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The ones that will suffer the most are those on fixed incomes that are unemployable and barely getting by, ie: a huge percentage of retirees living on just SS, that are already low cost, low income purchasers, that, unlike their employed MW counterparts, will not have increased spending ability. Eventually, the higher prices that would have to be charged to maintain sales at a profitable level, will be reflected in higher inflation, which eventually will adjust in the COLAs for higher SS benefits. COLA adjustments are not based on actual inflation, and always are less, and lag behind, but the increased COLA amounts, will make SS less sound, and cause higher increased taxes, then are reflected in the cost of everything, and the inflation spiral continues.
What happens in countries with high minimum wages, is eventually the cost of everything gets so high, that only very well employed people can afford to live a standard that we consider normal now. The larger and more diverse the ethnicity of the countries population is, and the land mass is, the harder it is to maintain a high MW, because people just move to a lower cost of living area. In European countries with high MW, the unemployed immigrate to wherever the cost of living is lower, and they can work. Many retirees already (often unhappily, but many not) try to relocate to other countries where they hope their income is higher in respect to the local economy.
To make bad debts good is something US has done in the past, and we know how that turned out. US do not need credit growth.
There are many was to measure credit growth. %GDP % personal income or in fixed dollar amounts. We need credit to go down in % GDP and go up in dollar value at the same time.
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Originally Posted by Camlon
I don't think you thought this through. A lot of outsourcing is not done through the company, but by buying services from abroad. And if you make this rule for all trade, then you will create a recession for no reason.
I have put a lot of thought into this. I want inflation. Global inflation. Increasing wages world wide reduces debt loads.
A 110% tax penalty on capital gains and dividends if the company buys anything made buy any one at less than US minimum wage,
Uses contract labor at less than US minimum wage,
Or employs anyone at less than US minimum wage world wide.
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Originally Posted by Camlon
If you want less imports, then tariffs are a better solution, because at least that gives tax money.
I don't particularly want less imports. I want higher wages world wide.
Again, let me repeat. This is not about the economy, this is about unemployment for low income workers. Got it? The companies who benefit are companies with few MW workers per customer, and the ones who fail are the ones who have many MW workers per customer. That means a lot of low income people will lose their jobs.
And why do you want me to give examples of such business, you should already know. One clear example is the restaurant industry.
Companies are not going to fail because they have a lot of MW workers. If they serve the lower income demographic they will experience an *increase* in sales across the board. And the high income demographic isn't sensitive to price.
How much of a restaurant's gross sales is MW compensation for employees? I don't know exactly what it is, but I guarantee it's a lot less than you assume. Most of the employees live on tips. Fast food places would be higher, but they also serve a lot of low income people. Even then I doubt it is more than 25%.
If you are worried about companies automating instead, that is happening anyway, and lowering wages would only buy a handful of years.
Another thing, we don't have to pretend that the US is alone in the universe. Scandinavian countries have been paying much higher floor wages for a long while. Currently ~$20/hr. How come they haven't experienced the disaster you pretend will occur?
Companies are not going to fail because they have a lot of MW workers. If they serve the lower income demographic they will experience an *increase* in sales across the board. And the high income demographic isn't sensitive to price.
How much of a restaurant's gross sales is MW compensation for employees? I don't know exactly what it is, but I guarantee it's a lot less than you assume. Most of the employees live on tips. Fast food places would be higher, but they also serve a lot of low income people. Even then I doubt it is more than 25%.
If you are worried about companies automating instead, that is happening anyway, and lowering wages would only buy a handful of years.
Another thing, we don't have to pretend that the US is alone in the universe. Scandinavian countries have been paying much higher floor wages for a long while. Currently ~$20/hr. How come they haven't experienced the disaster you pretend will occur?
It depends on what type of restaurant and there are variations even within restaurant classes depending on region, management style, etc... The fanciest ones may pay close to 40% of gross sales toward labor because they have well-paid chefs, highly professional service staff, management, etc... Those are the places where it costs $100 per person or more to eat.
Fast food and limited service restaurants like Chili's etc... less than 30% without a doubt. Probably more like 15-20% if they use a lot of minimum wage. I'm not going to cry crocodile tears over the restaurant industry's labor costs. They're doing fine.
It depends on what type of restaurant and there are variations even within restaurant classes depending on region, management style, etc... The fanciest ones may pay close to 40% of gross sales toward labor because they have well-paid chefs, highly professional service staff, management, etc... Those are the places where it costs $100 per person or more to eat.
Fast food and limited service restaurants like Chili's etc... less than 30% without a doubt. Probably more like 15-20% if they use a lot of minimum wage. I'm not going to cry crocodile tears over the restaurant industry's labor costs. They're doing fine.
You are making up numbers, restaurants generally have three costs, food, labour, and rent. So lets take a look at the figures. A resturant that has 1500 customers a month will earn about $30000 a month. Rent in most places is not more than $3000 a month, and food costs is not more than $6000. But a place like this might have 8 MW employees, which result in a cost of $10000 per month.
In fact it is the opposite way, fancy resturants pay less in staff costs, because they spend more on rent and take more profits.
There are many was to measure credit growth. %GDP % personal income or in fixed dollar amounts. We need credit to go down in % GDP and go up in dollar value at the same time.
I have put a lot of thought into this. I want inflation. Global inflation. Increasing wages world wide reduces debt loads.
You will just decrease debt levels, you won't decreate debt payments. Because when inflation becomes high, then loan providers will demand more in interest. This is especially damaging during crisis, you can't borrow a lot because then you bancrupt yourself, and you can't print because then you get hyperinflation.
You don't need to believe me, just look at south america who has suffered from high inflation over long time. Their debt payments are high, they have high unemployment rates, and the countries with high inflation rates are also the countries who perform the worst.
