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The costs have to be paid somehow and that means less investment/spending in other areas of the business or an increase in prices.
They did all this in Australia jacking up the minimum wage to $16 and it's now one of the most expensive countries in the world.
09-24-2013, 07:33 PM
i7pXFLbhE3gq
n/a posts
Quote:
Originally Posted by pnwmdk
Everyone in the world has to learn the following.
TANSTAAFL.
There Aint No Such Thing As A Free Lunch.
I find it extremely unlikely they're operating at such margins they can raise their labor costs by 10, 20, 30 percent or more, and not move from having black on the bottom of the balance sheet to red. Businesses like that typically have net profit margins in the single digits.. .or, if they're real good, low double digits. Rule of thumb in food, that labor is 1/3 of your costs, then a 20 percent change in labor costs is 7 percent on your bottom line. That is usually enough to cut your profit (the stuff you use to improve your business, facilities, repair things, update things, etc) by anywhere from 1/3 loss to actually going broke.
You can pay more, but you have to sell more expensive and better things to people with more money to buy them. That's a difficult proposition to carry off.
You can do with less people, but make them work harder.
You can cut budgets for capital investments and "expenses".
Likely a combination of all of those things will happen - I'm betting on the "fewer people working harder" bearing the biggest brunt of it all.
Or, the costs of paying livable wages is largely made up for by not having to do as much hiring, firing, and training, all of which cost money. You can't completely discount the benefits of having people stick around and do a good job (customers come in more often when the food is better, and it's better when it's made by someone who doesn't hate every second of being there and who has more than a week of experience) just because you feel certain jobs are worthless.
Good businesses realize the value of having people who stay with the company.
When I hear advocates of a living wage for fast food, the old adage comes to mind......." you can't make a silk purse out of a sows ear"
A job that operates on low skill and low profit margins can't make that a high paid job and be competitive when the skill level requirement has not changed.
09-24-2013, 10:02 PM
i7pXFLbhE3gq
n/a posts
Quote:
Originally Posted by Teddy52
When I hear advocates of a living wage for fast food, the old adage comes to mind......." you can't make a silk purse out of a sows ear"
A job that operates on low skill and low profit margins can't make that a high paid job and be competitive when the skill level requirement has not changed.
Is anyone arguing that it should be high paid? Full time, 40 hours/week, 52 weeks/year, at $15 an hour works out to $31,200/year. Not exactly living in a McMansion and driving an Escalade money.
It should, however, be livable, especially if people are willing to stick it out for a decent period of time. It's ultimately good for the business to have people who stick around. They know what they're doing and do a better job.
No... it really shouldn't.
This keeps getting repeated but it isn't any more valid from that.
The job is and will remain what it is.
To the degree that these (FF and other) folks are otherwise unable to earn (demonstrate they're worth)
the $15 they need really isn't the responsibility of the employer who will pay $8, $10 or more to the few
that have stuck around and shown that they're worth more than the starting MW until they've done so.
Quote:
..especially if people are willing to stick it out for a decent period of time.
Those who stick around (for whatever reason) DO get more.
In some tighter markets they'll even start out with more.
Or, the costs of paying livable wages is largely made up for by not having to do as much hiring, firing, and training, all of which cost money. You can't completely discount the benefits of having people stick around and do a good job (customers come in more often when the food is better, and it's better when it's made by someone who doesn't hate every second of being there and who has more than a week of experience) just because you feel certain jobs are worthless.
Good businesses realize the value of having people who stay with the company.
I'm not discounting ANYTHING.
Arbitrarily raising wages, without increases in productivity and decreased expenses is not an effective long-term survival strategy.
Congratulations on your successful business. Now, what exactly did I post that was absurd?
This:
Quote:
Neo-con logic:
Raising the minimum wage = businesses closing and ruining the economy.
Huge raises and bonuses for CEOs = no increased costs anywhere, and somehow that money magically trickles down to the under class.
Keep going with that, guys. It's served you so well the past few elections.
As if somehow bad business decisions are a political ploy to get elected by whomever it is you call "neo-con".
None of this makes sense. Someone managing a business can't just raise wages without consequences. And CEO pay is almost NEVER driven by the CEO himself, rather, those charged with responsibility to run it HIRE the CEO for the pay both of them agree to.
If your point is that corporate boards make a lot of bad decisions, or don't know how to pick a CEO, then argue that. It is not, however, some partisan political plot.
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