I made fine profits and expanded the business. Biggest downer ? All the people who called in and said > "Sorry. I can't afford it." Of course they can't. Not one somebody out there is paying them a low minimum wage. To be successful in business, you have a lot fo things to do. But you can't do anything, if the public around you doesn't have money in their pockets to buy what you're trying to sell.

This is why Conservatives who support raising the MW nationwide, outnumber Conservatives who don't, 54% to 44%.

the most important aspect of this is NEVER MENTIONED. Not a word. That is the increase in DISPOSABLE INCOME resulting in INCREASES SALES$$$.

If I pay my employees another $500,000 a year, are my sales supposed to increase by $500,000?
Is that supposed to be an even trade?

The OP is deluded under the belief that a rising tide lifts all boats...
No it doesn't.....Not in economics or finance.

 

[thereisnospoon]

He said it would cause jobs to be lost. FALSE! Employers function with a number of employees that bring them the most income/profit. They CANNOT reduce staff. Any more or less employees results in SALES and income reduction. Layoffs result in losses, not gains.

Where is the chart that shows employers the precise number of employees they should hire in order to get the most income/profit?


He (and Banderas too) said prices would be raised (or fees created) to compensate for the wage losses, and these losses would just be "passed on" to the customers. More FALSE! scare talk. Businesses CANNOT raise prices because they are already fixed at a market price, related to maximization of sales/income. Any change in price (up or down) results in reduction of SALES and income.
Where is the chart that shows employers the precise price level they need in order to get the most sales/income?

He said businesses will move away from LA. FALSE! (in most cases). Does Gamm think that closing down a business and moving to another location can be done scott (no pun intended) free ?

Did anyone say moving was free?

Depending on the business, moving costs can vary from just barely economical, to completely UNeconomical, and the latter is much more often the case. Imagine a machine shop with over 100 large production machines, having to pack then all up and move miles away.

Imagine a machine shop with over 100 large production machines, having to pay higher wages than the business could support. Imagine that business running at a loss, just because some politicians, who couldn't pass an Econ 101 class, created a stupid law.

Do you even realize how hollow this response is? You don't even have an argument. Any idiot taking an Econ class knows that consumer spending is what drives this economy. Consumer spending comes from paychecks. This isn't hard to grasp.

Hmmm
You make an argument for market based economics. Yet you advocate for government mandates increasing wages. A practive which violates the principles of market based economics.
I still have yet to see any one who is in support of these artificial mandated wage hikes to explain from where does the business owner get the funds to pay the workers.

 

[thereisnospoon]

Just now, I saw another report about the topic of minimum wage increase. This one was on CNN, hosted by Julie Banderas. She was talking to Scott Gamm, of HelpSaveMyDollars.com, a financial website focused on helping consumers save and learn about money. They were talking about the recent 14-1 vote by the city of Los Angeles to raise the minimum wage to $15 by 2020.

Scott might be well versed on various aspects pertaining to consumer finances but, on the minimum wage raise, he is waaay off the mark. He said three things about the minimum wage raise topic. And he was WRONG on all three. Gamm merely recited the 3 most commonly heard (and programmed) descriptions about minimum wage raises.

1. He said it would cause jobs to be lost. FALSE! Employers function with a number of employees that bring them the most income/profit. They CANNOT reduce staff. Any more or less employees results in SALES and income reduction. Layoffs result in losses, not gains.

2. He (and Banderas too) said prices would be raised (or fees created) to compensate for the wage losses, and these losses would just be "passed on" to the customers. More FALSE! scare talk. Businesses CANNOT raise prices because they are already fixed at a market price, related to maximization of sales/income. Any change in price (up or down) results in reduction of SALES and income.

3. He said businesses will move away from LA. FALSE! (in most cases). Does Gamm think that closing down a business and moving to another location can be done scott (no pun intended) free ? Depending on the business, moving costs can vary from just barely economical, to completely UNeconomical, and the latter is much more often the case. Imagine a machine shop with over 100 large production machines, having to pack then all up and move miles away. Some businesses could do it. Not many.

