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> and raising prices as a result would be fine since other minimum wage earners (i.e., customers) would now have more money to spend on fast food. (estimating b

> and raising prices as a result would be fine since other minimum wage earners (i.e., customers) would now have more money to spend on fast food. (estimating based on your numbers, prices would have to increase about 10%) And what about the customers that aren't minimum wage earners and don't have more money to spend? And what about the formally minimum wage workers who no longer have a job or have fewer hours (reduced total wages) because the business cut head count and/or reduced hours? Just because the minimum wage is increased doesn't mean that it makes business sense to keep the same headcount/hours at the increased wage.

clairity 7y ago
what small business owner really wastes money by carrying extra headcount though? if the business could have cut headcount before and still have done all the work needed, they would have done that already regardless of a change in minimum wage. small businesses just don't generally carry extra overhead the way a larger organization does.
- gwright 7y ago
  I think you are simplifying things quite a bit. For example, a grocery store might have minimum wage workers who help bag groceries to provide a better service to their customers. If the minimum wage goes up, then the store might decide to eliminate that service. My local Dairy Queen, for example, might decide that two people getting paid $15/hour will just have to do instead of three people getting paid $10/hour. Maybe that isn't for all shifts/times, but just on the margins. And of course it isn't just the lowest paid workers that are affected by this. Let's say there are two tiers of jobs at a particular business. One that pays $15/hour and one that is $10/hour. If the lowest tier must be paid $15, what happens to those workers at the next tier of $15/hour? Either their pay must be increased or they are going to be unhappy about having more responsibilities/skills for the same pay as the person that was just hired. Alternatively new hires will have little incentive to work harder to fill the next tier (since they won't get paid any more). So wages for the positions just above minimum wage also have to go up increasing total payroll costs. IMHO, Anyone who thinks that hourly wages can be increased by 50% ($10 to $15, for example), without having a significant impact on any business that depends on low-skilled labor isn't thinking very deeply about this sort of change. I'm being generous also since the federal change is almost a 100% increase.

clairity 7y ago

what small business owner really wastes money by carrying extra headcount though? if the business could have cut headcount before and still have done all the work needed, they would have done that already regardless of a change in minimum wage. small businesses just don't generally carry extra overhead the way a larger organization does.

gwright 7y ago
I think you are simplifying things quite a bit. For example, a grocery store might have minimum wage workers who help bag groceries to provide a better service to their customers. If the minimum wage goes up, then the store might decide to eliminate that service. My local Dairy Queen, for example, might decide that two people getting paid $15/hour will just have to do instead of three people getting paid $10/hour. Maybe that isn't for all shifts/times, but just on the margins. And of course it isn't just the lowest paid workers that are affected by this. Let's say there are two tiers of jobs at a particular business. One that pays $15/hour and one that is $10/hour. If the lowest tier must be paid $15, what happens to those workers at the next tier of $15/hour? Either their pay must be increased or they are going to be unhappy about having more responsibilities/skills for the same pay as the person that was just hired. Alternatively new hires will have little incentive to work harder to fill the next tier (since they won't get paid any more). So wages for the positions just above minimum wage also have to go up increasing total payroll costs. IMHO, Anyone who thinks that hourly wages can be increased by 50% ($10 to $15, for example), without having a significant impact on any business that depends on low-skilled labor isn't thinking very deeply about this sort of change. I'm being generous also since the federal change is almost a 100% increase.