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I understand the concept that a business such as Wal-Mart can easily afford a sudden rise in minimum wage as that's almost always the example used. That, or ano

by talmand 12y ago

I understand the concept that a business such as Wal-Mart can easily afford a sudden rise in minimum wage as that's almost always the example used. That, or another similarly large and successful company. But what about that mom and pop store on the corner? Am I to understand that they could afford the new employment costs if suddenly it were to be doubled, or close to it? How long does it take for the new economic benefits of the store paying out more money per week to employees to offset the new costs? Can they last that long? Some places are on tough times and on tight margins. Any increase in expenses is potential disaster. Do they raise prices at first because that new positive economic impact doesn't happen immediately, which may actually prevent the positive impact if other local stores have to do the same? Will the customers with more money to spend in their store offset the new higher costs of employing people or will it be a wash? (If anyone has a source of the economic impact on small businesses, and not the large chains, of doubling the minimum wage I would be highly interested in reading it.) Because this isn't just about increasing minimum wage, it would increase wages for a great number of people who are not making minimum wage. Would the manager of a pizza shop be happy that his drivers suddenly make more per hour then he does? Of course not, that would mean all wages at the place would need to be adjusted according to seniority and responsibilities. Many wages are structured based on the current minimum wage level. Plus, it would seem that it would be in the best interest of Wal-Mart to push for doubling the minimum wage. As been shown numerous times, they can afford it. Much of their competition could not. Not that I disagree with the sentiment, something definitely needs to be done because the current mantra clearly doesn't work. But the issue is far more complicated, as the original essay mentioned points out, then just simply raising the minimum wage. I think raising the minimum wage would, in the end, be a good thing; but I believe there would be a wave of negative consequences, and there are many, that would have to be survived. Many people who are against raising the minimum wage point out those negative consequences, but cannot see beyond them. That doesn't mean they should be ignored.