So here's the real crux of all this. As in 1000 other media reports I've seen on minimum wage increases, the most important aspect of this is NEVER MENTIONED. Not a word. That is the increase in DISPOSABLE INCOME resulting in INCREASES SALES$$$. All businesses get this, and generally it far outweighs labor increases, since the number of wage raised consumers (not just those at the minimum wage) by far outnumbers any one employer's workers who are getting wage increases.

Then there's also the fact that many business, while receiving this big SALES boost, do NOT have any wage loss at all. These are businesses who are mom & pop and have no employees, those whose workers are all working just on sales commission (car lots, furniture, real estate, insurance, etc), and third, those with skilled workers (ex. machine shops) whose workers all already get well over $15 hour, or whatever the MW would be raised to.

I think back to when I owned a business. I paid my commission salespeople $350/hour (in 2015 dollars), and they still were only receiving 15% of the sale. In all, I made fine profits and expanded the business. Biggest downer ? All the people who called in and said > "Sorry. I can't afford it." Of course they can't. Not one somebody out there is paying them a low minimum wage. To be successful in business, you have a lot fo things to do. But you can't do anything, if the public around you doesn't have money in their pockets to buy what you're trying to sell.

This is why Conservatives who support raising the MW nationwide, outnumber Conservatives who don't, 54% to 44%.

the most important aspect of this is NEVER MENTIONED. Not a word. That is the increase in DISPOSABLE INCOME resulting in INCREASES SALES$$$.

If I pay my employees another $500,000 a year, are my sales supposed to increase by $500,000?
Is that supposed to be an even trade?

I don't understand how you can be so dense. The economic benefits of raising the minimum wage would occur because the change would happen in the entire economy. Overall, a good portion of the economy would have more disposable income, so yeah, business in general would see an increase in demand.

Overall, a good portion of the economy would have more disposable income, so yeah, business in general would see an increase in demand.

And the increase still leaves them less profitable.

It would initially, yes, but over time the huge boom in consumer spending would change that.

Any wage increase would eventually be offset by increasing prices.
Period.

 

[thereisnospoon]

He said it would cause jobs to be lost. FALSE! Employers function with a number of employees that bring them the most income/profit. They CANNOT reduce staff. Any more or less employees results in SALES and income reduction. Layoffs result in losses, not gains.

Where is the chart that shows employers the precise number of employees they should hire in order to get the most income/profit?


He (and Banderas too) said prices would be raised (or fees created) to compensate for the wage losses, and these losses would just be "passed on" to the customers. More FALSE! scare talk. Businesses CANNOT raise prices because they are already fixed at a market price, related to maximization of sales/income. Any change in price (up or down) results in reduction of SALES and income.
Where is the chart that shows employers the precise price level they need in order to get the most sales/income?

He said businesses will move away from LA. FALSE! (in most cases). Does Gamm think that closing down a business and moving to another location can be done scott (no pun intended) free ?

Did anyone say moving was free?

Depending on the business, moving costs can vary from just barely economical, to completely UNeconomical, and the latter is much more often the case. Imagine a machine shop with over 100 large production machines, having to pack then all up and move miles away.

Imagine a machine shop with over 100 large production machines, having to pay higher wages than the business could support. Imagine that business running at a loss, just because some politicians, who couldn't pass an Econ 101 class, created a stupid law.

1. The "chart" is in their books. It is the dollar amounts of sales that comes from selling at various prices. That price than brings them the most sales is the "MARKET PRICE". This is the price you see on the shelves for all products. Rather than do the trial and error approach, many employers just use the copycat method and just go with what competitors are charging.

That's just plain wrong. The market price is the price the produces the greatest profit. Zero is the price that brings in the most sales.

Talk about someone who doesn't know anything about economics. You should just shut your mouth on the subject before you embarrass yourself further.

BINGO.....

 

[Toddsterpatriot]

Just now, I saw another report about the topic of minimum wage increase. This one was on CNN, hosted by Julie Banderas. She was talking to Scott Gamm, of HelpSaveMyDollars.com, a financial website focused on helping consumers save and learn about money. They were talking about the recent 14-1 vote by the city of Los Angeles to raise the minimum wage to $15 by 2020.

