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Or, here’s a radical idea, companies could reduce their profit margins and shareholder returns. But we all know those shareholders would quickly fall into pove

Or, here’s a radical idea, companies could reduce their profit margins and shareholder returns. But we all know those shareholders would quickly fall into poverty if their returns reduced. Equally if that’s not possible, the company should fold. We shouldn’t prop up companies with cheap labor, that’s just forcing the poorest in society to provide corporate well fare, and basically the same excuse that was given for preventing the abolishment of slavery.

supertrope 5y ago
The restaurant and bar industry has always been notoriously tough. Most fail. Competition is fierce. Successful owners have to hustle to get top line revenue and maintain cost discipline down to individual shifts and boxes of napkins. My opinion is that the US has an oversupply of restaurants. It’s fundamentally a luxury service. People have come to expect to eat out often at rock bottom prices. We have even bent our labor laws ($2.13) to perpetuate the current market equilibrium.
- golemiprague 5y ago
  It's because we took women out of home and pushed them into corporates where they do much less valuable work like diversity and inclusion officer, comparing to the jobs they used to do at home like, cooking, cleaning, laundry, private teachers, mental support, gardening and old age care, to name a few. So suddenly you need restaurants to cover for that, and psychologists and and cheap mexican slave labourers and ritalin and florida and what not. Economically wise, women were much more valuable as housewives.
- Frost1x 5y ago
  I think when people mention ideas like taking a hit to business profit margins vs the new boiler plate "it will increase consumer costs" they're typically not talking about Bill's Steak House down the street, they're talking about businesses with massive profit margins that are ruling over larger and generalized markets, at least that's what I read. With that said the resutraunt labor rate is a bit misleading because businesses are required to pay the standard minimum wage or more in some areas. $2.13 is only what's paid if $2.13 + total tips average out to more or above what the person would earn at minimum wage. This means it's returaunt goers subsidizing business labor expenses. Now, one could argue if that's good/not or if the minimum wage is too low and I'd agree with them but the whole $2.13 or whatever figure touted around is misleading, it's absolutely not that low and if it is, it's illegal and wage theft.
nickff 5y ago
If 5% of your revenue is profit (a very healthy number), and half your costs are labor, an 11% hike in labor costs will wipe out all your profits. Corporate profit margins are smaller than most people think, and labor is usually their largest cost.
- alphabettsy 5y ago
  That really depends on how “expenses” are counted and deducted.
  - nickff 5y ago
    I'm counting 5% EBIT, to simplify things, so 47.5% of revenues go back out the door as wages.
jkhdigital 5y ago
> basically the same excuse that was given for preventing the abolishment of slavery. Histrionic sophistry alert
SllX 5y ago
> basically the same excuse that was given for preventing the abolishment of slavery. Any point you may have had was lost right here.
seanmcdirmid 5y ago
> Or, here’s a radical idea, companies could reduce their profit margins and shareholder returns. > But we all know those shareholders would quickly fall into poverty if their returns reduced. That isn't true. Investors will simply move their capital over to other things with better returns. So restaurants will simply close down if they aren't worth running and no one is going to fund them. > Equally if that’s not possible, the company should fold. We shouldn’t prop up companies with cheap labor, that’s just forcing the poorest in society to provide corporate well fare, and basically the same excuse that was given for preventing the abolishment of slavery. That is the likely result. Or the companies will invest in automation to make (automated) labor costs predictable. More likely, services that are easier to automate will survive while those that aren't will not.
- cinquemb 5y ago
  > More likely, services that are easier to automate will survive while those that aren't will not. This seems like the most likely thing to happen, and there will probably be many more of the later than the former. None of this though is obvious to me that will lead to broad based wage increases wrt cost of living out side of those exposed to sectors that are going to become increasing automated and we'll continue to see downward trend in LFP from those exposed to the later.
  - seanmcdirmid 5y ago
    There is a fear that automation is becoming more affordable, and that eventually most jobs at the low end of the economy will be gone. It is not like technology is standing still here, the problem is what will we do with our labor surplus after that happens (something like a UBI will really be needed or society is in deep trouble).
    - cinquemb 5y ago
      > There is a fear that automation is becoming more affordable From whom? Not from me… i welcome it and understand that the incentives are in place to drive this, just like it really always has (like you said: "It is not like technology is standing still here"). > and that eventually most jobs at the low end of the economy will be gone. Probably true in general, eventually at least. > (something like a UBI will really be needed. With our current form of governance (centralized, easily corruptible, lack of provenance/accountability in the decision making chain of bureaucracy, tendency to be opaque from the public) and resource allocation, this is untenable. > the problem is what will we do with our labor surplus after that happens And this cannot be a top down thing, if it is, expect heavy resistance when things start to go sideways. > or society is in deep trouble) This likely true imo, I think things need to get worse before they get better.

