Posted on 05/25/2015 6:50:29 AM PDT by Kaslin
That would be the intelligent thing to do. That is why it will not happen.
In Econ 101, I seem to recall a notion of the price elasticity of demand.
Prices can only be raised to the extent people continue to purchase. If prices exceed that point, demand falls off, sometimes dramatically.
At that point, a few businesses may survive by selling high quality and high service to the very affluent. But all the rest of the businesses go under.
Your analysis seems to me to involve the same fallacy that drives liberals to raise taxes ever higher and higher. In the tax area, what they ignore is referred to as the Laffer Curve. At a certain level, people stop paying higher taxes. That’s why DemocRat budget projections are never correct.
No, business doesn’t work that way either. If it did, we could raise the minimum wage to $100 per hour, and we would all live happily ever after, eating rainbow stew and drinking free bubble up.
Silly article, the minimum wage is, has always been and always will remain zero. There are in fact many firms at this moment willing to pay each of us zero.
All the so called minimum wage does is make illegal wages between zero and some amount of money. The author is right that there are ill effects from having a so called minimum wage above zero. That is why left wing organizations pay many of their entry level workers zero and call them interns.
Raising the minimum wage also prices a lot of working women out of being able to afford childcare.
Seattle’s minimum wage is NOT $15 per hour.
It is $11 per hour for large employers, and $10 for smaller employers who provide health insurance and other benefits.
The $15 wage will phase in over the next 4 years for large employers, and over the next 7 years for small employers.
The current minimum wage in Washington state is $9.47.
In Seattle, before the increase to $11 last month, almost no one in the city was working for less than $10 per hour.
One restaurant owner in Los Angeles stated that he was preparing for signing a new lease on ONE of his TWO restaurants.
He won’t be able to sign that lease now, and he is looking closely at shutting down BOTH operations, and he says the rise in minimum wage is the reason.
I suspect he will move completely out of Los Angeles, and find a location where he can use his skills.
The cost isn’t just the base raise-—you have to factor in matching Soc Sec==6.2%—matching Medicare==1.45% and then there is Workmen’s Comp Insurance. . All of that can add up to more than 35% on top of the base wage.
The last time I did bookkeeping for a roofing company in LA, their workmen’s comp rate was 105%-——For every $100.00 paid to the employee, the cost of the premium for workmen’s comp was $105.00.
Now you might understand why it costs so much to get a new roof on your house.
You will note that the Laffer Curve is a curve. The degree of effect is determined by location on the curve.
I’ve never said that there won’t be some effect. But from what I’ve read, most who calculate the actual price increases needed to cover the increase in labor cost for a fast-food place come out in the vicinity of 5%.
IOW, the $8 combo meal at McDonalds will now cost $8.40. Seems to me this is a good deal less than the national increase in prices for their burgers over the last couple of years due to beef prices, but I don’t have any numbers on that.
If you have alternative calculations on how much the price will increase, I’d be interested to see them.
The issue is not whether higher wages will cause an increase in prices and therefore a drop in demand. It’s entirely a question of degree. Which means calculations, not hyperbole.
I have been self-employed since 1980 as a bookkeeper for small businesses.
I charge $20 an hour & I pay all the Soc Sec & Medicare costs-—15.3%.
The people in those photos couldn’t do 1/10th of what I do & they are not people I would ever employ.
IF I remember correctly, In n Out actually sends their prospective employees to “Hamburger school”. They weed out the incompetent ones before you & see them in their facilities.
Also- I have been eating their food since the 60’s. I have NEVER seen one of their employees with tattoos—metal garnishment on their skin—or not properly groomed.
In other words-—they don’t hire the unemployable dregs.
So far, no one has solved this riddle: how do you create MORE jobs while forcing employers to raise wages by 107%, from $7.25 to $15?
Easy - union contracts are tied to the minimum wage, so that means mandatory salary increases for union workers all over the city. “”””
EXACTLY!!! Most Americans under 40 today don’t realize that union contracts are tied directly to the minimum wage.
