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Leaving for Las Vegas: California's minimum wage law leaves businesses no choice

36 points by SQL2219 10y ago

grundprinzip 10y ago
Luckily, Trump is going to make America great again and will keep all those manufacturing jobs where owners don't like to pay minimum wage because they can't afford to pass on the raise because nobody wants to buy cheap apparel at this price point. While I understand why the author is complaining, he should much rather complain to all his potential customers that make a purchase decision based on price instead of ethically supporting american workers. I'm really waiting to see all those voters spend significantly more on "Made in Great America" apparel to make sure to keep all those jobs...
mcphage 10y ago
I'm supposed to feel bad for an employer who claims to care about his employees—but not so much that he's willing to pay them a living wage? And is willing to incur the cost of moving out of state to avoid paying a rate that won't go into effect until 2021? How much business has he lost? Well... none. But he would. Really. Just like VCRs were the "Boston strangler" of the film industry.
- deleted 10y ago
  [deleted]
- hueving 10y ago
  By the time minimum wage hits $15, he will be operating at a $200k loss. Are you implying that he is lying about that? Or are you just suggesting that some of the employees would be better off unemployed while the remaining that he could afford pick up the slack? Or would you rather the business fold entirely and all of them become unemployed including the owner?
  - youdontknowtho 10y ago
    That would only be the case if this one business were the entire economy of California. The added demand caused by employees with more money to spend will generate more production.
    - twoodfin 10y ago
      If you're sure about this, what's the point at which raising the minimum wage would be a net loss for aggregate demand?
      - youdontknowtho 10y ago
        I'm not an economist, so consider me soundly put in my place.
      - cmdrfred 10y ago
        Probably around the natural wage floor that is artificially low due to government subsidies (food stamps, housing assistance, welfare, Medicaid, etc). The unsubsidised wage floor is likely around the cost of living (In California that number is or will be above 15 an hour by the time the law is in place). A minimum wage increase isn't a gift to workers as much as it is a demand that the taxpayer no longer subsidize these businesses.
        twoodfin 10y ago
        That argument still doesn't seem coherent me. What "subsidy" is Walmart receiving that the Costco across the street is not? Walmart, after all, is paying workers who otherwise would receive even more government benefits. Costco is paying those same workers $0.
        cmdrfred 10y ago
        I'm not sure what your question is. Costco runs smaller margins than Walmart due to the founders religious ideology that prohibits him from operating like Walmart. Walmart is by far a more profitable model (121 billion gross for Walmart compared to 15 for Costco). The wages paid by Walmart are below the cost of living, if they simply paid them without subsidy their employees would be often unfed and homeless. >Costco is paying those same workers $0. Why would Costco pay its competitors employees? (Beyond what is does already via taxes)
  - FussyZeus 10y ago
    These situations are not solvable by doing basic math, you miss the complexities of the situation. To pay employees better, he'd shift the cost of the salaries to the goods in question, and possibly provide new/different products to address market conditions. Additionally everywhere I've worked, and this is anecdotal but still, when you pay your employees better they don't loathe their jobs quite so much, which leads to better customer service. Some people do still shop for service. If his response to rising operating costs is to not respond at all and continue charging the same prices for the same goods and not move at all in terms of addressing the problem, then he shouldn't be in business in the first place, he clearly has no idea how to run one.
  - mcphage 10y ago
    > By the time minimum wage hits $15, he will be operating at a $200k loss. Are you implying that he is lying about that? Now, that's a good question. Are companies lying when they fight against every law enacted to protect their employees? Are they mistaken? I think most likely: they don't care if what they're saying is true or not. Is that the same as lying? Well, I'll leave that to you to decide. > Or would you rather the business fold entirely and all of them become unemployed including the owner? Well, if the company you work for paid you 33% less, would you rather they folded immediately, so you could look for work elsewhere? Or would you rather that they went on paying you less so they could stay in business—succeeding as a company merely because they're unwilling to pay people what they should?
- youdontknowtho 10y ago
  Agreed x100. Another way to think of this would be that if this business can only afford to operate while the state subsidizes its employees dietary, medical, and transportation costs then maybe it is a bad business. Walmart apparently has the same problem.