supertrope 5y ago

The restaurant and bar industry has always been notoriously tough. Most fail. Competition is fierce. Successful owners have to hustle to get top line revenue and maintain cost discipline down to individual shifts and boxes of napkins. My opinion is that the US has an oversupply of restaurants. It’s fundamentally a luxury service. People have come to expect to eat out often at rock bottom prices. We have even bent our labor laws ($2.13) to perpetuate the current market equilibrium.

golemiprague 5y ago
It's because we took women out of home and pushed them into corporates where they do much less valuable work like diversity and inclusion officer, comparing to the jobs they used to do at home like, cooking, cleaning, laundry, private teachers, mental support, gardening and old age care, to name a few. So suddenly you need restaurants to cover for that, and psychologists and and cheap mexican slave labourers and ritalin and florida and what not. Economically wise, women were much more valuable as housewives.
Frost1x 5y ago
I think when people mention ideas like taking a hit to business profit margins vs the new boiler plate "it will increase consumer costs" they're typically not talking about Bill's Steak House down the street, they're talking about businesses with massive profit margins that are ruling over larger and generalized markets, at least that's what I read. With that said the resutraunt labor rate is a bit misleading because businesses are required to pay the standard minimum wage or more in some areas. $2.13 is only what's paid if $2.13 + total tips average out to more or above what the person would earn at minimum wage. This means it's returaunt goers subsidizing business labor expenses. Now, one could argue if that's good/not or if the minimum wage is too low and I'd agree with them but the whole $2.13 or whatever figure touted around is misleading, it's absolutely not that low and if it is, it's illegal and wage theft.

nickff 5y ago

If 5% of your revenue is profit (a very healthy number), and half your costs are labor, an 11% hike in labor costs will wipe out all your profits. Corporate profit margins are smaller than most people think, and labor is usually their largest cost.

alphabettsy 5y ago
That really depends on how “expenses” are counted and deducted.
- nickff 5y ago
  I'm counting 5% EBIT, to simplify things, so 47.5% of revenues go back out the door as wages.

jkhdigital 5y ago

> basically the same excuse that was given for preventing the abolishment of slavery. Histrionic sophistry alert

SllX 5y ago

> basically the same excuse that was given for preventing the abolishment of slavery. Any point you may have had was lost right here.

seanmcdirmid 5y ago

> Or, here’s a radical idea, companies could reduce their profit margins and shareholder returns. > But we all know those shareholders would quickly fall into poverty if their returns reduced. That isn't true. Investors will simply move their capital over to other things with better returns. So restaurants will simply close down if they aren't worth running and no one is going to fund them. > Equally if that’s not possible, the company should fold. We shouldn’t prop up companies with cheap labor, that’s just forcing the poorest in society to provide corporate well fare, and basically the same excuse that was given for preventing the abolishment of slavery. That is the likely result. Or the companies will invest in automation to make (automated) labor costs predictable. More likely, services that are easier to automate will survive while those that aren't will not.

cinquemb 5y ago
> More likely, services that are easier to automate will survive while those that aren't will not. This seems like the most likely thing to happen, and there will probably be many more of the later than the former. None of this though is obvious to me that will lead to broad based wage increases wrt cost of living out side of those exposed to sectors that are going to become increasing automated and we'll continue to see downward trend in LFP from those exposed to the later.
- seanmcdirmid 5y ago
  There is a fear that automation is becoming more affordable, and that eventually most jobs at the low end of the economy will be gone. It is not like technology is standing still here, the problem is what will we do with our labor surplus after that happens (something like a UBI will really be needed or society is in deep trouble).
  - cinquemb 5y ago
    > There is a fear that automation is becoming more affordable From whom? Not from me… i welcome it and understand that the incentives are in place to drive this, just like it really always has (like you said: "It is not like technology is standing still here"). > and that eventually most jobs at the low end of the economy will be gone. Probably true in general, eventually at least. > (something like a UBI will really be needed. With our current form of governance (centralized, easily corruptible, lack of provenance/accountability in the decision making chain of bureaucracy, tendency to be opaque from the public) and resource allocation, this is untenable. > the problem is what will we do with our labor surplus after that happens And this cannot be a top down thing, if it is, expect heavy resistance when things start to go sideways. > or society is in deep trouble) This likely true imo, I think things need to get worse before they get better.