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A 110% tax penalty on capital gains and dividends if the company buys anything made buy any one at less than US minimum wage,
Uses contract labor at less than US minimum wage,
Or employs anyone at less than US minimum wage world wide.
And there you just destroyed all trade to the US. Just imagine the same requirement to the US from a very rich country. They tell us that any company who export to them need to pay all their workers at least $150K and they can't buy from companies who pay less than $150K. 99.9% of the companies in the US will not follow that requirement, because that rich nation is not their only market.
The result of this proposal is that millions of people abroad become unemoloyed, which will push down global wages. You will also cause a massive recession in the US, because people will have a lot less purchasing power.
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I don't particularly want less imports. I want higher wages world wide.
That is why I said you didn't think it through, because your proposal will lead to less imports and lower wages world wide.
So lets take a look at the figures. A resturant that has 500 customers a week will earn about $10000 a week. Rent in most places is not more than $1000 a week, and food costs is not more than $2000. But a place like this might have 4 MW employees, which result in a cost of $5000 per week.
Seriously, when did MW go up to $1250/wk, $65k/yr!
Use realistic figures not made up BS!
"Certain fast food restaurants can achieve labor cost as low as 25 percent, while table service restaurants are more likely to see labor in the 30 percent to 35 percent range. Food costs (including beverages) for the restaurant industry run typically from the 25 percent to 38 percent range, depending upon the style of restaurant and the mix of sales."
Note, this is total employee compensation, not MW employees.
I know a guy who worked at Dominoes. The workers made ~MW, but the store manager made >$100k/yr. Managers in these places can make more than all the MW employees combined.
Companies are not going to fail because they have a lot of MW workers. If they serve the lower income demographic they will experience an *increase* in sales across the board. And the high income demographic isn't sensitive to price.
I think you forgot about the middle class, or maybe in your world they don't exist? In reality minimum wage businesses do not mainly serve lower income demographic, most of their income comes from people with average wages and they are price sensitive.
In fact poor people prefer fast food and retailers like Walmart. If you look at business with a high fraction of MW workers compared per customer, then low income people are a tiny fraction of their income.
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How much of a restaurant's gross sales is MW compensation for employees? I don't know exactly what it is, but I guarantee it's a lot less than you assume. Most of the employees live on tips. Fast food places would be higher, but they also serve a lot of low income people. Even then I doubt it is more than 25%.
California doesn't have a lower minimum wage for tipped workers, how can you not know this?
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Originally Posted by rruff
Another thing, we don't have to pretend that the US is alone in the universe. Scandinavian countries have been paying much higher floor wages for a long while. Currently ~$20/hr. How come they haven't experienced the disaster you pretend will occur?
More talking out of your ass. First off they don't even have minimum wage so some people earn almost nothing. However, they have trade union deals and the minimum is around 140 NOK, 110 DKK, and 120 SEK. The result is $17, $17 and $15, not 20.
Secondly, you need to take into account those countries have very strong currencies, which lead to higher wages and costs. After adjuting for that, the result is about 12, 12, and 10. You think California can support a higher minimum wage than Scandinavia? And it gets worse, because California has very high inequalty even compared to other states, while Scandinavia is egalitarian.
Seriously, when did MW go up to $1250/wk, $65k/yr!
Use realistic figures not made up BS!
I just wrote a little fast, I updated it to months, the result is the same, a lot of the cost is in employees.
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I know a guy who worked at Dominoes. The workers made ~MW, but the store manager made >$100k/yr. Managers in these places can make more than all the MW employees combined.
In what universe is Dominoes a restaurant?
Why is it so hard for you to get the difference between MW business with a lot of employees per customer, and businesses with few employees per customer. Dominoes won't get hurt too much by a MW increase, because they have a very lean business model.
I just wrote a little fast, I updated it to months, the result is the same, a lot of the cost is in employees.
In what universe is Dominoes a restaurant?
Why is it so hard for you to get the difference between MW business with a lot of employees per customer, and businesses with few employees per customer. Dominoes won't get hurt too much by a MW increase, because they have a very lean business model.
Last I checked Dominoes sold food. It's basically fast food AND its stores are run by franchisees, aka "small businesses" --- exactly the kind of businesses you say are going to die out because of this.
It took me about 90 seconds to discover what a typical restaurant pays to labor.
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According to the Restaurant Report website, labor costs in the food and beverage industry account for 22 to 40 percent of total sales.
Who knows? Maybe no one will go out to eat any more in California. As a society Americans eat too much salt and fat laden food outside the house anyway. Perhaps an increase in eating out costs will reduce our aggregate health care costs over time.
I doubt anything bad will happen. I don't know what industries you're talking about that have "a lot of employees per customer." Searching "revenue per employee by industry" brings up the usual suspects on the low end - retail and food & beverage. Again, I'm not convinced minimum wage is going to significantly impact those industries.
Why is it that people so against increasing the minimum wage are so in love with those crappy jobs? I worked PLENTY of those kinds of jobs in my life. You know what they lead to? Slightly less crappy jobs - basically management within those industries. They don't lead to any better work. Once I finished school, no one cared that I had worked retail or food service. So I had been able to hold jobs in my life. Big whoop, so can anyone not disabled, a drug addict or plain lazy. One interviewer actually laughed in my face about how I had listed my fast food jobs from my youth on my resume.
If some of those jobs in the food service or retail industry phase out I'm not going to shed any tears. Technology, competition from online, consumer behavior & tastes, etc... will do much more than minimum wage anyway. No employer is a charity or welfare agency. They don't exist to provide jobs. If the minimum wage causes the phase out of some marginal jobs or industries perhaps we didn't need them.
Last edited by redguard57; 04-05-2016 at 05:30 PM..
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