jusplay4fun wrote:To save space, I will not re-quote Dukasaur's post here; you can read it for yourself. I did, however, copy and paste it here for efficiency of my responses. Those responses are numbered for reference sake.
Yeah, moving around the quote tags can be a pain in the ass on the longer conversations.
One alternative is just use an alternate colour. Like this:
Dukasaur: See JP4F, that is the standard trickle-down line, and I know it well. I was a libertarian activist for many years and I pushed lines like that all the time. I know them inside and out, and it's only later that I figured out how wrong they were. The fact is, raising the minimum wage will NOT raise the cost of the burger. The owner may indeed hire fewer people and replace them with robots, but that's not because he has to, it's because he wants to. JP4F RESPONSE1: Such business decisions are made by individuals and individual businesses. The intent of the owner is difficult to determine and motivations for decisions cannot be all grouped together to develop a “class warfare” response, of the type you cite."Class warfare" is a term you're bringing in here, not me. Just remember that, if it lingers.
I personally don't think want the companies want to ground the working man into dust. He's just collateral damage. They just want all the cookies in the jar, and anyone else who claims a share is an obstacle.
But let's backtrack a bit. The first time I found out what my work was worth was more than 30 years ago. I wasn't supposed to know, but a customer showed me an invoice to bitch about it, so I found out despite my employer's secrecy. I was doing concrete inspections at the time, making $14 an hour. If I did a site inspection, my company would charge the customer $125 an hour with a four-hour minimum. So, a customer would be billed $500. There was no four-hour minimum for me. If it took me 90 minutes I would get paid for 90 minutes, so I might make $21 for a service which ultimately cost the customer $500. RESPONSE2: What you claim here is called anecdotal evidence. Let’s for now assume it is all true. BTW: there is no reason to doubt your analysis; my point is that your experiences are not true for all businesses, situations, workers, and owners. Also note that what you did in BOTH jobs are not what I consider low/no skill and/or entry level jobs. It seems that you were not a minimum wage worker; based on your wage and “30 years ago” would imply my conjecture to be valid. So comparing your two jobs that you cite to minimum wage jobs is not valid, in entirety. The question is how much is applicable to the minimum wage debate for St. Louis or Missouri. That is what I question.Now, of course there's an overburden on wages. For every dollar you pay someone there's another dollar paid out in payroll taxes and health insurance and various other things. But even if you allow 100% overburden (which is generous), that $21 becomes $42. Even if you go really wild and allow a 200% overburden, that $21 becomes $63. I didn't even have a company truck at the time, had to travel to the site at my own expense, so there wasn't even vehicle expenses to consider. I used a really trivial amount of consumable supplies -- a few aluminum test cylinders, which are really just tin cans and probably cost 10 cents when bought in bulk, maybe a millilitre of oil, maybe a few pieces of masking tape, a bit of ink in my pen, that kind of thing. I doubt if I used a full dollar of supplies in a typical inspection. So, my owners made (even if you take the most extreme interpretation of a 200% overburden on my wage) about $435 in profit, or about 87% profit. RESPONSE3: Again, I do not doubt your # or your analysis. I argue that your point is not applicable to situation in the debate. (SEE RESPONSE2 above.)30 years later, with a few inconvenient detours along the way, I'm in much the same boat. I'm not going to give you a detailed discussion of what I do now, but suffice it to say that once again I'm in a position where my employers make more than 80% profit on at least some of my work, based on what they bill the client versus what they pay me. RESPONSE4: Again, no doubt what you say is valid. However, is the analysis applicable to a minimum wage job? That part is very doubtful. Do you work a minimum wage job now? I doubt that too.Your "2", "3", and "4" essentially refer to the same thing, so I'll just respond once.
You're right, I don't work for minimum wage. My examples were just illustrative, to show that what the companies charge the client is vastly more than what they pay the employee. There is vast "gravy" in the system. The companies like to cry the blues, claiming if they paid their employees more they would collapse, but in fact it's all propaganda. Profit margins are so fat, markups so huge, that
most companies could easily pay two or three times what they're paying without being in any sort of danger.
Now, the example I gave at the beginning, where the company would bill the client $500 for work that they paid me $21 to perform, is probably an extreme example. Not everyone is "lucky" enough to work for a consulting engineer, lol. Still, the markups are huge, and the percentage of costs represented by labour shrinks constantly.
Here's a couple of nice graphs, which are aggregate numbers, not anecdotal evidence:
The source for those graphs:
http://www.businessinsider.com/corporate-profits-just-hit-an-all-time-high-wages-just-hit-an-all-time-low-2012-6Even the title of the article is illuminating: "
corporate-profits-just-hit-an-all-time-high-wages-just-hit-an-all-time-low"
One reason companies are so profitable is that they're paying employees less than they ever have as a share of GDP.
(...)
In short, our current system and philosophy is creating a country of a few million overlords and 300+ million serfs.