  - VLM 10y ago
    The state isn't subsidizing a penny. The taxpayers are paying directly into the parasites profits. What a crook!
    - youdontknowtho 10y ago
      Agreed. By the state, I meant the public. Tax money supports his paying people low wages and everyone is supposed to act like he's a captain of industry. Notice that he didn't talk about his profit margins either. He'll be losing 200K out of what exactly?
      - hueving 10y ago
        When someone says a business is operating at a 200k loss, that means it's not making any profits and it's losing money. It's a standard way to talk about a business.
        cmdrfred 10y ago
        That often doesn't show the whole picture. Let's say Viacom operated at a 1 billion dollar loss, does that mean the CEO doesn't get paid? We would have to know how this business is structured to know if that figure means anything. 200k loss after the owners 500k salary could be the case here.
        hueving 10y ago
        Of course the salaries are part of a business's expenses. That still means the company is going to run out of money though. Basic math...
- VLM 10y ago
  "but not so much that he's willing to pay them a living wage?" The problem with word choices like that is the implication the human beings working for him are not living, and further, that's OK. The reality is that "we" are paying the living wage to his employees via higher taxes in very expensive government services so he can pocket more profit than if he responsibly took care of his own employees. If all the welfare queen small business owners left, tax rates could drop quite a bit. Life would, frankly, improve for everyone except the parasites future hosts in LV and other areas.
  - hueving 10y ago
    >welfare queen small business owners left, tax rates could drop quite a bit. Life would, frankly, improve for everyone except the parasites Inflammatory comments like these are anti-intellectual and don't belong here. It's the same thing as referring to people on unemployment as welfare queens.
  - coldtea 10y ago
    >The problem with word choices like that is the implication the human beings working for him are not living, and further, that's OK. They are barely living hand-to-mouth or need to have 2 jobs to make even that.
  - chillydawg 10y ago
    The "welfare queens" are operating in a competitive business environment where they have to compete to survive. Don't hate the player, hate the game. Obviously, we want to remove as much corporate welfare as possible, to allow the market to operate smoothly while still allowing for subsidies in well thought out places like clean energy or investing in new business sectors.
hueving 10y ago
Sometimes I wonder how quickly things could collapse in California if a place like Las Vegas gained enough critical mass in non gaming/convention businesses. I would take the oppressive heat over the oppressive fog and piss smell of SF if it had the same job opportunities. I know the reason me and the majority of my friends pack into this peninsula like sardines to pay massive taxes, rents, and general COL expenses is purely because of the industry. Definitely a chicken and egg problem but maybe if the state continues with anti-business and high tax policies, they may accidentally go over board and cause an exodus.
- lintiness 10y ago
  chicago has done all that. california has a unique asset that enables it to enact all kinds of offensive tax etc legislation: climate.
  - hueving 10y ago
    Climate does very little for well being on a broad scale. Almost nobody I know who lives in the bay area moved here because of the nice weather. I would have gone to Chicago if the job offers there meant 200k+ at big companies and 100-150 at startups (+options).
    - brianwawok 10y ago
      You can get that pay with enough experience. Obviously nowhere near as common though. I think your pay:cost of life ratio will win in Chicago. One of the best setups in the country. Climate matters a ton for me. I live by Chicago but am considering taking an effective pay cut to get the bay weather. Running is my hobby, and running in blizzards is getting old.
    - et-al 10y ago
      > Climate does very little for well being on a broad scale. Almost nobody I know who lives in the bay area moved here because of the nice weather. People stay in the Bay Area because of climate since you realise you can be outside nearly year-round. And in terms of well-being, if you spend more time outside, there's a good chance of being healthier and happier.
mattmanser 10y ago
Author's sums don't seem to make sense. How could an increase in $5 per hour for minimum wage translate into $40,000 per employee? Worst case scenario: 260 days * 8 hours * $5 increase = $10,400
- thatfrenchguy 10y ago
  Don't try to run the math, it will show that it's not that much for the business in the long run, especially since their labor cost are probably a small fraction of their costs.
  - ams6110 10y ago
    Labor is almost certainly the largest controllable cost for a business like this one (hand-sewn garment assembly).
    - czep 10y ago
      Then labor should also receive most of the profits from said business.
    - VLM 10y ago