krisdol 12y ago
Regarding your mom and pop store example: some businesses should fail. If they cannot afford to keep full time workers out of poverty, they cannot afford to run a business that hires workers.
- Infinitesimus 12y ago
  But when that happens, we have both the owners of the stores and their employees joining the unemployment pool. Then what?
- talmand 12y ago
  You seem to be assuming that it is the decision of the business to keep the employees in poverty. They might be able to afford to run a business that employees fewer workers, which is the opposite of the intent. It's one thing for a business to fail due to market forces or poor choices by management/owners. It's another for a business to pushed into closing, thus employees losing their jobs, by a government mandate that attempted to make the employees' lives better. That's the initial wave of negative consequences that I said would have to be survived before the positive results would come to fruition.
- ufmace 12y ago
  >full time workers What if somebody doesn't want/need a full time job, or to hire a full time worker? That's one of the things that bothers me about boosting the minimum wage. Force all businesses to pay enough to raise a family of 4 for every job, and people who don't have a family and don't need the money will now have a harder time finding jobs that meet their needs, because nobody can create a job unless they can afford to pay somebody much more than they need.
sharemywin 12y ago
my parents own a small time pizza shop. They have already talked about it they would do. stop offering delivery. A good chunk of costs in pizza are to subsidize delivery and early and late hours. maybe shut down on sundays or lunch. only keep the profitable hours.
- bryanlarsen 12y ago
  Which means that their competitors who still offer delivery would start making more money, and could afford to hire the drivers that your parents let go...
  - joshdance 12y ago
    If their competitors could still afford delivery as well. Seems like most of this debate is anecdotal evidence and conjecture. Which is not a bad place to start from, but we need data.
- sp332 12y ago
  Since many of their customers will be earning more money, have they considered charging more?
bryanlarsen 12y ago
The article notes that minimum wage increases are supported by many small business associations. That's because, in most cases, it's the Mom & Pop stores that can afford minimum wage increases more than the big corporations can. Many of the hours worked in a Mom & Pop store are worked by Mom & Pop. That salary won't change no matter what happens. Mom & Pop stores are also more likely to be already paying above minimum wage. As for ability to pay, Wal-Mart does not have the ability to significantly increase pay unilaterally.[1] A minimum wage hike would require them to raise prices. This would allow Mom & Pops to compete with Wal-Mart better. 1: http://ipeatunc.blogspot.ca/2013/07/walmart-workers-cant-be-paid-much-more.html http://ipeatunc.blogspot.ca/2013/07/walmart-workers-cant-be-...
- talmand 12y ago
  If the owners of the small business don't change their own wages after a minimum wage hike then something is likely to a problem for them. We cannot assume that their cost of living will not increase in some way after the hike. They may indeed be already paying above minimum wage. But I pointed out that it's likely that many people who are not making minimum wage will see an increase in pay or will demand it. Let's say our small shop has two employees who make $10 an hour. They both now make $15 an hour, good for them. But that extra cost could have been a third employee. Let's say they hire that third employee anyway. Now the original two want a raise because it isn't right that a new hire makes the same as the experienced two. Granted, very simplified example that's rife with potential issues. So, if Wal-Mart's costs go up they raise prices. You are assuming that the small business won't have to do the same? Plus, if prices rise to counter the increased employment costs doesn't that eventually put us back where we started?
  - sp332 12y ago
    We cannot assume that their cost of living will not increase in some way after the hike. That's true, but they'll make it up in the profit of the store, not in wages. Of course they will increase prices.
gerbal 12y ago
First off, most of what follows is anecdotal. I've worked at a couple of mom-and-pop businesses. Most of our customers at a couple of the places were people working at or just above minimum wage. Were our customers to have their income doubled it would be great for the business. More customers with much more disposable income? That sounds fantastic. And in turn the cost of higher wages for the employees is smaller than the reward from a more prosperous customer base. On a $2 cup of coffee for instance, the wage cost is somewhere between $0.15 and $0.50. A customer making $8/hour would balk at a $3 cup of coffee, but a customer making $16/hour would have no issue with it. Even accounting for a 15% to 25% increase in cost all the way down our supply chain, we would still come out the better for it. As would most businesses. Even businesses were wages are the majority of the expenses wouldn't be hurt. If the cost of a service is 75% labor wages, and that cost doubles, you need to raise the price of that service by 35%, right? But your lowest income customers have a 100% increase in income. Probably a multi-times increase in disposable income. That's good for business. The problem with competing with walmart has little to nothing to do with labor and wage costs. It has to do with Walmart's highly optimized supply chain and one-stop-shopping at very low prices. Doubling of wages would have very little impact on the dynamic between Walmart and smaller businesses. Though smaller businesses may benefit from a consumer base with more disposable income having to be less price conscious and not having to shop at walmart out of economic necessity.
- overgryphon 12y ago
  For many small businesses, increasing the minimum wage would increase the cost of their employees but not increase the income of their customers. These businesses would see an increase in expenses but none of the benefits of a consumer base with more disposable income. Walmart wants a higher minimum wage because their consumer base includes minimum wage employees.
  - gerbal 12y ago
    54% of the US workers make less than $30,000 a year [1]. at a $14.50 minimum wage, the income floor for a full time employee becomes $30,000. You're telling me that a substantial income increase for >50% of the US working population would be bad for small businesses? [1] http://www.census.gov/hhes/www/cpstables/032011/perinc/new01_001.htm http://www.census.gov/hhes/www/cpstables/032011/perinc/new01...

by talmand 12y ago

krisdol 12y ago

Regarding your mom and pop store example: some businesses should fail. If they cannot afford to keep full time workers out of poverty, they cannot afford to run a business that hires workers.

Infinitesimus 12y ago
But when that happens, we have both the owners of the stores and their employees joining the unemployment pool. Then what?
talmand 12y ago
You seem to be assuming that it is the decision of the business to keep the employees in poverty. They might be able to afford to run a business that employees fewer workers, which is the opposite of the intent. It's one thing for a business to fail due to market forces or poor choices by management/owners. It's another for a business to pushed into closing, thus employees losing their jobs, by a government mandate that attempted to make the employees' lives better. That's the initial wave of negative consequences that I said would have to be survived before the positive results would come to fruition.
ufmace 12y ago
>full time workers What if somebody doesn't want/need a full time job, or to hire a full time worker? That's one of the things that bothers me about boosting the minimum wage. Force all businesses to pay enough to raise a family of 4 for every job, and people who don't have a family and don't need the money will now have a harder time finding jobs that meet their needs, because nobody can create a job unless they can afford to pay somebody much more than they need.

