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Individuals should have the ability to choose where they work and increasing the number of small businesses allows that. Reducing the number of small businesses

Individuals should have the ability to choose where they work and increasing the number of small businesses allows that. Reducing the number of small businesses means individuals have fewer employers to choose from. Communites with a higher number of businesses have a larger slice of wealth allocated towards the bottom 99%.

h0l0cube 5y ago
Your stance seems to be based more on conviction than reality > “…there seems to be no discernible correlation between minimum wage increases and a rise in business failures, either in the year the increase occurred or in the following year. If anything, the evidence leans the other way” https://www.epi.org/publication/webfeatures_viewpoints_raising_minimum_wage_2004/ https://www.epi.org/publication/webfeatures_viewpoints_raisi... Second-order effects of people have more money, is they can spend it on local businesses. Undeniably there will be some inflation but not enough to subsume the increase. As a counterpoint, large businesses like fast food and supermarket chains pay minimum wage, and many of their employees need to rely on welfare to get by - in general, business will pay the least they can get away with, no matter how many there are. Add to that, minimum wage disproportionately affects the bigger players who can't pay cash-in-hand (due to greater regulatory oversight) but can well afford to pay a higher wage, not the smaller businesses.
- GaryTang 5y ago
  > “…there seems to be no discernible correlation between minimum wage increases and a rise in business failures, either in the year the increase occurred or in the following year. If anything, the evidence leans the other way” Yes but this actually supports my argument; An increase of the minimum wage solidifies incumbent businesses. This occurs because increasing the min wage is the same as increasing a barrier to entry. Sure, the incumbents won’t fail, but you are effectively making it more difficult for new participants to start. Business failures won’t increase and neither will the rate of new businesses. > “In general, businesses will pay the least they can get away with, no matter how many there are.” Yes this is true. But employees will compete for employers that pay higher and a community with more businesses will have a larger pie to eat from because there is more overall value created.
  - h0l0cube 5y ago
    > This occurs because increasing the min wage is the same as increasing a barrier to entry. Do you have some data to back this up, or are you just speculating? To posit my own speculation, could it be if people have more money for discretionary spending there could be more businesses to service them? > But employees will compete for employers that pay higher and a community with more businesses This seems a little naive. Low skilled and unskilled labor in smaller/poorer towns, with less/no transport available, less/no money to self-train/self-improve etc. etc. are just going to take whatever's available. There's no incentive for a fast food franchise or a supermarket to pay more, because the labor market is saturated for low income work.
    - GaryTang 5y ago
      > “… could it be if people have more money for discretionary spending there could be more businesses to service them?” This would be true if people did have more money for discretionary spending, but increasing the minimum wage has shown to decrease their total compensation. I don’t know how reliable the following article is but the summary expands on a few reasons on how this happens. https://hbr.org/2021/06/research-when-a-higher-minimum-wage-leads-to-lower-compensation https://hbr.org/2021/06/research-when-a-higher-minimum-wage-... > “… (employees) are just going to take whatever's available” This is why it’s important to increase the opportunities available for them. More wealth creation means more wealth. I will get back to you on the citation for this.
      - h0l0cube 5y ago
        From the article: > We found that for every $1 increase in minimum wage, the percentage of workers working more than 20 hours per week (making them eligible for retirement benefits) decreased by 23.0%, while the percentage of workers with more than 30 hours per week (making them eligible for health care benefits) decreased by 14.9%. To be fair, this isn't an argument against minimum wage, but an argument for reform in health care and retirement funding. Keep in mind, this technique was always available to them, this almost seems a spiteful reaction, or at least they would have done it sooner if they'd thought to. > More wealth creation means more wealth. Does it mean more income to the lowest earners in a high-GDP country? Or does it just mean GDP has increased?
theonlybutlet 5y ago
Considering it an inhibitor of small business is assuming unquantified/unrecognised subsidisation either by the employee or government. If everyone were paid a minimum wage, theoretically a new employee could agree for this additional wage portion to be capitalised as a liability in the business for payment at a later stage when the businesses cashflow can support it (this is open to abuse and probably should be or is illegal for low wage employees). If the government is subsidising that employee's income, they are indirectly subsidising that business. It would be more transparent/in the public's interest for them to apply for a business grant to pay these costs. Increasing access to these grants is a political issue.