      I've been informed repeatedly that the cost of real estate and prop tax and rent is so staggering that losing a large percentage of productivity via open offices is still cheaper than providing civilized working conditions for people getting $150K+. That seems to be implying that its better to lose say, $20/hr in productivity than to double rent costs, so rent in CA must be more than $40/hr for a couple sq feet, lets say rent is $4/sq ft in CA, or annually about $8K/sq ft. Some google real estate results for sand hill road indicates that $2000/sq ft per year is somewhat high but not unrealistic... For averaging purposes at a non-24x7 operation rent in CA is going to cost about $30/hr/employee no matter how much or how little you pay the employee. Some garment tasks inherently taking a lot of space to lay out cloth for cutting or sewing imply garment companies are paying maybe twice as much for a garment worker's space than for a software dev's space, an extremely large multiple of employee income is paid in rent, and moving away from CA would result in enormous savings in rent. Clearly moving production anywhere other than CA would save an enormous about of money in rent. In rural nowhere you can get industrial zoned buildings for about $4/sq/yr or about 500 times less than CA office space, at which point you have to start looking in more detail at costs of utilities and other expenses that were noise at higher rents but are now significant relative to the cheaper rent.
youdontknowtho 10y ago
The wealthy elite will need to get this through their heads. They must start paying people more. There isn't a choice. Businesses are sitting on trillions of dollars that haven't been used to "create jobs". EDIT: Jesus. I apologize for making an economic sounding argument for this. I've taken it out. How's this...the wealthy elites need to pay people more for the sake of the stability of the social fabric. Find some economic rational for that if you like. (That's what economists really do anyway...Provide the theoretical underpinnings for the operation of their class.) They need to understand that having slightly smaller profit margins will be good for them as well, in the long run, due to a more stable republic. I understand that, as libertarians, you guys don't think that government can play a part in that. I do. We have a fundamental disagreement about that. Propitiation follows: I know that all of you guys are very economically literate libertarians. I should never have fronted like I was anywhere in your league. I could tell you were not only attractive but powerful and noble as soon as you came in the room. Your ability to recite the economics that you picked up at Uni is not only impressive but frightening. Surely, your might and prowess will be known through the ages.
- JanezStupar 10y ago
  And some people need to realize that not every business is sitting on a massive pile of cash. In fact most of our livelihoods comes from the long tail that is going to be wiped out if one ever tries to go after the "rich ones hoarding trillions".
- hueving 10y ago
  >The added demand from paying higher wages to people at the bottom The business that will pick up the slack in this example is one overseas. These employees would lose their job and would be unemployed, not increasing demand with higher wages. Unless you are hoping trump enacts some seriously strict trade tariffs, it's pretty stupid to believe that every business hit with this raise will survive with the same number of employees due to increased demand.
  - youdontknowtho 10y ago
    Downvoting just because you disagree with something isn't how this site is supposed to work. My point is that this business is a bad business if it can only exist because the state subsidizes its employees with social programs. Eventually demand will pickup because of the wealth transferred to the lower economic class.
pjc50 10y ago
"domestically manufactured clothing is more expensive, but retail and wholesale customers who care about quality and working conditions have historically been willing to pay for it" .. so pass the price rise on to customers? After all, sewing industry is normally one of the first things that gets offshored. But here they're already willing to pay better prices for "ethically" manufactured goods.
- brianwawok 10y ago
  Just not too ethically. Only the minimum level of ethics.
- chillydawg 10y ago
  They're competing to provide the cheapest, legit "Made in America" label. There's a long way to the bottom of that.
coldtea 10y ago
>California's minimum wage law leaves businesses no choice Strange how all kinds of business have been able to prosper in places with the same or much higher minimum wage laws...
- hueving 10y ago
  What are the unemployment stats like in those locations? How high is the minimum compared to the median? Note that this is basic supply and demand, some businesses sitting right at their maximum labor price point will be shut down.
  - coldtea 10y ago
    Yeah, but "Basic supply and demand" rarely applies cleanly in the real world -- as there are way more factors into play, and even interactions between such factors. In this case, however, businesses "sitting right at their maximum labor price point "should be worrying about that fact instead on surviving on subsistence wages and/or subsidies.