Some are on a percentage basis. Some are on a dollar basis.
A union worker already getting $30 an hour plus benefits would get $7.75 more per hour immediately.
The unions have outlived their usefulness & the SEIU union is trying to capture the unskilled end of the spectrum. They are a very nasty union, also. Brings back memories of the Teamsters under Hoffa.
-——You can enjoy tapping your foot in line at your favorite burger joint....———
That is a very presumptive statement. There is no evidence at all that the new status quo will include burger joints. Being economically nonviable, the food providers will just shut down. The alternative will be street vendors operating with no health certificates and out of date meat.
LA will become an old Asian city with lots of underground street businesses having armed owners that shoot lazy inept black thugs on site.
Did some looking around. Difficult to find articles attempting to analyze the effects of an increase. Most seem to be trying to make a case pro or con rather than lay out the facts.
It really shouldn’t be all that difficult to determine how much a restaurant would have to raise prices to break even on a given labor cost increase. But not too many seem interested in making those calculations.
First you get facts, then you discuss what appropriate policy should be.
I’ve seem claims of 5% (seems low) to 20% (seems high) to cover a raise of minimum wage to $15. But almost nobody lays out their calculations, which shouldn’t be all that difficult.
Amazing-—The Seattle phase-in isn’t even close to complete & the number of restaurants closing down is accelerating.
By the time the full amount is reached, there will be no restaurants the average person can afford.
What happened when gasoline was $5 a gallon? Where I live, there were neighbors who called each other every time they had to make a trip for something & we had 2 or 3 persons in every car.
Just like George III used to do.
Sorry, but the employer is already paying those percentages on top of the actual wage, so if the minimum wage goes up 15%, his total cost of labor goes up 15%.
You are right, of course, that almost nobody realizes how much workers comp can affect cost of labor for some industries.
The lowest hourly wage listed on a wage site for In n Out is $10.88.
FWIW, I used to be in a line of work where we frequently had to hire temps from the services. We always arranged with the agencies to send us their better workers for an extra couple dollars an hour.
At least for what we were doing, the reduced labor cost for their dregs was much more than offset by increased supervisor and management cost, lower productivity, more mistakes that needed to be fixed, etc.
The lowest hourly rate for labor seldom, in my experience, correlates with the lowest total cost for getting a job done.
YMMV
oh i am sure McD will pay 15 dollars to those who are working there....except...be careful what you wish for
http://www.zerohedge.com/news/2015-05-24/mcdonalds-responds-minimum-wage-protests
if you cant link, it shows an automated ordering systems in McD’s...so they have reached the tipping point where automated systems are cheaper that 15 dollar an hour order takers...
“First you get facts, then you discuss what appropriate policy should be.”
That, my friend, is a perfect definition of Soviet planning.
In my view, first you decide how anyone gets to be Soviet planning Commissar for everyone else.
You don’t think it’s reasonable to analyze facts before making decisions? What do you think decisions should be based on? Emotional reactions?
Don’t you think it is reasonable to calculate what actual impact on businesses will be for this proposal, which really isn’t that hard to do?
Here, I’ll lay it out for you.
Let’s assume a business has a cost of labor that is 25% of sales. Let’s assume its labor cost increases by 50% due to an increase in minimum wage.
That business will have to, if all other things were held equal, which of course they never are, increase its prices by 12.5%. Then if unit sales stay the same, which they won’t, at least initially, the business will break even. The total profit will remain the same, although profit percentage will go down slightly. If you wanted to keep profit as a percentage of sales the same, prices would need to be raise somewhere between 1 and 2% more.
I suspect, in this hypothetical situation, prices would actually have to go up by somewhere around 15% to keep profits the same, assuming customers don’t go elsewhere. But since every other restaurant around is faced with the same situation, they don’t have the option of switching to a lower-priced restaurant. They have the option of packing a lunch, of course, but I suspect most people would get tired of that quickly and adjust to the 15% increase.
See, that wasn’t so difficult!
Fixed it.
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