Minimum Wage Increase: They Never Talks About the SALES

[Dirk the Daring]

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%.

Minimum wage laws cannot create jobs, they can ONLY outlaw them. Minimum wage laws demand that workers willing to accept wages less than the minimum wage are barred from such contracts. It is compulsory unemployment.

There is no escape from the objective fact of economic reality that minimum wage laws devalue wages. You simply cannot avoid devaluing wages when you make $1/hr work cost the same as $15/hr work.

Adding new dollars to the economy by increasing the minimum wage beyond what the work is worth is not the same thing as creating new wealth. Minimum wage laws always result in inflation. They necessarily must.

These realities are inescapable, and it is why minimum wage ponzi schemes ALWAYS fail.

How has Minimum Wage failed? Businesses seem to be surviving and thriving. Haven't observed any closing because they had to pay Workers Minimum Wage.

Have you been to a Woolworth lately?

 

[SuperDemocrat]

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%.

On your first point, you are right employers have to have a certain amount of employees to run their business but what happens if the business owner simply decides that this can't work anymore? He may eat the cost but he may discover he has alternate investment options or he may decide to spend that money on himself. This may result in closing the business all together.

 

[thereisnospoon]

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.

I am not interested in theories.
Narrow the focus to the people most affected. The small business owner. Now, one more time. From where does that business owner acquire the funds to pay the government mandated wages?
If you are going to advocate for central planning, we've nothing to discuss.

 

[thereisnospoon]

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 ?

That is an obfuscation....
The rising tide theory is a simplification.
In matters of economy, there is always negative push back against any outside influence mandated by government. Individual business will always react to either get around the mandate. Raise their prices or add fees. Seek waivers. Cut staff. Reduce labor hours. Cut out benefits. Or reduce benefits.
Simply put, money cannot be created out of nothing. Wealth must be produced.
Short term, those getting the government stipend will have a little extra spending money. Long term, once the marketplace reacts, they will be right back where they started.
In some cases, worse off as their boss is now their former boss because he or she had to lay off people to cut staff. Cut hours. Or close up shop.
Finally, for those managing to avoid the carnage, they will see their purchasing power reduced by higher consumer prices.
That last part is inevitable.
"just pay them" because "we believe you are hiding the money to keep it for yourself" doesn't cut any ice here.

 

[thereisnospoon]

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 seems to have this new method all figured out.

 

[thereisnospoon]

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

Sales? Wow.....hey genius, if your labor costs rise, you must increase the price to make up for the increase to generate the same profit margin as before the increase in wages.
Holy crap!!!!

 

[thereisnospoon]

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.

Oh...now we're using insults to get our point across....
Look, I did not make this personal.....Now, I will tell you I can hurl insults wbetter than most others. I am ruthless. And I don't give a shit about the rules.
You want to make this personal? I am debating an issue here. If you want a bar room brawl, let me know.
Otherwise stand down.
Your call.
Now, I don't care about the OP......The fact is if my labor costs rise, so do my prices. I will do what I must to maintain my profit margins.
BTW, your theory is predicated on the idea that those receiving the government handout will automatically send that money into the consumer end of the economy.
I contend they will use that money to pay bills and to save what they can...
That is precisely what happened when we got that $600 ( couples) $300 (individuals) tax refund. Most Americans used that money to pay down debt and for savings. And thank goodness it worked out that way. Because pumping $900 billion (cash) into the hands of consumers over a short period of time is inflationary.
Now, go ahead. Its your dime.....

 

[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.

Oh...now we're using insults to get our point across....
Look, I did not make this personal.....Now, I will tell you I can hurl insults wbetter than most others. I am ruthless. And I don't give a shit about the rules.
You want to make this personal? I am debating an issue here. If you want a bar room brawl, let me know.
Otherwise stand down.
Your call.
Now, I don't care about the OP......The fact is if my labor costs rise, so do my prices. I will do what I must to maintain my profit margins.
BTW, your theory is predicated on the idea that those receiving the government handout will automatically send that money into the consumer end of the economy.
I contend they will use that money to pay bills and to save what they can...
That is precisely what happened when we got that $600 ( couples) $300 (individuals) tax refund. Most Americans used that money to pay down debt and for savings. And thank goodness it worked out that way. Because pumping $900 billion (cash) into the hands of consumers over a short period of time is inflationary.
Now, go ahead. Its your dime.....