Scott might be well versed on various aspects pertaining to consumer finances but, on the minimum wage raise, he is waaay off the mark. He said three things about the minimum wage raise topic. And he was WRONG on all three. Gamm merely recited the 3 most commonly heard (and programmed) descriptions about minimum wage raises.

1. He said it would cause jobs to be lost. FALSE! Employers function with a number of employees that bring them the most income/profit. They CANNOT reduce staff. Any more or less employees results in SALES and income reduction. Layoffs result in losses, not gains.

2. He (and Banderas too) said prices would be raised (or fees created) to compensate for the wage losses, and these losses would just be "passed on" to the customers. More FALSE! scare talk. Businesses CANNOT raise prices because they are already fixed at a market price, related to maximization of sales/income. Any change in price (up or down) results in reduction of SALES and income.

3. He said businesses will move away from LA. FALSE! (in most cases). Does Gamm think that closing down a business and moving to another location can be done scott (no pun intended) free ? Depending on the business, moving costs can vary from just barely economical, to completely UNeconomical, and the latter is much more often the case. Imagine a machine shop with over 100 large production machines, having to pack then all up and move miles away. Some businesses could do it. Not many.

So here's the real crux of all this. As in 1000 other media reports I've seen on minimum wage increases, the most important aspect of this is NEVER MENTIONED. Not a word. That is the increase in DISPOSABLE INCOME resulting in INCREASES SALES$$$. All businesses get this, and generally it far outweighs labor increases, since the number of wage raised consumers (not just those at the minimum wage) by far outnumbers any one employer's workers who are getting wage increases.

Then there's also the fact that many business, while receiving this big SALES boost, do NOT have any wage loss at all. These are businesses who are mom & pop and have no employees, those whose workers are all working just on sales commission (car lots, furniture, real estate, insurance, etc), and third, those with skilled workers (ex. machine shops) whose workers all already get well over $15 hour, or whatever the MW would be raised to.

I think back to when I owned a business. I paid my commission salespeople $350/hour (in 2015 dollars), and they still were only receiving 15% of the sale. In all, I made fine profits and expanded the business. Biggest downer ? All the people who called in and said > "Sorry. I can't afford it." Of course they can't. Not one somebody out there is paying them a low minimum wage. To be successful in business, you have a lot fo things to do. But you can't do anything, if the public around you doesn't have money in their pockets to buy what you're trying to sell.

This is why Conservatives who support raising the MW nationwide, outnumber Conservatives who don't, 54% to 44%.

the most important aspect of this is NEVER MENTIONED. Not a word. That is the increase in DISPOSABLE INCOME resulting in INCREASES SALES$$$.

If I pay my employees another $500,000 a year, are my sales supposed to increase by $500,000?
Is that supposed to be an even trade?

The OP is deluded under the belief that a rising tide lifts all boats...
No it doesn't.....Not in economics or finance.

He's confused about many, many things.

 

[protectionist]

The problem with conservatives -including many on this board - is that they are too immature to admit they were wrong. Years back it may have been conventional wisdom to keep the minimum wage where it is, but the evidence of the economic benefits of raising it are undeniable. It it is crucial if we want to signficantly increase consumer spending - the driving force of our whole economy.

The same can be said about climate change. Their pathetic pride keeps them from seeing the truth.

You are right about the economic benefits of MW raise, and consumer spending the driving force of our whole economy, but it is only SOME conservatives (and only a minority of them) who refuse to admit they're wrong.

Conservatives who support raising the MW nationwide, outnumber Conservatives who don't, 54% to 44%

 

[protectionist]

Ok...Businesses cannot increase their prices. Now can they reduce staff or hours....
Hmm. Soooooooooooooooo.....The money comes from......where?

