5 ms·

> Do you expect your employer to keep his same prices and same amount of work force and just eat the labor cost? Many will simply eat the cost, actually. The

by Mikeb85 12y ago

> Do you expect your employer to keep his same prices and same amount of work force and just eat the labor cost? Many will simply eat the cost, actually. The minimum-wage debate is more about politics than economics. There's not as many minimum wage workers as people think, so for very little economic cost, you can increase the quality of life for the lowest paid workers in our society. A few businesses may be forced to change, but those are the ones that run razor-thin margins. > What happens if you make $9 now, make $15 tomorrow, but tomorrow the prices of everything you buy suddenly doubled?" Nothing will double in price. Given the amount of minimum wage workers that actually exist in the US, prices shouldn't increase by more than 5%. Anything more would just be opportunistic gouging.

aaronbrethorst 12y ago
There are about 3.3 million people who are affected by this per http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-minimum-wage/ http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-mi... The minimum-wage debate is more about politics than economics Not for those 3.3 million people, it's not.
- Mikeb85 12y ago
  > Not for those 3.3 million people, it's not. 3.3 million is about 2% of the workforce of the US. The point I'm making, is that the economic cost of the price increase (which is the argument made against minimum wage increases) is far less than the tangible quality-of-life benefits to those 3.3 million workers. I'm for raising the minimum wage BTW. Because the pros (better life for those workers) far outweigh the cons, especially from an economic standpoint.
- chrismcb 12y ago
  I don't know the numbers, but far more then 3 million will be affected. 3 million are at or below minimum wage, but how many make more than minimum wage but less than $15?
crdb 12y ago
Or they'll just hire more illegals. There's 11.5 million illegals in the US already [1] (edit: vs 3.3m legal workers on or below minimum wage [3]!), a large part of which are probably doing "minimum wage" type jobs for less than minimum wage. Every rise in the cost of doing business legally will push a few more jobs towards the illegal, or law-abiding businesses to bankrupcy from lack of competitiveness. My entirely anecdotal evidence places the dishwasher illegal salary in big cities (my data is from New York in 2010 or so) at around $3/hour. Different countries handle the issue of high minimum wage differently. Some countries have very thorough enforcement and drive the cost of everything through the roof, but end up with a more egalitarian society (I think Norway, where a beer costs as much as a large meal in neighbouring countries, counts). Singapore chooses not to have a minimum wage and to make it easy to import manual labour legally, and affords these labourers the same legal protection afforded any other resident. China uses the hukou system [2] to regulate the influx of unskilled labourers into more prosperous regions. The US simply turns a blind eye to the rule of law when it comes to unqualified labour, which allows businesses to keep their costs low, and politicians to save face and pretend they did something "for the workers", whilst a side effect is increasing the stress on the legal unskilled residents which might even be a positive for politicians as they love a good crisis. Conclusion: legal unskilled workers should fight for the law to be enforced, not for minimum wage to be legally increased. It would both remove competition and drive up demand for their unskilled work, and since there is no population explosion in the United States and legal immigration is incredibly regulated, should result in a natural rise of wages matching the higher cost of living in locations like Seattle. [1] http://en.wikipedia.org/wiki/Illegal_immigrant_population_of_the_United_States http://en.wikipedia.org/wiki/Illegal_immigrant_population_of... [2] http://en.wikipedia.org/wiki/Hukou_system http://en.wikipedia.org/wiki/Hukou_system [3] http://poverty.ucdavis.edu/faq/what-are-characteristics-minimum-wage-workers http://poverty.ucdavis.edu/faq/what-are-characteristics-mini...
- Mikeb85 12y ago
  So that's why, even with the recent strengthening of the US dollar vis à vis the Canadian dollar, things are still dirt cheap in the US compared to Canada. I do enjoy travelling down there to Montana - ski tickets are cheaper, gas is cheaper, and good beer is much, much cheaper (I seriously love the micro-brew scene in the US. Canada has a good micro-brewing scene too, but not to the same degree).
imacomputer2 12y ago
How many minimum wage workers are there? If you only look at the number of current minimum wage workers there may not be many, but we are talking about raising the minimum wage to $15. That means everyone under $15/hr is affected. So, I think the real question is how many people are making less than $15/hr. I skimmed this article http://en.wikipedia.org/wiki/Personal_income_in_the_United_States#cite_note-US_Census_Bureau.2C_median_income_for_total_labor_force-8 http://en.wikipedia.org/wiki/Personal_income_in_the_United_S... and it seems that median personal income is somewhere around 30K in the US. Well, $15/hr of full time work is about 31K. Therefor the number of people who will see a rise in their wages is potentially very large. So, I think that the problems with price increases are a real issue. Another issue I thought of is this. If min wage workers all suddenly have wage increases by law, then businesses like fast food chains might just replace many them with machines. I mean, you already know your McDonald's burger is disgusting, so probably wont mind if it gets pooped out of a dispenser like pudding. So, this policy may simply lead to layoffs.
- Alupis 12y ago
  > then businesses like fast food chains might just replace many them with machines Like McDonald's is currently piloting in France where you order your food from a touch-screen kiosk instead of a cashier.[1] [1] http://www.cnet.com/news/mcdonalds-hires-7000-touch-screen-cashiers/ http://www.cnet.com/news/mcdonalds-hires-7000-touch-screen-c...
  - fragmede 12y ago
    Wawa in Pennsylvania has touch-screen sandwich ordering machines, and has since a pilot program in 2001. It briefly gained national attention when a edited clip surfaced of Mitt Romney being "amazed" by the machines.
- ntkachov 12y ago
  If the median is the middle number, wouldn't that mean that around half of america makes less than $15/hr? The same wiki page says "slightly under 45% had incomes below $25,000". So a raise to $15/hr would potentially impact half the county.
greedo 12y ago
That's incredibly naive. Most business owners won't eat the cost. They'll cut hours. How do I know? Because I used to work in the fast food industry as a GM. Whenever CA increased the min wage, the first thing our owner would do is ask us how much more this was going to cost us, then he'd instruct us to cut the number of hours scheduled. Because in fast food, it's not like it only affects the workers making minimum wage, it bumps the entire pay scale. So if min wage is raised by $1, everyone working hourly gets a $1 bump. For a restaurant that has say 100 man hours of labor a day, that means $100 extra cost per day right out of the owner's pocket. Multiply that by 365 and you have a pissed off owner. He can't always raise prices, and labor costs are the largest controllable expense. So what happens is that each store manager is told that they need to make everyone work harder, and they have to cut $100 worth of labor each day. So the survivors get more money, but they get worked harder; the losers get their hours cut, or they don't get hired as the positions/hours are not replaced when attrition occurs. TANSTAAFL!
- tzs 12y ago
  I don't understand why the restaurant waited until there was a wage hike to do that. If they were able to cut hours and make the remaining people work harder in order to make up for the extra costs due to minimum wage, couldn't they have cut hours and made the remaining people work harder long before that, when instead of the savings going to offset a new expense, they would have gone into profit?
  - fragmede 12y ago
    Well, first off, maybe the restaurant doesn't run on greed? Hopefully there's room in your philosophy for that to be a possibility. Outside of that though, raising prices immediately hurts sales, but worse customer service due to the restaurant being chronically short-staffed takes longer to hurt sales. Being chronically short-staffed also makes for a worse working environment which leads to employee turnover, which is more costly in the long run, but when you're struggling to make rent this month, the long term costs may not be as apparent. Finally, if it's a small restaurant where the owner also helps with the day-to-day operations of restaurant (maybe they're even the chef), it mean's they'll have to work even harder. The owner may just find it worth the cost to have an extra employee and be able to work just a little bit less.