- cmdrfred 10y ago
  Its going to suck when virtually every single restaurant and grocery store shuts it's doors in California as the supply side economists have predicted.
  - youdontknowtho 10y ago
    Then what is the option? The state of California bares the cost of not paying people enough to take care of themselves. Massive profits don't seem to be rolling downhill. How do you get the trillions of dollars in corporate profits circulating through the economy? Not trolling, would like to know your opinion.
    - cmdrfred 10y ago
      My opinion is meaningless. Economics calls itself a science, and it has made a prediction about the outcome of this law. How accurate that predicition is will tell us if we should listen to it in the future.
amalrik_maia 10y ago
Minimum wage is one of those ideas that is evaluated more for its intentions than for its results. We are only employed as long as we can generate sufficient profit for the company, if salaries are artificially raised you only made some people unemployable.
- tankenmate 10y ago
  At the same time though companies that can afford to pay more do and what's more that money is far more likely to wind up in the local economy as poor people spend far more of their income than rich people (or companies for that matter). Low wages only leads to a race to the bottom, greater inequality, and finally lower growth because the people most likely to spend money don't have any. And based on how most OECD economies have been doing since 2008 it looks like the low growth of the last decade will probably hang around for longer. Unless the inequality shifts this will be low growth like it was during several hundred years of the feudal system.
jbmorgado 10y ago
When you have 17 employees and your all business model still revolves around paying them the minimum wage, then you are not really making profit from selling a product/service, your all profit comes from exploring people (your employees) that are in dire need of food/proper shelter. Your business is not adding anything positive to the economy so you should actually close the doors and go work for that minimum wage you think it's so great. The only exception here is if you are just starting and you have very few employees (less than 5). In that case it is acceptable that you can only afford low wages, but that can be remedied with tax cuts for the first few years of a company with no need to still keep the minimum wage so low.
norlowski 10y ago
You don't have to pity him or judge him to understand this article. He is just saying that this will be a common occurrence. Discussions like this should always goes back to first principles - you can't force people to pay a certain wage, no matter how good your intentions.
- Trombone12 10y ago
  He certainly tries to get pity, however awkward the attempt.
ensiferum 10y ago
Goddamn employees. The business loses so much money when we have to pay those employees! :/ Soon those 8$ ph employees in Nevada will get squeezed by automation or cheaper employees in some other state/country. And they'll be given the ultimatum, "work more for less or get the boot". This is a common downwards pointing death spiral in many of the western countries. There's going to be a huge economical squeeze starting with the blue collar workers in the next +10 years. Will be hard to compete with a robot...
Hondor 10y ago
It's not fashionable to say, but what a beautiful example of the free market working. California has attracted high value businesses so it's worth more to operate there. They're pushing out the low value ones because they can afford to and their place can be taken by programmers or something. Nevada wants all it can get so it welcomes low value businesses like clothes manufacturing. If they move, everyone wins. That applies to the workers too. If California is growing too rich around them, they might be under-skilled for the local job market and have to move to Nevada for work. Again, Nevada benefits from more labor. The downside is that people whose skills lock them into insecure industries like this also sometimes put down roots where they live and suffer more when they have to move. But at least they can see it coming. Raising the minimum wage is bound to cost some people their jobs. If it didn't, that would mean employers can actually afford to pay even more and it should be raised further.
soufron 10y ago
This is ridiculous. The guy should be happy. Thanks to higher wages, he will be able to raise his prices and offer better services. Instead, he wants to protect his benefits without evolving his business. No surprise California prefers to value high tech startups who try to pay their employees well.
- hueving 10y ago
  Why in the world would you think he would be able to raise his prices? For him to sell, he needs to compete with clothing shops in other states (and countries) that don't have the same minimum wage.
muzz 10y ago
TLDR: One single business owner wrote his opinion about the minimum wage law.
chrisbennet 10y ago
Seattle Food Jobs Soar After $11 Minimum Wage Starts http://www.forbes.com/sites/eriksherman/2016/01/08/seattle-food-jobs-soar-after-11-minimum-wage-starts/#2b56e71d4eb0 http://www.forbes.com/sites/eriksherman/2016/01/08/seattle-f...