1. You raise price, you lose sales$$$ Your loss.

2. Bills are just late purchases. Helps businesses. Helps he economy.

 

[protectionist]

Sales? Wow.....hey genius, if your labor costs rise, you must increase the price to make up for the increase to generate the same profit margin as before the increase in wages.
Holy crap!!!!

HA HA HA.

 

[protectionist]

Protectionist seems to have this new method all figured out.

I learned it in college in the 1960s. I taught it in college in the 1970s. Nothing new.

 

[protectionist]

. Now, one more time. From where does that business owner acquire the funds to pay the government mandated wages?

HA HA HA. I'm not sure if I'm believing this. Think real hard now. Or you could just read the OP and about 200 posts in the thread. Somebody please tell this poor soul about disposable income, would you ?

 

[protectionist]

On your first point, you are right employers have to have a certain amount of employees to run their business but what happens if the business owner simply decides that this can't work anymore? He may eat the cost but he may discover he has alternate investment options or he may decide to spend that money on himself. This may result in closing the business all together.

Nebulous post. What exactly are you talking about, might I ask ?

 

[protectionist]

So why not just raise it to $100/hr and eliminate poverty altogether?

I paid my workers $150/hour, (and that was in the 1980s)

 

[protectionist]

Are Progressives really this dumb? I mean really? Do they just not think and have no grasp of history? Do they think these stupid ideas are "NEW"?

Most CONSERVATIVES support raising the minimum wage. So do most Republicans.

In U.S. 71 Back Raising Minimum Wage

 

[Dirk the Daring]

I thought you were a supporter of free enterprise.

I don't shed tears for the most fortunate among us. They'll be fine, regardless of having to pay workers a little more. They'll still have their yachts, jets, and their kids will still attend top elite private schools. They'll be fine. The sky won't fall. I promise.

They'll be fine, regardless of having to pay workers a little more. They'll still have their yachts.....

I hate those rich guys and their yachts! We should create a tax on those yachts, show those bastards. What could go wrong?

I don't hate em. I'm sick of their silly whining. Just pay up and shut up. Their yachts and jets will still be there.

If they get their way on the $15/hr minimum wage, they'll just find something else to whine about.

You didn't really think they would stop whining before capitalism was totally destroyed, did you?

Give em the $15. I promise the sky won't fall. I still don't get why so many are so frightened and angry about people making a decent wage. If you're not paying em, don't worry about it. Trust me, Walmart and McDonalds Execs will be fine. They'll still be Multimillionaires. They don't need your outrage and sympathy.

Please, for the love of Gawd, leave your house right now, drive to the nearest bookstore, buy the (appropriately titled in this case) Economics for Dummies, read approximately one half of the first page, then come back here and apologize for wasting everyone's time.

 

[thereisnospoon]

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.

Oh...now we're using insults to get our point across....
Look, I did not make this personal.....Now, I will tell you I can hurl insults wbetter than most others. I am ruthless. And I don't give a shit about the rules.
You want to make this personal? I am debating an issue here. If you want a bar room brawl, let me know.
Otherwise stand down.
Your call.
Now, I don't care about the OP......The fact is if my labor costs rise, so do my prices. I will do what I must to maintain my profit margins.
BTW, your theory is predicated on the idea that those receiving the government handout will automatically send that money into the consumer end of the economy.
I contend they will use that money to pay bills and to save what they can...
That is precisely what happened when we got that $600 ( couples) $300 (individuals) tax refund. Most Americans used that money to pay down debt and for savings. And thank goodness it worked out that way. Because pumping $900 billion (cash) into the hands of consumers over a short period of time is inflationary.
Now, go ahead. Its your dime.....

1. You raise price, you lose sales$$$ Your loss.

2. Bills are just late purchases. Helps businesses. Helps he economy.

Hey guess what....All businesses subject to the increase will make adjustments to offset the increase in wages.
And that would be on all levels from the gathering and processing of raw materials, to engineering, production, packaging, logistics, transportation and delivery of product.
It starts at the beginning and makes its way to the end user.
I don't know if you've been an owner or operator of a business, but if you have, it would come as no surprise you are no longer a business owner....
Example.....I am a sole proprietor of a carpet cleaning business. And lets say for example, the price of fuel jumps by 70 cents per gallon because of whatever. A hurricane, geo political uncertainty, etc....Now, I buy 500 gallons of fuel per week. I do a lot of driving and my cleaning machine runs on gasoline as well. I am spending an additional $350 per week on gasoline....Now, do you think my customers are not paying more for gasoline? If so, they will react and maybe cut back on some items such as getting their carpets cleaned. This in turn causes a downturn in my receivables. I require a certain profit margin to maintain my business and my household....Therefore, I am going to raise my prices to make up the difference. Now you might say those customers will see the price increase and take their business elsewhere. What you don't realize is every other carpet cleaning company is paying 70 cents more per gallon. And so they have also raised their prices.
The same premise applies to labor costs.

