Affects of minimum wage hikes.

[Bama13]

Perhaps fast food restaurants operate differently in different parts of the country. In the southeast (Alabama, Georgia, and Florida) all the companies I worked for, or know people that worked for, calculate labor the same way, it is a percentage of sales. Has nothing to do with hourly wages. If you do X amount of sales you get Y dollars of labor. So if your labor percent for a $5,000 sales day is 15% then you can spend $750 on labor costs. If your employees are making $7.50 an hour you get 100 hours of labor that day. If you pay 15.00 per hour you get 50 hours of labor that day. Most restaurants operate on a thin profit margin. They can either raise prices but, unlike gas stations, people may actually stop buying meals from your restaurant and eat at home more, or they can cut labor. The point is that no matter what the hourly wage is the amount of money spent on labor is probably going to stay fairly constant.

[Guest Br Cornelius]

This made me laugh, I can't believe you think what you wrote is true.

There is a linear relationship between unemployment and the minimum wage, not a magic limit that needs to be reached first before it starts impacting the economy. All levels of minimum wage cause unemployment with the higher the wage the longer the dole queue.

That's quite simple economics (I know you don't like the E word).

I gave a link which demonstrates that such an assertion is utter bull****, and that statement is based upon empirical research rather than belief.

Br Cornelius

[Bama13]

I gave a link which demonstrates that such an assertion is utter bull****, and that statement is based upon empirical research rather than belief.

Br Cornelius

A link from Raise the Minimum Wage website? Yeah, they sound unbiased.

[Duke Wellington]

A doubtful conclusion since it is not those corporations who are mainly paying minimum wage - it is small local businesses. Major corporations who do pay minimum wage are money grubbing their employees and we have Walmart as a perfect example.

Br Cornelius

Most corporations/multinationals choose a cost-leadership strategy. The reason is that they have larger production volumes meaning they can spread their fixed costs across more output units. That means they can then compete on price against smaller competitors.

If you start meddling with their ability to compete by increasing the minimum wage for its lower order workers it causes significant problems. You cannot reconfigure the processes, resources and capabilities they spent years putting in place to a setup which supports a differentiation strategy overnight. Nor can you do it cheaply. If you make it so they cannot compete using the strategy they are setup to use then its bye-bye.

Perhaps fast food restaurants operate differently in different parts of the country. In the southeast (Alabama, Georgia, and Florida) all the companies I worked for, or know people that worked for, calculate labor the same way, it is a percentage of sales. Has nothing to do with hourly wages. If you do X amount of sales you get Y dollars of labor. So if your labor percent for a $5,000 sales day is 15% then you can spend $750 on labor costs. If your employees are making $7.50 an hour you get 100 hours of labor that day. If you pay 15.00 per hour you get 50 hours of labor that day. Most restaurants operate on a thin profit margin. They can either raise prices but, unlike gas stations, people may actually stop buying meals from your restaurant and eat at home more, or they can cut labor. The point is that no matter what the hourly wage is the amount of money spent on labor is probably going to stay fairly constant.

What? I'm not paying £10 for that bacon butty.... I don't care how high the minimum wage is.

[Duke Wellington]

I gave a link which demonstrates that such an assertion is utter bull****, and that statement is based upon empirical research rather than belief.

Br Cornelius

Then you have a reading problem. Here's the article the website links you to - http://www.igmchicag...br0IEq5a9E77NMV

Firstly its a poll not empirical research. Secondly it asks for opinions not assertions supported by evidence. Thirdly if you actually look at the results the majority said raising the minimum wage to $9 per hour would have a negative affect on the low skilled finding employment.

It should be pointed out that:

The people were not asked if getting rid of the minimum wage would make it easier for the low skilled to find work.

They were not asked about an increase from $0 to $9 but from the current rate to $9.

And they weren't asked what impact increasing it from its current amount to $15 in Seattle would have (which is what this debate is about).

Now, when it comes to economics I was taught that at Uni. So what in Earth makes you think the empirical evidence doesn't support everything I have said?