36 points by SQL2219 10y ago

Luckily, Trump is going to make America great again and will keep all those manufacturing jobs where owners don't like to pay minimum wage because they can't afford to pass on the raise because nobody wants to buy cheap apparel at this price point. While I understand why the author is complaining, he should much rather complain to all his potential customers that make a purchase decision based on price instead of ethically supporting american workers. I'm really waiting to see all those voters spend significantly more on "Made in Great America" apparel to make sure to keep all those jobs...

mcphage 10y ago

I'm supposed to feel bad for an employer who claims to care about his employees—but not so much that he's willing to pay them a living wage? And is willing to incur the cost of moving out of state to avoid paying a rate that won't go into effect until 2021? How much business has he lost? Well... none. But he would. Really. Just like VCRs were the "Boston strangler" of the film industry.

deleted 10y ago
[deleted]
hueving 10y ago
By the time minimum wage hits $15, he will be operating at a $200k loss. Are you implying that he is lying about that? Or are you just suggesting that some of the employees would be better off unemployed while the remaining that he could afford pick up the slack? Or would you rather the business fold entirely and all of them become unemployed including the owner?
- youdontknowtho 10y ago
  That would only be the case if this one business were the entire economy of California. The added demand caused by employees with more money to spend will generate more production.
  - twoodfin 10y ago
    If you're sure about this, what's the point at which raising the minimum wage would be a net loss for aggregate demand?
    - youdontknowtho 10y ago
      I'm not an economist, so consider me soundly put in my place.
    - cmdrfred 10y ago
      Probably around the natural wage floor that is artificially low due to government subsidies (food stamps, housing assistance, welfare, Medicaid, etc). The unsubsidised wage floor is likely around the cost of living (In California that number is or will be above 15 an hour by the time the law is in place). A minimum wage increase isn't a gift to workers as much as it is a demand that the taxpayer no longer subsidize these businesses.
      - twoodfin 10y ago
        That argument still doesn't seem coherent me. What "subsidy" is Walmart receiving that the Costco across the street is not? Walmart, after all, is paying workers who otherwise would receive even more government benefits. Costco is paying those same workers $0.
        cmdrfred 10y ago
        I'm not sure what your question is. Costco runs smaller margins than Walmart due to the founders religious ideology that prohibits him from operating like Walmart. Walmart is by far a more profitable model (121 billion gross for Walmart compared to 15 for Costco). The wages paid by Walmart are below the cost of living, if they simply paid them without subsidy their employees would be often unfed and homeless. >Costco is paying those same workers $0. Why would Costco pay its competitors employees? (Beyond what is does already via taxes)
- FussyZeus 10y ago
  These situations are not solvable by doing basic math, you miss the complexities of the situation. To pay employees better, he'd shift the cost of the salaries to the goods in question, and possibly provide new/different products to address market conditions. Additionally everywhere I've worked, and this is anecdotal but still, when you pay your employees better they don't loathe their jobs quite so much, which leads to better customer service. Some people do still shop for service. If his response to rising operating costs is to not respond at all and continue charging the same prices for the same goods and not move at all in terms of addressing the problem, then he shouldn't be in business in the first place, he clearly has no idea how to run one.
- mcphage 10y ago
  > By the time minimum wage hits $15, he will be operating at a $200k loss. Are you implying that he is lying about that? Now, that's a good question. Are companies lying when they fight against every law enacted to protect their employees? Are they mistaken? I think most likely: they don't care if what they're saying is true or not. Is that the same as lying? Well, I'll leave that to you to decide. > Or would you rather the business fold entirely and all of them become unemployed including the owner? Well, if the company you work for paid you 33% less, would you rather they folded immediately, so you could look for work elsewhere? Or would you rather that they went on paying you less so they could stay in business—succeeding as a company merely because they're unwilling to pay people what they should?
youdontknowtho 10y ago
Agreed x100. Another way to think of this would be that if this business can only afford to operate while the state subsidizes its employees dietary, medical, and transportation costs then maybe it is a bad business. Walmart apparently has the same problem.
- VLM 10y ago
  The state isn't subsidizing a penny. The taxpayers are paying directly into the parasites profits. What a crook!
  - youdontknowtho 10y ago
    Agreed. By the state, I meant the public. Tax money supports his paying people low wages and everyone is supposed to act like he's a captain of industry. Notice that he didn't talk about his profit margins either. He'll be losing 200K out of what exactly?
    - hueving 10y ago
      When someone says a business is operating at a 200k loss, that means it's not making any profits and it's losing money. It's a standard way to talk about a business.
      - cmdrfred 10y ago
        That often doesn't show the whole picture. Let's say Viacom operated at a 1 billion dollar loss, does that mean the CEO doesn't get paid? We would have to know how this business is structured to know if that figure means anything. 200k loss after the owners 500k salary could be the case here.
        hueving 10y ago
        Of course the salaries are part of a business's expenses. That still means the company is going to run out of money though. Basic math...
VLM 10y ago
"but not so much that he's willing to pay them a living wage?" The problem with word choices like that is the implication the human beings working for him are not living, and further, that's OK. The reality is that "we" are paying the living wage to his employees via higher taxes in very expensive government services so he can pocket more profit than if he responsibly took care of his own employees. If all the welfare queen small business owners left, tax rates could drop quite a bit. Life would, frankly, improve for everyone except the parasites future hosts in LV and other areas.
- hueving 10y ago
  >welfare queen small business owners left, tax rates could drop quite a bit. Life would, frankly, improve for everyone except the parasites Inflammatory comments like these are anti-intellectual and don't belong here. It's the same thing as referring to people on unemployment as welfare queens.
- coldtea 10y ago
  >The problem with word choices like that is the implication the human beings working for him are not living, and further, that's OK. They are barely living hand-to-mouth or need to have 2 jobs to make even that.
- chillydawg 10y ago
  The "welfare queens" are operating in a competitive business environment where they have to compete to survive. Don't hate the player, hate the game. Obviously, we want to remove as much corporate welfare as possible, to allow the market to operate smoothly while still allowing for subsidies in well thought out places like clean energy or investing in new business sectors.

