Passing the Cost to the Consumer from a Business Owner's Perspective

a reply to: AugustusMasonicus

If one, or more, states finds the right 'formula', be it a certain minimum wage or lack there of, it will become apparent in short order.

Exactly!

I agree with you that the states/localities should be deciding, but I am NOT opposed to a federal mandate to provide whatever-percentage increase the governors can agree on.....
same as a 'flat tax' that so many people want. 10% for example - for everyone. So why shouldn't minimum wage be a formula also? Whatever-percentage minimum wage works in that Cost Of Living index area. It's easy-peasy to find out what the median wage is for any city/town/village in this country. (citidata, for example).

How hard is it to plug in a basic algorithm to figure out what a 'minimum wage' ought to be when weighted against the real local COL? Not hard. A gifted 6th grader could do it.
An average high school junior.

It's simple algebra.

a reply to: BuzzyWigs

My major contention is I think their needs to be less Federal Government 'aught to' and more state-level can do. There is much more oversight and if something is not working then people can move to another state or correct the issue. The problem we have now is the Federal Government is not working and we are all screwed.

a reply to: ArtemisE

Look at Cosco.

Cosco is known for paying their employees very well....
and they are flourishing. I heard an interview with the founder about why they pay more, and their business platform.
Happy employees = good business.

Meanwhile, in other news, a local Taco Bell is being investigated/fined/shut down because an unhappy employee s#at in the taco-mystery-meat....
there was a post here earlier about how much nasty stuff gets fed to customers....but honestly it's disgusting to think/talk about. You can imagine.

originally posted by: AugustusMasonicus

Again, this has nothing to do with my thread. Whee do you see me advocating the outsourcing of technology to anyone? Stop being so damn melodramatic and stick to the topic (if you can).

Fair Enough.
Just one last question to you.
Who are you directing this thread to?
Those that have the power over our government or those that don't?
Our government is for sale to the highest bidders and that does not include the Upper, Middle or Lower Class People in this country. If you are fighting against the Middle and Lower Class, then nothing is going to change.

Recall this thread here to see what I mean:

www.abovetopsecret.com...

The Four Big Business Gangs That Run The US

First is the well-known military-industrial complex.

Second is the Wall Street-Washington complex, which has steered the financial system towards control by a few politically powerful Wall Street firms, notably Goldman Sachs, JPMorgan Chase, Citigroup, Morgan Stanley and a handful of other financial firms.

These days, almost every US Treasury secretary - Republican or Democrat - comes from Wall Street and goes back there when his term ends. The close ties between Wall Street and Washington ''paved the way for the 2008 financial crisis and the mega-bailouts that followed, through reckless deregulation followed by an almost complete lack of oversight by government''.


Third is the Big Oil-transport-military complex, which has put the US on the trajectory of heavy oil-imports dependence and a deepening military trap in the Middle East, he says.

''Since the days of John D. Rockefeller and the Standard Oil Trust a century ago, Big Oil has loomed large in American politics and foreign policy. Big Oil teamed up with the automobile industry to steer America away from mass transit and towards gas-guzzling vehicles driving on a nationally financed highway system.''


Fourth is the healthcare industry, America's largest industry, absorbing no less than 17 per cent of US gross domestic product.

Sachs says the main thing to remember about the corporatocracy is that it looks after its own. ''There is absolutely no economic crisis in corporate America.

''Consider the pulse of the corporate sector as opposed to the pulse of the employees working in it: corporate profits in 2010 were at an all-time high, chief executive salaries in 2010 rebounded strongly from the financial crisis, Wall Street compensation in 2010 was at an all-time high, several Wall Street firms paid civil penalties for financial abuses, but no senior banker faced any criminal charges, and there were no adverse regulatory measures that would lead to a loss of profits in finance, health care, military supplies and energy,'' he says.


The corporate and banking elite that own our government have absolutely no intention of helping small and medium sized business survive and would rather take over their market share to become even bigger. They are after all as you said out to maximize profits.

Revolving Door Wall Street and Corporate Politicians are the problem.

So it should be easy for you to see how people get confused and lump small and medium business into the mix as well, especially when we see threads attacking the lower and middle class for problems created by the elite that many business owners seem to stick up for.

Recall this thread as well:

www.abovetopsecret.com...&mem=

US is an Oligarchy

"Despite the seemingly strong empirical support in previous studies for theories of majoritarian democracy, our analyses suggest that majorities of the American public actually have little influence over the policies our government adopts. Americans do enjoy many features central to democratic governance, such as regular elections, freedom of speech and association, and a widespread (if still contested) franchise.

But, ..." and then they go on to say, it's not true, and that, "America's claims to being a democratic society are seriously threatened" by the findings in this, the first-ever comprehensive scientific study of the subject, which shows that there is instead "the nearly total failure of 'median voter' and other Majoritarian Electoral Democracy theories [of America].

When the preferences of economic elites and the stands of organized interest groups are controlled for, the preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy.

originally posted by: BuzzyWigs
If Walmart pays $7.50, but McDonald's pays $8.00, people who need to work will choose which employer?
Point: it works both ways. What will the market bear? "How much will it take to get decent, dependable employees?" is as legitimate a question as "How much can I charge for this burger?"