Try reading the OP instead of coming in here late, and asking dumb questions' Ans still another airhead comes in and confirms the title of the thread >>

Minimum Wage Increase: They Never Talks About the SALES

 

[protectionist]

The OP is deluded under the belief that a rising tide lifts all boats...
No it doesn't.....Not in economics or finance.

And your theory is ? That the rising tide SINKS the boats ?

 

[protectionist]

You make an argument for market based economics. Yet you advocate for government mandates increasing wages. A practive which violates the principles of market based economics.
I still have yet to see any one who is in support of these artificial mandated wage hikes to explain from where does the business owner get the funds to pay the workers.

Your question has been answered about 150-200 times in this thread. Try reading it

1. If you have to ask such a brain question, you have no business being in this thread.

2. To allow the free market to be in control of an economy, is about like allowing a hurricane to do whatever it wants.

 

[protectionist]

Any wage increase would eventually be offset by increasing prices.
Period.

That was refuted in the OP, you undereducated, ass clown.. And 100 times more throughout the thread.

 

[protectionist]

He said it would cause jobs to be lost. FALSE! Employers function with a number of employees that bring them the most income/profit. They CANNOT reduce staff. Any more or less employees results in SALES and income reduction. Layoffs result in losses, not gains.

Where is the chart that shows employers the precise number of employees they should hire in order to get the most income/profit?


He (and Banderas too) said prices would be raised (or fees created) to compensate for the wage losses, and these losses would just be "passed on" to the customers. More FALSE! scare talk. Businesses CANNOT raise prices because they are already fixed at a market price, related to maximization of sales/income. Any change in price (up or down) results in reduction of SALES and income.
Where is the chart that shows employers the precise price level they need in order to get the most sales/income?

He said businesses will move away from LA. FALSE! (in most cases). Does Gamm think that closing down a business and moving to another location can be done scott (no pun intended) free ?

Did anyone say moving was free?

Depending on the business, moving costs can vary from just barely economical, to completely UNeconomical, and the latter is much more often the case. Imagine a machine shop with over 100 large production machines, having to pack then all up and move miles away.

Imagine a machine shop with over 100 large production machines, having to pay higher wages than the business could support. Imagine that business running at a loss, just because some politicians, who couldn't pass an Econ 101 class, created a stupid law.

1. The "chart" is in their books. It is the dollar amounts of sales that comes from selling at various prices. That price than brings them the most sales is the "MARKET PRICE". This is the price you see on the shelves for all products. Rather than do the trial and error approach, many employers just use the copycat method and just go with what competitors are charging.

That's just plain wrong. The market price is the price the produces the greatest profit. Zero is the price that brings in the most sales.

Talk about someone who doesn't know anything about economics. You should just shut your mouth on the subject before you embarrass yourself further.

Obvious to anyone with a brain, when I said the market price is the price that brings in the most sales, I was talking about the price at the top of the bell-shaped curve of prices vs income, which brings in the most profit-generating sales, RELATIVE to other prices along the curve. If you understood this simple graphic, you wouldn't have had trouble understanding what I was saying. On the left side of the bell, are prices that, of course, could bring in more sales, but that's meaningless because the price is too low to maximize income. That's understood. On the right side of the bell, there are less sales than at the MP AND less income, as sales drop off because the price has gone too high.

 

[protectionist]

You can do whatever YOU want, but when the MW goes up, suddenly the highest energy spenders (with the longest list of things they need to buy) go out and spend like hotcakes. Common sense.

Which is why I won't do business with any company paying these people $10+ an hour. I can live without McDonald's or going to Honey Farms mini markets.

That doesn't make a grain of sense.

 

[protectionist]

Fine. So if total disposable income increases by $1 billion, they can buy, at most $1 billion more in goods and services. And total profits still fall.

No, profits increase. Especially for millions of companies who don't pay MW wages (or ANY wages) For them it is clear cut 100% GAIN.

 

[JoeMoma]

Say a manufacturer of widgets sells widgets for $3.00 each. Each widget costs $2.50 to produce and $0.50 of that cost is labor (minimum wage labor). The manafacturer sells 10 million widgets a year making a net profit of 5 million.