Edited April 17, 2015 by RabidMongoose

[Bama13]

Most corporations/multinationals choose a cost-leadership strategy. The reason is that they have larger production volumes meaning they can spread their fixed costs across more output units. That means they can then compete on price against smaller competitors.

If you start meddling with their ability to compete by increasing the minimum wage for its lower order workers it causes significant problems. You cannot reconfigure the processes, resources and capabilities they spent years putting in place to a setup which supports a differentiation strategy overnight. Nor can you do it cheaply. If you make it so they cannot compete using the strategy they are setup to use then its bye-bye.

What? I'm not paying £10 for that bacon butty.... I don't care how high the minimum wage is.

Exactly. Which is why most restaurants choose to cut labor hours instead of raising prices. Why do you think "fast food" is no longer very fast? Hint: Less people working

[Guest Br Cornelius]

A link from Raise the Minimum Wage website? Yeah, they sound unbiased.

As does Forbes which started this little thread.

I was pointing out that anyone can find a site which confirms their biases - and that applies to WCF as much as myself.

However the research on that page is as real as any other research you can point to and what it tells you that the notion of a simple linear relationship between minimum wage and unemployment is entirely to simple to explain reality.

Br Cornelius

Edited April 17, 2015 by Br Cornelius

[Guest Br Cornelius]

Then you have a reading problem. Here's the article the website links you to - http://www.igmchicag...br0IEq5a9E77NMV

Firstly its a poll not empirical research. Secondly it asks for opinions not assertions supported by evidence. Thirdly if you actually look at the results the majority said raising the minimum wage to $9 per hour would have a negative affect on the low skilled finding employment.

It should be pointed out that:

The people were not asked if getting rid of the minimum wage would make it easier for the low skilled to find work.

They were not asked about an increase from $0 to $9 but from the current rate to $9.

And they weren't asked what impact increasing it from its current amount to $15 in Seattle would have (which is what this debate is about).

Now, when it comes to economics I was taught that at Uni. So what in Earth makes you think the empirical evidence doesn't support everything I have said?

There is far more to my link than your analysis suggests, but i expect no less.

Br Cornelius

[Duke Wellington]

There is far more to my link than your analysis suggests, but i expect no less.

Br Cornelius

Far more which isn't included in it anywhere lol

[Guest Br Cornelius]

Far more which isn't included in it anywhere lol

Follow the script, try not to think to hard about COMPLEXITY.

Remember its you who made the farcical statement that there is a direct linear relationship between minimum wage and unemployment. Nuanced analysis not.

Br Cornelius

Edited April 17, 2015 by Br Cornelius

[aztek]

Wal-Mart suddenly closed 5 stores and laid off thousands of workers and no one knows why.

The closures could last up to six months and affect roughly 2,200 workers in Texas, California, Oklahoma, and Florida, CNN Money reports.

Wal-Mart employees say they were completely blindsided by the news, having been notified only a couple hours before the stores closed at 7 p.m. Monday.

All workers will receive paid leave for two months. After that, full-time workers could become eligible for severance, according to CNN Money. But part-time workers will be on their own.

Local officials and employees have questioned Wal-Mart's reasoning for the closures.

city official in Pico Rivera confirmed to CBS Los Angeles that the city has not received any permit requests for building repairs.

In Midland, Texas, where another store was closed, a city official told ABC News that his plumbing inspector was turned away when he visited the store and offered to help secure construction permits.

Wal-Mart plumbing technician Codi Bauer, who worked at the now shuttered store in Brandon, Florida, questioned the company's time frame for the repairs.

"Even if they had to replace the whole sewer line, it wouldn't take six months to replace a whole sewer line in that store," he told WFLA.

Some employees believe that the stores were closed because of worker protests for higher pay.

Employees of the Pico Rivera store were among the first to hold Black Friday protests in 2012.

"This is the first store that went on strike," an employee told CBS Los Angeles. "This is the first store in demanding changes for Walmart."

http://finance.yahoo.com/news/wal-mart-suddenly-closed-5-135231172.html

how do they like the changes now?

