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They can just raise their prices. Do you think the working poor who got a big pay increase won't be buying things there?
The *only* businesses that might be hurting are the ones where a high % of their sales are in low wage labor, *and* they cater to a higher income customer.
How much money are they going to have leftover in NYC or LA at $15 hr versus 10 ?
Plus you have to keep in mind more taxes they will likely be paying AND the inflation of prices on everything . $15 hr won't really be $15.
People are going to make $15 hr and be spending like drunken sailors ?
I don't see it
Maybe it will go to paying for actually expenses rather than welfare
Isn't that one of the arguments for having businesses increase wages , so that workers don't have to rely on welfare ?
But if a min wager used to spend $300 on groceries using food stamps and now they spend $300 of their own money from a job , how is that more money in the economy ?
The rruff argument also depends on the idea that raising the MW will mean businesses employ the same number of people and just pay them more. Many businesses will not be able to do that. They will find ways to automate, get by with fewer employees, cut back night time service, or they will go out of business. The latter is a high possibility for many fast food places. Fast food chains depend on selling franchises. That is a high risk venture with low profits. Blimpies, Quiznos and others are going under. Starbucks is already overextended. We will see fewer stores. Few of the $15 employees will be buying $4 crappy frappys.
The rruff argument also depends on the idea that raising the MW will mean businesses employ the same number of people and just pay them more. Many businesses will not be able to do that.
It's a zero sum game. Some will win and some lose. In the end it won't look much different. If you want an idea, look at those countries that have high floor wages now.
It isn't going to be a big effect period, for the simple reason that low wage labor comprises a small percentage of GDP.
Quote:
Few of the $15 employees will be buying $4 crappy frappys.
I don't know what a crappy frappy is, but I can guarantee you that poor people who get a 50% pay raise are going to spend it on something. Expect new businesses to open up to serve that demographic, or for existing businesses to adjust.
Not according to rruff: "Demand will increase even if prices rise enough to cover increased labor costs." I mentioned not wanting to buy steaks because the prices had jumped to $15-18/lb. I guess I should want to buy more steaks because the price increased.
Funny you mentioned steaks. The price of beef doubled in 5 years. Food cost is a higher portion of overall costs for a fast food restaurant than labor. Why don't hamburgers cost $10 each now, and why haven't half the hamburger places gone out of business?
This isn't rocket science. Simple 3rd grade arithmetic is sufficient.
It think you are forgetting that a portion of the population got a big income increase. It all perfectly cancels out. Even with the price increase, demand and sales are the same as before.
And then you introduce the fact that poor people spend more of their income, and you get an increase in demand.
Housing costs are already up regarless of minimum wage. Let me repeat that for those of you that seem to think minimum wage is a leading rather than a trailing indicator.
Housing costs are already up. Housing costs are already up. Housing costs are already up.
In no state does the minimum wage pay enough to hit the 30%-of-income standard of affordable housing costs. How many hours would a minimum-wage worker need to work per week to make enough that the fair market rent would be about a third of their income? A lot, from a low of 63 hours a week in West Virginia to a high of 175 in Hawaii
According to that site, there are only 15 out of 50 states where minimum wage even comes close to affording housing. That was 4 years ago when we were still at relatively low rents due to the housing crisis recovery. Rents are much higher nationwide now.
I don't advocate raising the minimum everywhere. Places like Arkansas don't need it to be as high. However, minimum wage nationally should be at least $10.50 & probably more like $11, so at least we give workers that that low end a fighting chance of affording a place to live. Other states with dysfunctional housing markets, ie: California, should be higher. $15 is totally appropriate for California and New York.
Last edited by redguard57; 05-16-2016 at 05:01 PM..
Funny you mentioned steaks. The price of beef doubled in 5 years. Food cost is a higher portion of overall costs for a fast food restaurant than labor. Why don't hamburgers cost $10 each now, and why haven't half the hamburger places gone out of business?
Because the wholesale price is under $2/lb or under $0.50/burger. I have no idea if they higher price is a big factor, but the fast food franchises are not doing well. Even McDs has been struggling. Others are on the verge of bankruptcy. And many of the individual stores are not profitable even if the franchise company is getting by.
Also in case you have not noticed, burgers are approaching the $10 price. I recently bought a whopper, fries and coke. The price was with tax was just under $9.
Give the minimum a 25% boost. We've done it before and there is an adjustment phase and some likely inflation but it's a good thing. It might hurt employment in some low wage industries over time.
Because the wholesale price is under $2/lb or under $0.50/burger. I have no idea if they higher price is a big factor, but the fast food franchises are not doing well. Even McDs has been struggling. Others are on the verge of bankruptcy. And many of the individual stores are not profitable even if the franchise company is getting by. Also in case you have not noticed, burgers are approaching the $10 price. I recently bought a whopper, fries and coke. The price was with tax was just under $9.
BS, the price doubled for wholesalers as well as for retail, if wholesale is $2 now it was $1 not too long ago. Food costs is about 35% of the expense of running a fast food store, labor about 20-24%. Businesses have margins they can tap into for wage or food increases, and if all stores in the same sector raise prices, there is no huge drop off in sales. The average net profit of a McDonald's franchise is $150,000 In 2012 the average number of McDonald's stores owned by a franchisee was 6 That is a $900,000 annual profit for the average franchisee.
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