Then the minimum wage is doubled so that the labor cost of each widget is now $1.00 per widget. Each widget now costs $3.00 to produce. By how much must sales increase for the widget manafacturer to have a higher profit than he had before?

Keep in mind that according to the OP that the price can not be raised because the original market price was already the ideal price. Also, the manufacture cannot lay people off because that would result in a decrease in sales and a decrease in profit.

 

[protectionist]

Do all 100,000 MW workers shop at ABC? Do any?

Yeah. I happen to know ABC. It's owned by a friend of mine. And I heard the 100,000 workers were going to call in another 100,000 from Europe, to all come over and shop there. So it will be 200,000 (and that includes the 2 who work at ABC)

 

[protectionist]

Most of the time when the minimum wage is raised, it is so slight that it affects only a small percentage of the work force. That being said, labor costs are part of the cost of every product and service. A universal doubling of the minimum wage would have a huge effect on the labor costs of almost every product or service. If the minimum wage were to be raised from $7.25 per hour to $15.00 per hour over a short period of time, it will tend to drive the wages of the more skilled workers up also. For example, the shift supervisor who was happy with making $15 per hour to work with and supervise a group of people making $10.00 per hour will not be happy making only $15 per hour supervising those making the same amount, and rightly so since his work is worth more. The supervisor's wage would probably be pushed at least to two or three dollars above minimum. A hamburger joint that sells hamburgers will not only be affected by the increased cost of the labor of its workers, but it will also be affected by the increased labor costs of its suppliers. The cost to produce a product is a very important factor of the market price of a product. If the cost to produce a product changes, then the market price for that product will also change. Apple is not going to sell iPads for $500 they cost $600 to produce.

If low wage workers have more money in there pockets, then this will increase sales. However, if labor cost go up, the cost to produce products and services go up. If the sales price of the products and services are not increased, then the profit margin for each product sold will decrease, and some products may even have negative profit margins. Thus, an increase in labor costs will cause a reset in the market prices of product and services.

Not quite. Regardless of profit margin for each product sold, the firm is still OK because SALES$$$ increase. And if the sales price of the products and services were increased, that would cause LESS money to come in, not more (due to reduced sales)

Also, the greater the increase in MW (and higher wages), the greater the increase in DI and SALES$$$

Minimum Wage Increase: They Never Talk About the SALES

 

[JoeMoma]

Most of the time when the minimum wage is raised, it is so slight that it affects only a small percentage of the work force. That being said, labor costs are part of the cost of every product and service. A universal doubling of the minimum wage would have a huge effect on the labor costs of almost every product or service. If the minimum wage were to be raised from $7.25 per hour to $15.00 per hour over a short period of time, it will tend to drive the wages of the more skilled workers up also. For example, the shift supervisor who was happy with making $15 per hour to work with and supervise a group of people making $10.00 per hour will not be happy making only $15 per hour supervising those making the same amount, and rightly so since his work is worth more. The supervisor's wage would probably be pushed at least to two or three dollars above minimum. A hamburger joint that sells hamburgers will not only be affected by the increased cost of the labor of its workers, but it will also be affected by the increased labor costs of its suppliers. The cost to produce a product is a very important factor of the market price of a product. If the cost to produce a product changes, then the market price for that product will also change. Apple is not going to sell iPads for $500 they cost $600 to produce.

If low wage workers have more money in there pockets, then this will increase sales. However, if labor cost go up, the cost to produce products and services go up. If the sales price of the products and services are not increased, then the profit margin for each product sold will decrease, and some products may even have negative profit margins. Thus, an increase in labor costs will cause a reset in the market prices of product and services.

Not quite. Regardless of profit margin for each product sold, the firm is still OK because SALES$$$ increase. And if the sales price of the products and services were increased, that would cause LESS money to come in, not more (due to reduced sales)

Also, the greater the increase in MW (and higher wages), the greater the increase in DI and SALES$$$

Minimum Wage Increase: They Never Talk About the SALES

So if the increase in labor cost reduces the profit margin per product to zero at the current price, the profit will still increase because of increased sales?