[Gromdor]

Are you saying that a reputable company like Walmart would make up a lie about plumbing problems just to crush their workers first amendment rights and show them that they are powerless and meaningless when it comes to their lives and jobs?

[aztek]

Are you saying that a reputable company like Walmart would make up a lie about plumbing problems just to crush their workers first amendment rights and show them that they are powerless and meaningless when it comes to their lives and jobs?

lol, is it a trick question?

i actually do think they would lie about plumbing problems, (5 different stores, in diferent states, have same plumbig issue at the same time? come on, you believe that?) even their plumber thinks something is off.

as far as, would a multibillion dollar corporation throw away thousands on the street to save\make few bucks? absolutely

[Gromdor]

The box stores all use a similar design and are often all built by the same company. It's quite possible for them to have a flaw that multiple stores share. Like a bad refrigeration system design that could leak and dump refrigerant into the air.

[Guest Br Cornelius]

Whats telling of that lie is that they laid them off rather than kept them on at a reduced rate - holding them as valued assets. I suspect that if they reopen those stores later they wont go back to the same employees who asked for better wages.

Gotta punish the uppity plebs.

Br Cornelius

Edited April 17, 2015 by Br Cornelius

[aztek]

The box stores all use a similar design and are often all built by the same company. It's quite possible for them to have a flaw that multiple stores share. Like a bad refrigeration system design that could leak and dump refrigerant into the air.

no, i do not believe 5 stores in 4 different states, (that have different plumbing codes, and no they are not build by the same company, they are build by union plumbers that are lisenced in that state, along with JC who is also lisenced in that state.) had the same issue.

Edited April 17, 2015 by aztek

[Gromdor]

no, i do not believe 5 stores in 4 different states, (that have different plumbing codes, and no they are not build by the same company, they are build by union plumbers that are lisenced in that state, along with JC who is also lisenced in that state.) had the same issue.

Well, I did take the time to go read up on it a bit. Five different stores with nothing in common except for high plumbing complaints. So yeah, you pretty much crushed the benefit of the doubt I was giving them.

[acidhead]

"One of the simplest and most fundamental economic principles is that people tend to buy more when the price is lower and less when the price is higher. Yet advocates of minimum wage laws seem to think that the government can raise the price of labor without reducing the amount of labor that will be hired." --Thomas Sowell

Just curious.....

What are the city limit perameters for Seattle where this $15/hr minimum wage will be instituted?

I believe this is where the effects will first be noticed in the coming 3-7 years, the time allocated for small to large businesses to increase wages. It will be very interesting to see if a 'buffer zone' is created from the new law.... a zone of zero business. Because some scenarios are most certainly to arise from this legislation to compensate from a loss in revenue: 1. a cut back in overall staff(which could impact performance of the business) 2. a gradual rise in prices to offset the rise in wages 3. the employer(owner/risktaker) accepts the added cost with no change to business plan lowering company profits 4. Business goes bust 5. ???

Ive played this out in my head for years since the likes of Home Depot and Walmart has come into my area here in Victoria, BC. Im self-employed. Small business... I install hardwood floors.... just me... zero employees(thankfully). It seems to me,based on witnessing what's happened with these larger corporations using their large volume purchasing power, that they have a much better chance at surviving a higher minimum wage as opposed to smaller businesses. There is no doubt in my mind that a larger business can absorb the higher costs to their business plan than smaller businesses.

Which always brings me back to what most often overlook and that the root of the problem is Inflation. Business simply cannot keep up with the rising costs of inflation. The minimum wage debate is nothing more than a symptom of inflation.

Edited April 17, 2015 by acidhead

[+DieChecker]

What I know for a Fact is that I live in that other PNW metro area of Portland. The poverty rate of Portland ALSO would little be moved by an increase in the minimum wage. BECAUSE the people earning minimum wage do NOT live there. They bus, or Max (commuter train) into the Portland area mainly. Or, at least a significant portion of them do, so that any statistics would be messed up without considering the entire Metro area. The POOR living in Portland get most of their money from the government, and actually work very little. Thus, if we assume Seattle is similar, then we'd see very little effect inside the city regarding poverty. What you would see, is an effect on the neighboring communities, as more spending money is shifted there. Areas like Bellevue, Woodland and Tacoma will see increased spending and perhaps lowering of poverty.