hueving 10y ago

Sometimes I wonder how quickly things could collapse in California if a place like Las Vegas gained enough critical mass in non gaming/convention businesses. I would take the oppressive heat over the oppressive fog and piss smell of SF if it had the same job opportunities. I know the reason me and the majority of my friends pack into this peninsula like sardines to pay massive taxes, rents, and general COL expenses is purely because of the industry. Definitely a chicken and egg problem but maybe if the state continues with anti-business and high tax policies, they may accidentally go over board and cause an exodus.

lintiness 10y ago
chicago has done all that. california has a unique asset that enables it to enact all kinds of offensive tax etc legislation: climate.
- hueving 10y ago
  Climate does very little for well being on a broad scale. Almost nobody I know who lives in the bay area moved here because of the nice weather. I would have gone to Chicago if the job offers there meant 200k+ at big companies and 100-150 at startups (+options).
  - brianwawok 10y ago
    You can get that pay with enough experience. Obviously nowhere near as common though. I think your pay:cost of life ratio will win in Chicago. One of the best setups in the country. Climate matters a ton for me. I live by Chicago but am considering taking an effective pay cut to get the bay weather. Running is my hobby, and running in blizzards is getting old.
  - et-al 10y ago
    > Climate does very little for well being on a broad scale. Almost nobody I know who lives in the bay area moved here because of the nice weather. People stay in the Bay Area because of climate since you realise you can be outside nearly year-round. And in terms of well-being, if you spend more time outside, there's a good chance of being healthier and happier.