h0l0cube 5y ago

Your stance seems to be based more on conviction than reality > “…there seems to be no discernible correlation between minimum wage increases and a rise in business failures, either in the year the increase occurred or in the following year. If anything, the evidence leans the other way” https://www.epi.org/publication/webfeatures_viewpoints_raising_minimum_wage_2004/ https://www.epi.org/publication/webfeatures_viewpoints_raisi... Second-order effects of people have more money, is they can spend it on local businesses. Undeniably there will be some inflation but not enough to subsume the increase. As a counterpoint, large businesses like fast food and supermarket chains pay minimum wage, and many of their employees need to rely on welfare to get by - in general, business will pay the least they can get away with, no matter how many there are. Add to that, minimum wage disproportionately affects the bigger players who can't pay cash-in-hand (due to greater regulatory oversight) but can well afford to pay a higher wage, not the smaller businesses.

GaryTang 5y ago
> “…there seems to be no discernible correlation between minimum wage increases and a rise in business failures, either in the year the increase occurred or in the following year. If anything, the evidence leans the other way” Yes but this actually supports my argument; An increase of the minimum wage solidifies incumbent businesses. This occurs because increasing the min wage is the same as increasing a barrier to entry. Sure, the incumbents won’t fail, but you are effectively making it more difficult for new participants to start. Business failures won’t increase and neither will the rate of new businesses. > “In general, businesses will pay the least they can get away with, no matter how many there are.” Yes this is true. But employees will compete for employers that pay higher and a community with more businesses will have a larger pie to eat from because there is more overall value created.
- h0l0cube 5y ago
  > This occurs because increasing the min wage is the same as increasing a barrier to entry. Do you have some data to back this up, or are you just speculating? To posit my own speculation, could it be if people have more money for discretionary spending there could be more businesses to service them? > But employees will compete for employers that pay higher and a community with more businesses This seems a little naive. Low skilled and unskilled labor in smaller/poorer towns, with less/no transport available, less/no money to self-train/self-improve etc. etc. are just going to take whatever's available. There's no incentive for a fast food franchise or a supermarket to pay more, because the labor market is saturated for low income work.
  - GaryTang 5y ago
    > “… could it be if people have more money for discretionary spending there could be more businesses to service them?” This would be true if people did have more money for discretionary spending, but increasing the minimum wage has shown to decrease their total compensation. I don’t know how reliable the following article is but the summary expands on a few reasons on how this happens. https://hbr.org/2021/06/research-when-a-higher-minimum-wage-leads-to-lower-compensation https://hbr.org/2021/06/research-when-a-higher-minimum-wage-... > “… (employees) are just going to take whatever's available” This is why it’s important to increase the opportunities available for them. More wealth creation means more wealth. I will get back to you on the citation for this.
    - h0l0cube 5y ago
      From the article: > We found that for every $1 increase in minimum wage, the percentage of workers working more than 20 hours per week (making them eligible for retirement benefits) decreased by 23.0%, while the percentage of workers with more than 30 hours per week (making them eligible for health care benefits) decreased by 14.9%. To be fair, this isn't an argument against minimum wage, but an argument for reform in health care and retirement funding. Keep in mind, this technique was always available to them, this almost seems a spiteful reaction, or at least they would have done it sooner if they'd thought to. > More wealth creation means more wealth. Does it mean more income to the lowest earners in a high-GDP country? Or does it just mean GDP has increased?

theonlybutlet 5y ago

Considering it an inhibitor of small business is assuming unquantified/unrecognised subsidisation either by the employee or government. If everyone were paid a minimum wage, theoretically a new employee could agree for this additional wage portion to be capitalised as a liability in the business for payment at a later stage when the businesses cashflow can support it (this is open to abuse and probably should be or is illegal for low wage employees). If the government is subsidising that employee's income, they are indirectly subsidising that business. It would be more transparent/in the public's interest for them to apply for a business grant to pay these costs. Increasing access to these grants is a political issue.