Another thing you'd probably see is people ditching their second job. So, they work less, but aren't really any more affluent.

This might lead to a situation were Unemployment drops, as unemployed people move into those part time jobs. And it would lead to more jobs being shown as needing employees. But those might really indicate some success, but they wouldn't indicate by themselves that a great number of people have left poverty.

I think poverty is like global warming. You can throw CO2 air scrubbers (A higher minimum wage) at the problem, but really you have no idea what the effect on the environment (social structure) of the world is going to be. All that can be done is seek to act in the best interest, and then adjust when it inevitably fails.

[Guest Br Cornelius]

Restaurants in Seattle who have recently closed are denying this is because of the new minimum wage law, in most cases its because of expansion or the unsuitability of the premises:

Renee Erickson is closing Boat Street Cafe, her first restaurant, but she runs three others and is in the process of opening two more. Asked in an email about the closure being associated with $15, she replied: “That’s weird, ha. No, that’s not why I’m closing Boat Street. Would have said so.”

Erickson continued, “I’m totally on board with the $15 min. It’s the right thing to do … Opening more businesses would not be smart if I felt it was going to hinder my success.”

And another restaurant says indignantly :

“We were never interviewed for these articles and we did not close our … location due to the new minimum wage,” Kounpungchart and Frank said in an email. “We do not know what our colleagues are doing to prepare themselves for the onset of the new law, but pre-emptively closing a restaurant seven years before the full effect of the law takes place seems preposterous to us.”

More on minimum wage

Frank went so far as to send a note to the author of the Washington Policy Center post saying: “Our business model is conducive to the changing times and we would appreciate it if you did not make assumptions about our business to promote your political values.”

And another misrepresented restauranteur:

Shanik proprietor Meeru Dhalwala, who is also mentioned by Seattle Magazine, said in a Facebook message, “My closure is strictly due to location — nothing to do with wages.”

http://www.seattleti...-owners-say-no/

Its a conservative scare story - GET IT.

Br Cornelius

Edited April 19, 2015 by Br Cornelius

[GlitterRose]

The bottom line is that wages have not increased to go along with inflation, and the people at the top have doubled the wage gap over the last 20 years or so. It's all about greed at the top, and nothing else. CEOs make obscene salaries. These places could afford to pay a living wage that does not require subsidizing with food stamps so people can afford to eat.

The wage gap between CEOs and store workers wasn’t always so wide. Twenty years ago, when Johnson first started at McDonald’s, the CEO’s compensation was about 230 times that of a full-time worker paid the federal minimum wage. The $8.75 million that Thompson’s predecessor as CEO, Skinner, made last year was 580 times, according to data compiled by Bloomberg.

https://www.google.c...09ckJD6wfHlaCfg

Edited April 19, 2015 by ChaosRose

[F3SS]

McDonalds employs 1.7m people. Spread that $8.75m to all and you get a life changing experience as a McD's employee to the tune of $5.12 a year.

[GlitterRose]

McDonalds employs 1.7m people. Spread that $8.75m to all and you get a life changing experience as a McD's employee to the tune of $5.12 a year.

And how much are they bringing in?

the fast food industry is annually costing American taxpayers nearly $7 billion, while taking in hundreds of billions year after year

https://www.google.c...PMCo2zF8WdAXWrg

And that article is a couple years old. It's grown worse, not better.

Edited April 19, 2015 by ChaosRose

[F3SS]

I believe it's the companies marketing departments bringing in the customers if that's what your asking. The employees you're thinking of, the ones behind the counters at the store, aren't bringing anyone in.

[GlitterRose]

I believe it's the companies marketing departments bringing in the customers if that's what your asking. The employees you're thinking of, the ones behind the counters at the store, aren't bringing anyone in.

The point is that these companies are raking in hundreds of billions of dollars every year, and while costing taxpayers billions in subsidizing their workers so that they can afford to eat.