mattmanser 10y ago

Author's sums don't seem to make sense. How could an increase in $5 per hour for minimum wage translate into $40,000 per employee? Worst case scenario: 260 days * 8 hours * $5 increase = $10,400

thatfrenchguy 10y ago
Don't try to run the math, it will show that it's not that much for the business in the long run, especially since their labor cost are probably a small fraction of their costs.
- ams6110 10y ago
  Labor is almost certainly the largest controllable cost for a business like this one (hand-sewn garment assembly).
  - czep 10y ago
    Then labor should also receive most of the profits from said business.
  - VLM 10y ago
    I've been informed repeatedly that the cost of real estate and prop tax and rent is so staggering that losing a large percentage of productivity via open offices is still cheaper than providing civilized working conditions for people getting $150K+. That seems to be implying that its better to lose say, $20/hr in productivity than to double rent costs, so rent in CA must be more than $40/hr for a couple sq feet, lets say rent is $4/sq ft in CA, or annually about $8K/sq ft. Some google real estate results for sand hill road indicates that $2000/sq ft per year is somewhat high but not unrealistic... For averaging purposes at a non-24x7 operation rent in CA is going to cost about $30/hr/employee no matter how much or how little you pay the employee. Some garment tasks inherently taking a lot of space to lay out cloth for cutting or sewing imply garment companies are paying maybe twice as much for a garment worker's space than for a software dev's space, an extremely large multiple of employee income is paid in rent, and moving away from CA would result in enormous savings in rent. Clearly moving production anywhere other than CA would save an enormous about of money in rent. In rural nowhere you can get industrial zoned buildings for about $4/sq/yr or about 500 times less than CA office space, at which point you have to start looking in more detail at costs of utilities and other expenses that were noise at higher rents but are now significant relative to the cheaper rent.

youdontknowtho 10y ago

The wealthy elite will need to get this through their heads. They must start paying people more. There isn't a choice. Businesses are sitting on trillions of dollars that haven't been used to "create jobs". EDIT: Jesus. I apologize for making an economic sounding argument for this. I've taken it out. How's this...the wealthy elites need to pay people more for the sake of the stability of the social fabric. Find some economic rational for that if you like. (That's what economists really do anyway...Provide the theoretical underpinnings for the operation of their class.) They need to understand that having slightly smaller profit margins will be good for them as well, in the long run, due to a more stable republic. I understand that, as libertarians, you guys don't think that government can play a part in that. I do. We have a fundamental disagreement about that. Propitiation follows: I know that all of you guys are very economically literate libertarians. I should never have fronted like I was anywhere in your league. I could tell you were not only attractive but powerful and noble as soon as you came in the room. Your ability to recite the economics that you picked up at Uni is not only impressive but frightening. Surely, your might and prowess will be known through the ages.

JanezStupar 10y ago
And some people need to realize that not every business is sitting on a massive pile of cash. In fact most of our livelihoods comes from the long tail that is going to be wiped out if one ever tries to go after the "rich ones hoarding trillions".
hueving 10y ago
>The added demand from paying higher wages to people at the bottom The business that will pick up the slack in this example is one overseas. These employees would lose their job and would be unemployed, not increasing demand with higher wages. Unless you are hoping trump enacts some seriously strict trade tariffs, it's pretty stupid to believe that every business hit with this raise will survive with the same number of employees due to increased demand.
- youdontknowtho 10y ago
  Downvoting just because you disagree with something isn't how this site is supposed to work. My point is that this business is a bad business if it can only exist because the state subsidizes its employees with social programs. Eventually demand will pickup because of the wealth transferred to the lower economic class.

pjc50 10y ago

"domestically manufactured clothing is more expensive, but retail and wholesale customers who care about quality and working conditions have historically been willing to pay for it" .. so pass the price rise on to customers? After all, sewing industry is normally one of the first things that gets offshored. But here they're already willing to pay better prices for "ethically" manufactured goods.

brianwawok 10y ago
Just not too ethically. Only the minimum level of ethics.
chillydawg 10y ago
They're competing to provide the cheapest, legit "Made in America" label. There's a long way to the bottom of that.

coldtea 10y ago

>California's minimum wage law leaves businesses no choice Strange how all kinds of business have been able to prosper in places with the same or much higher minimum wage laws...

