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People are always talking about how huge chain corporations like Wal-Mart or McDonalds can easily afford to raise all their employees' pay to $15-20/hour like that's some kind of justification for a minimum wage increase. Maybe so.
But I was wondering, what about all the small businesses? The eateries and specialty stores and such across America that have maybe five employees across the board? How many of them do you think could stay in business if they suddenly had to double (or more) everyone's pay because of a minimum wage hike? Do you think small businesses have the same kinds of profit margins that Wal-Mart has and they can just eat the loss like they can?
On the one hand people want to blame big businesses for running small businesses out of town, and on the other hand people are proposing things that would ensure that small businesses can no longer afford to exist.
In many, many cases, I think the result would be that a business owner with six minimum wage workers would turn into seven people applying for unemployment.
This ignores history. Adjusted for inflation, the current minimum wage is well below what it was during many years when the unemployment rate was usually much lower than it is now.
There are probably some small businesses that can't afford to pay $10/hour (which is about what most people who want an increased minimum wage are talking about) but there would be plenty of other businesses that would be able to hire more people because of increased demand caused by workers having some money to spend.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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I had a small business for 16 years, with 3-4 employees. Because the work required skills I paid $10-12/hour back in 2007. A significant increase in the minimum wage would have required me to pay my people more to maintain their deserved percentage over minimum. That would have meant raising prices, cutting their hours, or a combination of both to maintain the already modest profit margin. Back in the mid 1990s when business was booming I could have easily raised prices, but later on it was far more competitive and my customers (businesses) would not order at all if the price was too high, so most likely I would have cut their hours and worked even more than my usual 10-12 hours a day.
I didn't vote for the mayor or that socialist councilwoman.
By all means, lets handout $15 an hour to jobs that were never meant to be careers just because said employees have no job skills and don't want to put forth the effort to better themselves.
The waitress makes up to $45 an hour with tips and doesn't want the increase... the Starbucks barista makes $9.38 plus $1-$2 in tips so of course she's all for an increase.
As with any law, the most important thing is to weigh the overall winners vs. losers. Unfortunately, the debates too often focus on the exceptions, the single incidents that make for compelling stories that fit nicely into the 90 second sound bites on cable TV news. The fact is there are many, many, many more minimum wage earners working for employers that can afford to pay a higher minimum wage than those who do not. Will some employers face problems forcing them to reduce hours or staff because of a minimum wage inccrease? Probably. But will that harm outweigh the benefits of raising the minimum wage for all of those employed by employers who will not be FORCED to reduce hours or staff because of the minimum wage increase? Almost certainly not.
Aside from the obvious benefit to minimum wage workers, raising the minimum wage has additional benefits for the rest of us. In particular, raising the minimum wage shifts some of the costs of providing those individuals with basic life support from the government (i.e., we, the taxpayers) to the employers. By requiring employers to increase wage levels for the lowest paid workers, the government can and should also reduce the overall amount of welfare-type benefits it pays out. People who work full time should be able to support themselves. We should require that employers bear the burden of paying a wage that people can use to provide themselves with life's basic necessities. If we don't, we bear the burden of providing those necessities because to let those people go without those necessities has even greater costs to us in terms of things like health care, law enforcement, and maintaining public safety.
If the minimum wage is raised, the biggest losers will likely be the wealthiest employers. They typically have the highest number of workers. Those workers are the people who enable the employers to have the highest profits. Raising the minimum wage may indeed cause those employers to raise wages for not only the lowest paid employees but also some above them. Will that cause prices of the products or services provided by those employers to rise? Probably not. Again, in cases where the profit margins are extremely low, raising prices may be the only way to account for the required payroll cost increase. But how many of the really large employers are in that class? Very, very few. Making the highest profits while selling a product or service at the lowest profit margin seems nearly impossible. So where does the money to pay the workers come from if not from increased consumer prices? Profits of course.
Our income inequality between the richest and poorest of us is crushing our economy. Redistributing some of the current profits from the uber wealthy employers to the many lower paid employees they hire will benefit all but the few uber wealthy employers. The Walton family, the Koch brothers, and those very few taxpayers in their very select and fortunate club of billioinaires will have to suffer with a few less million dollars of income each year. Meanwhile, you and I will pay a little less for at least a few million welfare recipients. I like that deal.
Many large businesses are constantly running in a Deficit mode....accounts Payable are always higher then their Accounts Receivable....but they continues operating. All one has to do is read the newspapers every day for some specific info.
Was just wundering here of all the business knowledged people posting here who have actually started a business of their own....had employees and what their profit margin was based upon their Gross income (Sales) and Net Profit after overhead expenses.
Last edited by Steve Bagu; 04-27-2014 at 02:20 PM..
Reason: Additional question as per their knowledge/experience
This ignores history. Adjusted for inflation, the current minimum wage is well below what it was during many years when the unemployment rate was usually much lower than it is now.
There are probably some small businesses that can't afford to pay $10/hour (which is about what most people who want an increased minimum wage are talking about) but there would be plenty of other businesses that would be able to hire more people because of increased demand caused by workers having some money to spend.
History and facts are generally ignored in cases like this ever since corporate infallibility and worship of short-term profits overcame all common sense and social responsibility in this nation.
Sure, some jobs may vanish, but on the other hand, more people will not be living in total poverty and dependent upon the taxpayer via social safety nets to survive. The net gain is positive, except big corporations might have to pay more of their share for a functioning society vs. passing the costs off to the taxpayer... Yeah, reducing corporate welfare is no loss, and I won't shed a tear over that.
The minimum wage hikes in 2007-09 made it more costly to hire people and created more long term unemployed.
The minimum wage hikes of that time probably also caused all of the housing foreclosures, bank failures, credit shutoffs and credit line reductions by banks to employers, reduced national credit rating, and government bailouts at the time, all of which probably had nothing to do with causing long term unemployment.
lol. why do people always exaggerate when they make these threads? is it because they don't think the point would stand up with the raise only being between 10-12$ an hour? seriously, besides the sort of recent fast food dudes asking for 15$, i have almost never seen people suggest minimum wage should be higher for americans that what is it for canadians. how come canada can do it and the usa can't?
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