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If aggregate prices in the whole economy go up just enough to cover the wage increases, and no one is laid off or has their hours reduced, sales will actually increase.
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There is no math here, just assumptions. If costs go up and the only people getting increases are those at MW, don't count on sales increasing.
I know I won't have much money to cover substantially higher costs. Millions of other retirees are in the same position. The ageing US population will be changing some aspects of our economy. There is going to be even more resistance to higher prices than we have now. It is not just that retirees are on fixed budgets, but we remember when prices were much lower. Going to restaurants is highly discretionary spending. The 2008 recession hit restaurants very hard in my area. There was what seems to be a permanent change in spending patterns. Restaurants have recovered somewhat but a great many went out of business. In the good old days they came and went on a frequent basis. There were few long term survivors. Well there are fewer today by a substantial and noticeable amount.
BTW, the recession in my area was very modest. Hardly anyone lost jobs and the value of housing did not substantially decline. Salaries and housing values are now substantially higher but there have been lasting psychological effects. It became fashionable not to spend money unnecessarily. The shopping malls are in trouble. They used to depend on selling expensive, high end clothing and are now reduced to survival with big sales on inexpensive items. Some even fairly large strip malls are boarded up. I already mentioned the decline of restaurants. Well, half of the gas stations closed permanently. The tanks were removed and the stations torn down. There were many art galleries. All but one is closed and it stays open because it is a coop and the members pay to keep it open. Years ago there were plenty of big Hummers and Lexus, Mercedes and other high end cars. Those dealers even closed. Now the vast majority of cars are Honda CRVs or equivalent. Plenty of people have the money for those high end cars, but they are no longer fashionable.
Based on what I am seeing our consumer economy seems to be changing drastically. The era of conspicuous consumption and keeping up with the Joneses seems to have died...good riddance. I think we have a much more cost sensitive economy. People are not going to easily absorb prices increases. They are more likely just to stop spending when prices go up.
Great point, I was going to post something along the same lines about the delivery guys delivering food, supplies,etc will get a raise too bringing overall costs up way above just paying their payroll employees more.
Yes it's actually gotten expensive and no longer a good value. I'm usually left disappointed after paying for fast food.
The worst part is we will continue to see more of these chains because they will have a better chance at making it versus the mom and pops. They have brand recognition, will be able to invest in automation, etc.
The mom and pops will be hurt much more than the multinational chains.
"Oh we can't operate in California?..no problem...Our China stores are doing GREAT!"
No $15hr minimum wage in China , Vietnam, the middle east or lots of other growing places.
A subway or wendys with people employed and earning a paycheck is better than a vacant building with no workers.
Oftentimes these buildings stay vacant for many months or years ...even in big cities like L.A
Hmmm wonder if people don't want to invest hundreds of thousands of dollars into a location where the minimum wage will be $15hr soon...Business owners run the numbers (or should) before they open...and even before $15 wages are going to $11,12,13,14 every year.
THe businesses that WILL be able to afford these locations are likely not going to be businesses that are high labor like fast food..it will be the types of businesses that fast food workers likely aren't qualified to work at.
For now this is what is happening... why set up in high minimum wage city when you have options just minutes away?
Yeah but pretty much every business is saying they will cut down on hours or have layoffs.
No, they won't. They won't reduce hours or lay off people unless they lose sales. Any cuts will be offset by others that need to hire more.
Aggregate profits will stay the same or increase slightly due to the sales increase.
If employers choose to invest in automation, that is a good thing because it increases aggregate productivity and prosperity. You can't solve the tech unemployment problem by reducing wages!
Why did it publicly say the $12.55 plus sick leave was the reason for closing a performing store? Some employees were transferred to San Leandro which has two Walmarts minutes away...
MW rates in individual towns right next to each other cause imbalances such as this. That's very different from a universal MW.
Not at all. You are only pretending to address the cost of the restaurant worker. You also need to cover the increased costs for harvesting, processing and packing the food. Food costs are highly labor related and most workers are at or near minimum wage.
Actually, they're not. Agriculture and food production in the United States is highly automated. The unit labor cost of food in the US has been dropping for decades. The same is true for our transportation infrastructure.
There is no math here, just assumptions. If costs go up and the only people getting increases are those at MW, don't count on sales increasing.
False assumptions. That is the problem. You are leaving out the other side of the equation.
In aggregate, sales will increase because MW workers spend a higher % of their income than the rest of the population.
"Substantially higher costs"?! Do the math. I've already showed it a couple times in this thread. How much will the MW increase, and what % of national income will it represent? Do that and you have your answer.
Is the world going to come to an end because aggregate prices increased 1%? You won't even notice it, though I'm certain that there will great loads of laying blame where it doesn't belong.
What affect, if any, on the cost of housing... renting and/or ownership?
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