Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
If you want to do a smell test why not estimate what raising the MW would do to costs throughout the economy? I've done it a few times in this thread.
I can't give a concrete number, but I can certainly give a range. A minimum wage increase of 50% is likely to increase prices for fast food between 20 - 50 percent.
You might ask how do you get to 50 percent when cost like rent, transport and raw materials is not that affected by the minimum wage. That can happen because higher prices can shift sales from fast food to for instance grocery stores. To compensate for the lack of sales, many stores will increase prices.
If it is 20 or 50 percent I don't know. But any study that goes lower than 10 percent is completly bogus.
I can't give a concrete number, but I can certainly give a range. A minimum wage increase of 50% is likely to increase prices for fast food between 20 - 50 percent.
Now you are being completely bogus. A 50% MW increase in an industry that typically has 15% of its sales in hourly wage would justify a 7.5% increase. If the inputs also have 15% of their sales in low wage labor (doubtful) then you can boost that to 8.1%.
Now do it for the whole economy. Per capita GDP is ~$58k/yr, and 42% of the population is employed. So it's $138k/yr/worker. Now estimate the number of people in the wage effected zone and how much of an increase on average they'd get.
For instance if 20% of the workers get an average increase of $8k/yr, then .2*8k/138k is a 1.2% increase. That's how much you can expect aggregate prices to rise.
I honestly doubt that fast food and most other businesses that use a lot of low wage labor will be hurt at all, since most of them already cater to low wage customers. And those customers just got a big pay increase. They are going to spend it on something.
Now you are being completely bogus. A 50% MW increase in an industry that typically has 15% of its sales in hourly wage would justify a 7.5% increase. If the inputs also have 15% of their sales in low wage labor (doubtful) then you can boost that to 8.1%.
As I said, your math is totally bogus. Here is very conservative calculation
Labor: 1/3, will cause 16.5% inflation
Inputs: 1/3, will cause 4% inflation
Total price increase is 20.5% assuming spending stay the same. If you take into account that sales may drop, because people buy more from grocery stores, then prices may increase 40%.
Now do it for the whole economy. Per capita GDP is ~$58k/yr, and 42% of the population is employed. So it's $138k/yr/worker. Now estimate the number of people in the wage effected zone and how much of an increase on average they'd get.
For instance if 20% of the workers get an average increase of $8k/yr, then .2*8k/138k is a 1.2% increase. That's how much you can expect aggregate prices to rise.
Stop making calculations, you are making so many mistakes, both ways.
1. 20% of the workers will not get an average increase of 8K, more like 4K
2. 80% of the workers is likely to get some kind of wage increase
3. You cannot use GDP.
Quote:
I honestly doubt that fast food and most other businesses that use a lot of low wage labor will be hurt at all, since most of them already cater to low wage customers. And those customers just got a big pay increase. They are going to spend it on something.
Except they do not cater to low wage customers, they just hire low wage workers.
Fast food is very popular among students, people who not work and the middle class. They are not going to get a large pay increase.
.... an industry that typically has 15% of its sales in hourly wage ........
Actually labor costs are more like 30% with the vast majority of those salaries in low hourly wages. Anything over 10% for management labor would be outside of successful business practices.
We seem to have some issues on this forum. Everyone is entitled to an opinion, but that does not entitle someone to make up the facts or to find someone else who has.
Obama's new rule on overtime pay is bad for workers
The vice president of the Economic Policy Institute, a left-leaning think tank that pressed for the reform, praised it as "sort of a minimum wage for the middle class." That's exactly the problem: Like the minimum wage, the new overtime policy raises the cost of labor and thereby puts jobs at risk. The new rule is sure to have other unintended consequences too, once employers start looking for ways around it. There are better ways to help workers.
Employers already contending with rising minimum wages will now be all the more likely to find ways to automate processes, cut workers' hours, reduce other benefits and bonuses, or all of the above. In the case of overtime, the scope for this kind of arbitrage is especially wide: Where the newly eligible workers are paid more than the minimum, basic rates can be cut to make room in the budget for the new mandate.
How about let's let the workers decide if it's good or bad for them.
The fact is the percentage of workers falling under the old standard is a fraction of what it once was because employers learned how to exploit the system for free labor, by calling someone "salary" and then working them 60 hours.
Any business that relies upon squeezing unpaid labor out of employees deserves to die.
Actually labor costs are more like 30% with the vast majority of those salaries in low hourly wages. Anything over 10% for management labor would be outside of successful business practices.
10% is typical for management, and fast food has a lower labor % than a typical restaurant. Hence 15% for hourly, particularly in poor areas where wages are low. If you don't like that we can use 20%, but it definitely isn't more than that.
10% is typical for management, and fast food has a lower labor % than a typical restaurant. Hence 15% for hourly, particularly in poor areas where wages are low. If you don't like that we can use 20%, but it definitely isn't more than that.
I guess you just want to pick any old number you prefer. Source for 20%?
We seem to have some issues on this forum. Everyone is entitled to an opinion, but that does not entitle someone to make up the facts or to find someone else who has.
Or if you are going to make up numbers start by overstating things...
If your business is 50% labor and you double labor, then you have 50% increase in prices but your workers have 200% of their original wages. So 200% - 150% = 50% more income to spend.
Fast food might have to reduce the breadth of some of its loss leader items. Do you think that dollar menu crap actually cost only $1.00 to produce? Even at the grocery store, the ingredients for a chicken sandwich are going to cost you more than $1.00
Other than that I think they'll be A-OK.
Fast food will probably go up but it'll be the way health insurance is going up... you start paying a little more of the true cost because they eliminate their artificially cheap options.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
