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It's not always easy to quantify. Consider people like janitors or security guards. They may be absolutely critical to the business running even though they don

It's not always easy to quantify. Consider people like janitors or security guards. They may be absolutely critical to the business running even though they don't produce revenue directly. Even if minimum wage was set to $100/hr for these jobs, it would still be worth it for many companies to hire them, since producing any revenue could be contingent on having people in those positions. At the same time, they are very competitive labor markets, so without a floor, the pay could go very low despite being essential to the business. When someone is directly contributing to revenue, like a factory worker or salesperson, it's a bit simpler since you can look at their output, but you still need more information than gross margin to know the maximum a company could profitably pay an employee, since a company might design their operations very differently depending on the price of labor.

leetcrew 6y ago
$100/hr is considerably more than I make as a software engineer. if my employer was required to pay a janitor $100/hr, they would fire them and have all the junior engineers spend the last hour of their day cleaning. having someone clean the building is essential for any business with a physical presence, but it's only worth hiring a person specifically to clean if they can be paid less than your core employees or if they can do it much more efficiently. this is why restaurants typically do not employ janitors.
bumby 6y ago
Another example that has come to mind lately is how do you quantify non-production skilled or intellectual labor? The value of maintenance, safety, quality are often only only apparent after being cut
refurb 6y ago
They may be absolutely critical to the business running even though they don't produce revenue directly. They don't produce revenue, but one must assume they provide some value and in this case avoiding the loss of revenue due to theft, fires, etc.

leetcrew 6y ago

$100/hr is considerably more than I make as a software engineer. if my employer was required to pay a janitor $100/hr, they would fire them and have all the junior engineers spend the last hour of their day cleaning. having someone clean the building is essential for any business with a physical presence, but it's only worth hiring a person specifically to clean if they can be paid less than your core employees or if they can do it much more efficiently. this is why restaurants typically do not employ janitors.

bumby 6y ago

Another example that has come to mind lately is how do you quantify non-production skilled or intellectual labor? The value of maintenance, safety, quality are often only only apparent after being cut

refurb 6y ago

They may be absolutely critical to the business running even though they don't produce revenue directly. They don't produce revenue, but one must assume they provide some value and in this case avoiding the loss of revenue due to theft, fires, etc.