by Mikeb85 12y ago

aaronbrethorst 12y ago

There are about 3.3 million people who are affected by this per http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-minimum-wage/ http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-mi... The minimum-wage debate is more about politics than economics Not for those 3.3 million people, it's not.

Mikeb85 12y ago
> Not for those 3.3 million people, it's not. 3.3 million is about 2% of the workforce of the US. The point I'm making, is that the economic cost of the price increase (which is the argument made against minimum wage increases) is far less than the tangible quality-of-life benefits to those 3.3 million workers. I'm for raising the minimum wage BTW. Because the pros (better life for those workers) far outweigh the cons, especially from an economic standpoint.
chrismcb 12y ago
I don't know the numbers, but far more then 3 million will be affected. 3 million are at or below minimum wage, but how many make more than minimum wage but less than $15?

crdb 12y ago

Or they'll just hire more illegals. There's 11.5 million illegals in the US already [1] (edit: vs 3.3m legal workers on or below minimum wage [3]!), a large part of which are probably doing "minimum wage" type jobs for less than minimum wage. Every rise in the cost of doing business legally will push a few more jobs towards the illegal, or law-abiding businesses to bankrupcy from lack of competitiveness. My entirely anecdotal evidence places the dishwasher illegal salary in big cities (my data is from New York in 2010 or so) at around $3/hour. Different countries handle the issue of high minimum wage differently. Some countries have very thorough enforcement and drive the cost of everything through the roof, but end up with a more egalitarian society (I think Norway, where a beer costs as much as a large meal in neighbouring countries, counts). Singapore chooses not to have a minimum wage and to make it easy to import manual labour legally, and affords these labourers the same legal protection afforded any other resident. China uses the hukou system [2] to regulate the influx of unskilled labourers into more prosperous regions. The US simply turns a blind eye to the rule of law when it comes to unqualified labour, which allows businesses to keep their costs low, and politicians to save face and pretend they did something "for the workers", whilst a side effect is increasing the stress on the legal unskilled residents which might even be a positive for politicians as they love a good crisis. Conclusion: legal unskilled workers should fight for the law to be enforced, not for minimum wage to be legally increased. It would both remove competition and drive up demand for their unskilled work, and since there is no population explosion in the United States and legal immigration is incredibly regulated, should result in a natural rise of wages matching the higher cost of living in locations like Seattle. [1] http://en.wikipedia.org/wiki/Illegal_immigrant_population_of_the_United_States http://en.wikipedia.org/wiki/Illegal_immigrant_population_of... [2] http://en.wikipedia.org/wiki/Hukou_system http://en.wikipedia.org/wiki/Hukou_system [3] http://poverty.ucdavis.edu/faq/what-are-characteristics-minimum-wage-workers http://poverty.ucdavis.edu/faq/what-are-characteristics-mini...