That's not what has made America a great country. It's also not what most people think America is supposed to be about.
Okay, so that's a bit of background, based on work I know very well. It's not exactly the same as the fast food/mimimum wage stuff you were talking about, but I know a little bit about that, also.
Let's take your typical Tim Horton's drive through. During the morning rush it might be turning over $500 and be staffed by five employees. Later in the day it slows down and is turning only $200 to $300 an hour and is staffed by two or three employees. In the middle of the night it might only be doing $80 an hour and have only one employee. The ratio stays pretty constant. One employee generates about $80 to $100 in revenue every hour. During slower periods they keep fewer employees, so the ratio doesn't vary much.
Here in Ontario the minimum wage is something like $11 an hour, so with (again, a very generous allowance) of a 100% overburden, each employee costs about $22 an hour. The non-labour inputs (the actual wholesale cost of the coffee and other supplies) is about 25% of the total, so $100 in revenue costs about $22 in labour and $25 in non-labour inputs. (I have known a couple of Tim Horton franchisees, so I'm pretty confident about those numbers.) Beyond that, there are things that are called costs but really aren't. (For instance, the land the store sits on is treated as a cost, but it isn't losing any value, quite likely gaining, so it's really just more of a capital reserve.) After all is said and done, the fast food operator is collecting something between 30% and 40% in pure profit. RESPONSE5: I once read that many millionaires in the USA are those who own franchise places like McDonald’s restaurants. I assume that the same is true in Canada and true for Tim Horton owners. For now, let us assume your numbers are true. However, not all restaurants are equally profitable. Your assumption of “between 30% and 40% in pure profit” may be an average, but does not apply for all places. The question then becomes how much profit is “enough”? You address some of that below.You may claim the Burger King will have to raise the price of a burger because the minimum wage went up, but really he won't. He'll probably claim the same thing, but it's just propaganda. If an employee costing $20 an hour (after overburden) suddenly costs $25, he may raise the price of a burger and pass it on to his customers, but he could simply choose to make a $35 profit off the employee's work instead of a $40 profit. The fact that he probably sees it as inconceivable that he might have to reduce his profit is at the core of this issue. RESPONSE6: Of course each owner (entrepreneur) needs to decide where to cut costs when the cost of labor rises due to government intervention and NOT by market forces. Many will opt to pass costs on, some will do so in part, and others will absorb the expense. Without knowing all the numbers for a Tim Horton (as an example) I will cite what I know. The grocery industry typically operates at a very low margin for profit; I read that it was 1% of the total revenue. I doubt they will simply absorb the extra expense. In a capitalist situation, that essentially what exists in the USA and Canada, those decisions are left to the owners and managers of such places of business.He may, indeed, get rid of the employee entirely and replace him with a robot, but that's not because he can't afford the employee. It's because he doesn't want to. Part of the reason the rich get richer is that the more people have, the more obsessed they become with having even more. The small contractor sees himself as pretty much one of the boys and figures he's doing okay as long as he makes a decent income. He doesn't mind paying his workers a decent paycheque. The larger and more successful he is, the more divorced he gets from the daily lives of his workers and the more likely he is to tell himself stories about how he is so much more deserving than they are and finds ways to pay them less. RESPONSE7: Again seems valid. BUT not always true for each business and business owners.No, of course it's not true in all cases. We're talking broad trends here, and there will always be exceptions and outliers.
(Again, I've combined your 5, 6, and 7 because they're basically about the same thing.) Yes, not everybody is sitting on Tim's Horton's or Burger King franchise printing money. There's the mom-and-pop diner down the street that seats 8 people at lunchtime and 5 the rest of the day and is only staying open because they really have no other option. I get that. I get that not every business is raking in a 30% profit margin. Hell, I've owned 3 different businesses in my life, and they all died.
About your grocery store: yes, grocery stores are running at smaller profit margins than most. They're dealing with a lot of competition and they sell goods that, in economic terms, have a high price elasticity. (Even so, the 1% that you cite is outdated information. That was the profit margin that grocery stores ran on when we were kids. Nowadays it's more like 4%.
Source.)
It needs to be noted there, however, that even in the grocery stores the profit per labour input is huge. Most of the grocery store's cost (indeed most of any retail cost) is the wholesale price of the goods they sell. Their own labour is a small component.
Studies prove the wealthy are less generous than the poor. Here's one, for instance. Then again, anyone who's ever driven cab or delivered pizza can already tell you that. Bring home the blue collar worker and he digs deep to give you a decent tip. Bring home the Chairman of the Chamber of Commerce and he may give you 10%, or he may give you nothing at all, but of course he'll wait for his receipt so he can claim it as a business expense. RESPONSE8: Seems valid. Again, the question becomes how much profit is “reasonable”?I don't have an answer for that. Really, I'm not telling anyone not to make a profit. I just want you to understand that it's never enough. Making money is like a game. Nobody's ever satisfied with a good score. They want a great score, then they want a greater score, then they want the all-time high score on the machine, then they want to beat their own high score.