 

[Dirk the Daring]

If I was a governor of a state with a legislature stupid enough to pass a $30/hr minimum wage, I would totally sign it into law. Just to shut you morons up once and for all.

Hey if someone can get $30, good for them. America's all about gettin that paper. That's what matters most in America.

And if they can't, they're not allowed to work. Nice.

America is all about greed. So why do people like you feel workers aren't allowed to be greedy? You certainly don't mind businesses being greedy? So why not struggling workers? Why can't they be greedy? America's only about the cash. Workers would be stupid to not demand theirs.

Workers are absolutely allowed to be greedy. If a worker is greedy enough to better their standard of living by improving their value and finding a higher paying job elsewhere, they are absolutely entitled to do so. But asking for your value to double overnight despite what you contribute to your company isn't greed, it's outright insanity.

 

[Dirk the Daring]

If I was a governor of a state with a legislature stupid enough to pass a $30/hr minimum wage, I would totally sign it into law. Just to shut you morons up once and for all.

Hey if someone can get $30, good for them. America's all about gettin that paper. That's what America's all about.

The reason I know that even you don't believe the bullshit your spinning is that you will never answer a very simple question: If minimum wage mandates have no negative repercussions, why stop at $30/hr? Why not just legislate a $100/hr minimum wage? If you think that is ridiculous, please explain why.

Well obviously there has to be some reasonable contemplation involved.

Why?

But again i ask, show us all the examples of businesses going under due to the Minimum Wage. Because i've never observed even one example of that happening. If you can't afford to pay Minimum Wage, you need to shut things down. It wasn't meant to be for you.

In terms of real value, relative to inflation, minimum wage has been going down. So if anything, they've been getting relief over the last twenty or thirty years. There's no evidence that minimum wage increases will have negative consequences because they've been carefully, and deliberately, kept lagging behind the rate of inflation.

And again, the other point you keep ignoring, what do you say to workers who want to do work that isn't worth $30/hr? I'm not that really concerned about the fate of the businesses in question. They can, and will, find a workaround for dumbass regulations. They always do. It's the workers who are told they can no longer work who will suffer.

But what is a human being worth? Seems to be a pretty arbitrary calculation and a matter of philosophical viewpoint. If a human being isn't worth $15 an hr to you, than so be it. But others may see it very differently than you do. Personally, i don't think $15 is very much. It'll still be a struggle for most. But that's just me.

And there it is, I *knew* we'd get here eventually. 'What is the value of a human being?' The exact type of nonsensical rhetoric I'd expect from any four year old... or any liberal for that matter. This chap isn't here to discuss the cause/effect relationship of minimum wages and production costs, he's just here to waste everyone's time with hippie 'all humans are worth more!' rantings. If any employer at any time paid more than 3 pennies for any amount of this poster's time, they are owed a big-time refund. >

 

[rightwinger]

Employers can't reduce staff? Really? I was working at a car wash when the minimum wage took a big jump in the 1970s. The car wash laid off about 1/4 to 1/3 of the workers because they simply could not afford to pay the same amount of people at the new wage.

One problem with liberalism is that it repeatedly must ignore reality. Why, why, why not use the Earned Income Tax Credit to help low-income folks who are supporting families and/or who are over 25, rather than raise the minimum wage and destroy tons of jobs?

If you can function with lower staffing levels....you do

You don't have more workers on a shift than you need

 

[rightwinger]

I see you never refuted my two tier MW is a great idea and I ripped it off from the liberals

If your up on your news the teen un employment is off the charts ridiculous high, but liberals don't care

16 to 17 years old can't vote

For that matter neither do republicans

Why do you think teen unemployment is so high?

Because older workers have been forced to take jobs formerly reserved for teens