Mikeb85 12y ago
So that's why, even with the recent strengthening of the US dollar vis à vis the Canadian dollar, things are still dirt cheap in the US compared to Canada. I do enjoy travelling down there to Montana - ski tickets are cheaper, gas is cheaper, and good beer is much, much cheaper (I seriously love the micro-brew scene in the US. Canada has a good micro-brewing scene too, but not to the same degree).

imacomputer2 12y ago

How many minimum wage workers are there? If you only look at the number of current minimum wage workers there may not be many, but we are talking about raising the minimum wage to $15. That means everyone under $15/hr is affected. So, I think the real question is how many people are making less than $15/hr. I skimmed this article http://en.wikipedia.org/wiki/Personal_income_in_the_United_States#cite_note-US_Census_Bureau.2C_median_income_for_total_labor_force-8 http://en.wikipedia.org/wiki/Personal_income_in_the_United_S... and it seems that median personal income is somewhere around 30K in the US. Well, $15/hr of full time work is about 31K. Therefor the number of people who will see a rise in their wages is potentially very large. So, I think that the problems with price increases are a real issue. Another issue I thought of is this. If min wage workers all suddenly have wage increases by law, then businesses like fast food chains might just replace many them with machines. I mean, you already know your McDonald's burger is disgusting, so probably wont mind if it gets pooped out of a dispenser like pudding. So, this policy may simply lead to layoffs.

Alupis 12y ago
> then businesses like fast food chains might just replace many them with machines Like McDonald's is currently piloting in France where you order your food from a touch-screen kiosk instead of a cashier.[1] [1] http://www.cnet.com/news/mcdonalds-hires-7000-touch-screen-cashiers/ http://www.cnet.com/news/mcdonalds-hires-7000-touch-screen-c...
- fragmede 12y ago
  Wawa in Pennsylvania has touch-screen sandwich ordering machines, and has since a pilot program in 2001. It briefly gained national attention when a edited clip surfaced of Mitt Romney being "amazed" by the machines.
ntkachov 12y ago
If the median is the middle number, wouldn't that mean that around half of america makes less than $15/hr? The same wiki page says "slightly under 45% had incomes below $25,000". So a raise to $15/hr would potentially impact half the county.

greedo 12y ago

That's incredibly naive. Most business owners won't eat the cost. They'll cut hours. How do I know? Because I used to work in the fast food industry as a GM. Whenever CA increased the min wage, the first thing our owner would do is ask us how much more this was going to cost us, then he'd instruct us to cut the number of hours scheduled. Because in fast food, it's not like it only affects the workers making minimum wage, it bumps the entire pay scale. So if min wage is raised by $1, everyone working hourly gets a $1 bump. For a restaurant that has say 100 man hours of labor a day, that means $100 extra cost per day right out of the owner's pocket. Multiply that by 365 and you have a pissed off owner. He can't always raise prices, and labor costs are the largest controllable expense. So what happens is that each store manager is told that they need to make everyone work harder, and they have to cut $100 worth of labor each day. So the survivors get more money, but they get worked harder; the losers get their hours cut, or they don't get hired as the positions/hours are not replaced when attrition occurs. TANSTAAFL!

tzs 12y ago
I don't understand why the restaurant waited until there was a wage hike to do that. If they were able to cut hours and make the remaining people work harder in order to make up for the extra costs due to minimum wage, couldn't they have cut hours and made the remaining people work harder long before that, when instead of the savings going to offset a new expense, they would have gone into profit?
- fragmede 12y ago
  Well, first off, maybe the restaurant doesn't run on greed? Hopefully there's room in your philosophy for that to be a possibility. Outside of that though, raising prices immediately hurts sales, but worse customer service due to the restaurant being chronically short-staffed takes longer to hurt sales. Being chronically short-staffed also makes for a worse working environment which leads to employee turnover, which is more costly in the long run, but when you're struggling to make rent this month, the long term costs may not be as apparent. Finally, if it's a small restaurant where the owner also helps with the day-to-day operations of restaurant (maybe they're even the chef), it mean's they'll have to work even harder. The owner may just find it worth the cost to have an extra employee and be able to work just a little bit less.