hueving 10y ago
What are the unemployment stats like in those locations? How high is the minimum compared to the median? Note that this is basic supply and demand, some businesses sitting right at their maximum labor price point will be shut down.
- coldtea 10y ago
  Yeah, but "Basic supply and demand" rarely applies cleanly in the real world -- as there are way more factors into play, and even interactions between such factors. In this case, however, businesses "sitting right at their maximum labor price point "should be worrying about that fact instead on surviving on subsistence wages and/or subsidies.
cmdrfred 10y ago
Its going to suck when virtually every single restaurant and grocery store shuts it's doors in California as the supply side economists have predicted.
- youdontknowtho 10y ago
  Then what is the option? The state of California bares the cost of not paying people enough to take care of themselves. Massive profits don't seem to be rolling downhill. How do you get the trillions of dollars in corporate profits circulating through the economy? Not trolling, would like to know your opinion.
  - cmdrfred 10y ago
    My opinion is meaningless. Economics calls itself a science, and it has made a prediction about the outcome of this law. How accurate that predicition is will tell us if we should listen to it in the future.

amalrik_maia 10y ago

Minimum wage is one of those ideas that is evaluated more for its intentions than for its results. We are only employed as long as we can generate sufficient profit for the company, if salaries are artificially raised you only made some people unemployable.

tankenmate 10y ago
At the same time though companies that can afford to pay more do and what's more that money is far more likely to wind up in the local economy as poor people spend far more of their income than rich people (or companies for that matter). Low wages only leads to a race to the bottom, greater inequality, and finally lower growth because the people most likely to spend money don't have any. And based on how most OECD economies have been doing since 2008 it looks like the low growth of the last decade will probably hang around for longer. Unless the inequality shifts this will be low growth like it was during several hundred years of the feudal system.

jbmorgado 10y ago

When you have 17 employees and your all business model still revolves around paying them the minimum wage, then you are not really making profit from selling a product/service, your all profit comes from exploring people (your employees) that are in dire need of food/proper shelter. Your business is not adding anything positive to the economy so you should actually close the doors and go work for that minimum wage you think it's so great. The only exception here is if you are just starting and you have very few employees (less than 5). In that case it is acceptable that you can only afford low wages, but that can be remedied with tax cuts for the first few years of a company with no need to still keep the minimum wage so low.

norlowski 10y ago

You don't have to pity him or judge him to understand this article. He is just saying that this will be a common occurrence. Discussions like this should always goes back to first principles - you can't force people to pay a certain wage, no matter how good your intentions.

Trombone12 10y ago
He certainly tries to get pity, however awkward the attempt.

ensiferum 10y ago

Goddamn employees. The business loses so much money when we have to pay those employees! :/ Soon those 8$ ph employees in Nevada will get squeezed by automation or cheaper employees in some other state/country. And they'll be given the ultimatum, "work more for less or get the boot". This is a common downwards pointing death spiral in many of the western countries. There's going to be a huge economical squeeze starting with the blue collar workers in the next +10 years. Will be hard to compete with a robot...

Hondor 10y ago

It's not fashionable to say, but what a beautiful example of the free market working. California has attracted high value businesses so it's worth more to operate there. They're pushing out the low value ones because they can afford to and their place can be taken by programmers or something. Nevada wants all it can get so it welcomes low value businesses like clothes manufacturing. If they move, everyone wins. That applies to the workers too. If California is growing too rich around them, they might be under-skilled for the local job market and have to move to Nevada for work. Again, Nevada benefits from more labor. The downside is that people whose skills lock them into insecure industries like this also sometimes put down roots where they live and suffer more when they have to move. But at least they can see it coming. Raising the minimum wage is bound to cost some people their jobs. If it didn't, that would mean employers can actually afford to pay even more and it should be raised further.

soufron 10y ago

This is ridiculous. The guy should be happy. Thanks to higher wages, he will be able to raise his prices and offer better services. Instead, he wants to protect his benefits without evolving his business. No surprise California prefers to value high tech startups who try to pay their employees well.

hueving 10y ago
Why in the world would you think he would be able to raise his prices? For him to sell, he needs to compete with clothing shops in other states (and countries) that don't have the same minimum wage.

muzz 10y ago

TLDR: One single business owner wrote his opinion about the minimum wage law.

chrisbennet 10y ago

Seattle Food Jobs Soar After $11 Minimum Wage Starts http://www.forbes.com/sites/eriksherman/2016/01/08/seattle-food-jobs-soar-after-11-minimum-wage-starts/#2b56e71d4eb0 http://www.forbes.com/sites/eriksherman/2016/01/08/seattle-f...