sharemywin 12y ago

my parents own a small time pizza shop. They have already talked about it they would do. stop offering delivery. A good chunk of costs in pizza are to subsidize delivery and early and late hours. maybe shut down on sundays or lunch. only keep the profitable hours.

bryanlarsen 12y ago
Which means that their competitors who still offer delivery would start making more money, and could afford to hire the drivers that your parents let go...
- joshdance 12y ago
  If their competitors could still afford delivery as well. Seems like most of this debate is anecdotal evidence and conjecture. Which is not a bad place to start from, but we need data.
sp332 12y ago
Since many of their customers will be earning more money, have they considered charging more?

bryanlarsen 12y ago

The article notes that minimum wage increases are supported by many small business associations. That's because, in most cases, it's the Mom & Pop stores that can afford minimum wage increases more than the big corporations can. Many of the hours worked in a Mom & Pop store are worked by Mom & Pop. That salary won't change no matter what happens. Mom & Pop stores are also more likely to be already paying above minimum wage. As for ability to pay, Wal-Mart does not have the ability to significantly increase pay unilaterally.[1] A minimum wage hike would require them to raise prices. This would allow Mom & Pops to compete with Wal-Mart better. 1: http://ipeatunc.blogspot.ca/2013/07/walmart-workers-cant-be-paid-much-more.html http://ipeatunc.blogspot.ca/2013/07/walmart-workers-cant-be-...

talmand 12y ago
If the owners of the small business don't change their own wages after a minimum wage hike then something is likely to a problem for them. We cannot assume that their cost of living will not increase in some way after the hike. They may indeed be already paying above minimum wage. But I pointed out that it's likely that many people who are not making minimum wage will see an increase in pay or will demand it. Let's say our small shop has two employees who make $10 an hour. They both now make $15 an hour, good for them. But that extra cost could have been a third employee. Let's say they hire that third employee anyway. Now the original two want a raise because it isn't right that a new hire makes the same as the experienced two. Granted, very simplified example that's rife with potential issues. So, if Wal-Mart's costs go up they raise prices. You are assuming that the small business won't have to do the same? Plus, if prices rise to counter the increased employment costs doesn't that eventually put us back where we started?
- sp332 12y ago
  We cannot assume that their cost of living will not increase in some way after the hike. That's true, but they'll make it up in the profit of the store, not in wages. Of course they will increase prices.

gerbal 12y ago

First off, most of what follows is anecdotal. I've worked at a couple of mom-and-pop businesses. Most of our customers at a couple of the places were people working at or just above minimum wage. Were our customers to have their income doubled it would be great for the business. More customers with much more disposable income? That sounds fantastic. And in turn the cost of higher wages for the employees is smaller than the reward from a more prosperous customer base. On a $2 cup of coffee for instance, the wage cost is somewhere between $0.15 and $0.50. A customer making $8/hour would balk at a $3 cup of coffee, but a customer making $16/hour would have no issue with it. Even accounting for a 15% to 25% increase in cost all the way down our supply chain, we would still come out the better for it. As would most businesses. Even businesses were wages are the majority of the expenses wouldn't be hurt. If the cost of a service is 75% labor wages, and that cost doubles, you need to raise the price of that service by 35%, right? But your lowest income customers have a 100% increase in income. Probably a multi-times increase in disposable income. That's good for business. The problem with competing with walmart has little to nothing to do with labor and wage costs. It has to do with Walmart's highly optimized supply chain and one-stop-shopping at very low prices. Doubling of wages would have very little impact on the dynamic between Walmart and smaller businesses. Though smaller businesses may benefit from a consumer base with more disposable income having to be less price conscious and not having to shop at walmart out of economic necessity.

overgryphon 12y ago
For many small businesses, increasing the minimum wage would increase the cost of their employees but not increase the income of their customers. These businesses would see an increase in expenses but none of the benefits of a consumer base with more disposable income. Walmart wants a higher minimum wage because their consumer base includes minimum wage employees.
- gerbal 12y ago
  54% of the US workers make less than $30,000 a year [1]. at a $14.50 minimum wage, the income floor for a full time employee becomes $30,000. You're telling me that a substantial income increase for >50% of the US working population would be bad for small businesses? [1] http://www.census.gov/hhes/www/cpstables/032011/perinc/new01_001.htm http://www.census.gov/hhes/www/cpstables/032011/perinc/new01...