And that's all perfectly okay with me. I have no problem with the profit motive. I just have a problem with dishonest people who cry about how they will imminently go bankrupt if they have to give their employees a raise. (Sorry to digress into anecdotal territory here, but the owner of the company I work for has six vacation homes, each valued at over $10 million. His latest acquisition is a historical building he picked up for $25 million. At the same time, he had to fire a bunch of veterans making between $23 and $26 per hour and replace them with new hires making $19, because apparently the business was on the verge of extinction and couldn't afford those horrendous paycheques.)
RESPONSE9 (for the above 3 paragraphs): Different businesses have different expenses. The more unique the service and goods, the more the seller can charge for that service or good (pizza, burger, car, plate, etc., often referred to as a “widget” when discussion general economic theory. ) My point is not to discuss each business and try to surmise a fair and reasonable profit. My point is that raising the minimum wage has economic consequences that the majority of such workers does not understand or appreciate. All they see is that they make so much less than “the rich” who own the establishment and the “less rich” who manage the business at different levels. They want higher wages without the economic justification. They are not skilled and do not have special training that is beyond an entry level job. Such workers should be motivated to get more training, more experience, and therefore deserve a raise or higher wages. They can also seek to obtain a job with a higher pay and NOT march and protest for $15 wage. I assume that this is what you did; you got a better paying job.Yeah, I've had a long road with many bumps but I'm making decent money at the moment.
I think you're naive about the advancement to higher paying jobs, though. For a few people, it works. For many, it never will. Employers demand more work for less money all the time. Sure, a journeyman millwright might make a nice sum, but that's only because there's very few of them. If there were millions of millwrights, they'd be getting minimum wage, too. Nurses are one example that comes to mind. They go to university for years with the promise of a high-paying job. In the end, a few will win the lottery and get a job in a hospital trauma centre making $200K/year. Meanwhile, two-thirds of them will end up working in an old folks home for $20 an hour. If more went into university and fought for those same jobs, they would just push the average wage down. There would still be a few getting those trauma centre jobs for $200K/year, but meanwhile their sisters in the old folks homes would be getting $18 an hour.
CONCLUSION: So rather than looking at each business, let’s look at the overall impact of raising the minimum wage. Looking at each business is counterproductive to the debate as it would not address the “big picture” in a timely and efficient and reasonable fashion. So my arguments still stand. Some business close, many sell fewer things (burgers, fries, pizza, “widgets”), and many cut their profit margins. Once major consequence is that the minimum wage workers work few hours and THUS the minimum wage raise results in LESS pay for the worker. Those issues were not addressed.JP4F[/quote]
Well, the research doesn't bear that out. There are many studies, and they are highly equivocal. Some say an increase in minimum wage causes an increase in unemployment, others that it does not. Still others say that it has no immediate effect but it may still cause a long-term slowdown in the economy.
A handful of articles:
https://www.bloomberg.com/view/articles/2015-05-27/finally-an-answer-to-the-old-minimum-wage-questionhttps://www.theguardian.com/commentisfree/2014/jun/11/the-evidence-is-clear-increasing-the-minimum-wage-doesnt-cause-unemploymenthttps://www.labour.gov.on.ca/english/es/pubs/mwap/section_03.phphttps://mises.org/library/yes-minimum-wages-still-increase-unemploymenthttp://www.frbsf.org/economic-research/publications/economic-letter/2015/december/effects-of-minimum-wage-on-employment/So, there's a wealth of different interpretations. Okay, so intuitively, we can say there is some job loss to an increase of the minimum wage. For most, it won't make a difference. If you're operating a Tim Horton's drive-through or a MacDonalds drive-through, you're not going to kill the goose that lays the golden egg. If you need five people manning the line, you're not going to shoot yourself in the foot and lose business by having fewer than five people on the line. You're averaging $100 of revenue per employee-hour, so even if each employee was to cost you $50 an hour you're still ahead. But some losses will occur. Some small number of marginal businesses may not be able sustain their operations at all, some others may need to cut back on hours somewhat.
Let's just take one fairly common claim, that there's a wage elasticity of -0.1 for unskilled labour. That means, for a 10% increase in the minimum wage, there will be a 1% decrease in the number of jobs. Let's do the math here. Let's say there are 10,000 unskilled labourers in your town and they bring home on average about $1000/month, for a gross total of about 10 million dollars toward the survival of their families. Raise the minimum wage 10%, cut 1% of those jobs. You now have 9,900 workers bringing home an average of $1100/month, for a gross total of 10,890,000. That's a big increase in the well-being of the families in your town.
Maybe the 1% that are cut will go to nursing school...
)...I can't imagine why Americans are all ways crying they don't have enough money...
ConfederateSS.out!(The Blue and Silver Rebellion)... 