I'm all in favor of removing the minimum wage, it actually depresses wages. The problem is we don't have an economy that can support the removal of the minimum wage. Labor needs to be in high demand/low supply for it to make sense. If you have an economy like we currently have with a real unemployment rate of 30% and people desperate just for food and shelter what happens when a company comes along and offers no pay, but gives you corporate housing and 3 meals per day? We've had company towns in the past and they were terribly exploitative. We're heading back down that road now.

originally posted by: squittles

This can happen - just not for very long, as a competitor will come along, who'll pay the employees better (and thus get better employees), and/or accept less profit, so can provide the same or better products/services for less cost, and that "greedy" company will either have to adapt to the competitor or fail - it's survival of the fittest.

Aren't you in a sense, probably not intentionally, describing Walmart??? They went about it in a fashion similar to what you describe. They (Walmart) have decided that providing the same products at a much lower price along with tight payroll and lower profit margins has resulted in them becoming the dominant retailer in the U.S. They have accepted lower profits Percent-wise than most of their peers and yet they are still "greedy"???

People make it sound like Walmart is making excessive profits, their actual profit margins are smaller than almost ALL of their industry, they use scale of business to make their money, not high profit margins. Google, Microsoft and Apple have profit margins in the 23% to 28% range, yet Walmart is greedy working on a 3.3% to 3.9% margin?!?!? By the same rationale shown by some here in this thread, shouldn't Apple, Microsoft and Google pay their employees far more than they currently do?

originally posted by: AugustusMasonicus

originally posted by: Daughter2
Business owners don't charge based on their cost, they charge based on demand. Your decision to pass on that extra tax increase is based on whether or not you will lose customers.

Demand and cost are intertwined. Please explain in detail how a business can remain profitable by not passing on increases to the consumer and absorbing them internally.

There's not an exact correlation between cost and demand. Look at housing. There seemed to be an inverse relationship between demand and cost. Demand was the highest when housing was the most expensive. As prices fell so did demand.

Give employees money or tax breaks (or government aid) and they will take that money and do a good job of buying things and getting the money to business. When business gets money, they do a POOR job of getting that money back to employees. Corporations are making tons of money but aren't hiring anyone.

a reply to: pavil

Google, Microsoft and Apple have profit margins in the 23% to 28% range, yet Walmart is greedy working on a 3.3% to 3.9% margin?!?!? By the same rationale shown by some here in this thread, shouldn't Apple, Microsoft and Google pay their employees far more than they currently do?

That's the problem. It seems a lot of people are confusing profits (dollars and cents) with profit margins (which may not necessarily be high at all in terms of percentages/ratios).

Most businesses try to maintain a profit margin of anywhere from 5-18% in order to maintain business growth and longevity. If gross profit margin drops below that, the business starts to struggle, particularly when unexpected operating costs come flying their way... and they always do.



But the elephant in the room here that I think most people are skipping over is the ridiculous increasing inflation rate we've been seeing. It's literally become an out of control exponential rate of growth since the 80's that now is causing a serious trickle down problem to the end user. Us.

And as we all know, costs ALWAYS fall back to the end user... we the people. It always has, and it always will.

So now we have a situation where businesses are struggling to stay afloat, being forced to increase their prices to their customers at an ever-increasing rate. Meanwhile more and more people are struggling (including business owners) to keep up with their own increasing personal bills and cost of living because their own wages are not keeping up with this exponential inflation growth rate.

All caused by, you guessed it... the banksters and their fraudulent central banking ponzi scheme.

originally posted by: jacobe001
Fair Enough.
Just one last question to you.
Who are you directing this thread to?

Everyone. Because, as you can see, there are some rather fundamental misunderstandings as to how businesses interact on a daily basis.

originally posted by: Daughter2
There's not an exact correlation between cost and demand. Look at housing. There seemed to be an inverse relationship between demand and cost. Demand was the highest when housing was the most expensive. As prices fell so did demand.

That is the exact operation of supply and demand. The piece of the puzzle that you are missing is the interaction of the Federal Reserve who has been keeping the price of lending artificially low for close to a decade. There is too much easy money which has artificially depressed demand.

Why buy real estate when you can invest in other sectors with better return? When the money supply tightens it will move to real estate like it always does.

originally posted by: BuzzyWigs
a reply to: macman

And no, a janitor or greeter at Walmart shouldn't be making $14hr, as the market doesn't justify it.

Wouldn't the local wage they pay reflect the real cost of living for whatever place they are operating? In some places $14/hour will provide you enough to get exactly a cardboard box and maybe a coverall suit and some processed junk food to go along with your bus-fare and/or shoes to walk. Or even maybe a bicycle. If you're frugal.

If that is either the going wage or.........that is what the company wants to pay, then there ya go.

And yes, places like NY city, where the dollar gets you nothing, $14 an hour would be like $9 in most other markets. But, people choose to reside and work in places like NYC.

Why on earth they do, when the city is pretty disgusting and yet they have flat screen TVs at the entrance of every subway point, is beyond me.

The easy money (credit) is a response to the inevitable failure of the monetary system itself.

This particular monetary system wasn't meant to do anything other than what it is doing and in the past private central banking was repeatedly struck down in the U.S. for good reason, as were corporations.......

Quotation: "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered...I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

These banking institutions Jefferson speaks of are the of British business / banking / economic model, which just happens to be the same model that was behind the south in the civil war, the entire country wasn't yet infected with the British model as it is today.

Credit requirements were relaxed long ago in response to the imminent failure of the current system which was designed to do exactly what it does.

Being a consumer based economy as the U.S. is today requires that the consumer has the ability to acquire the wealth (credit today for most) to buy all of that garbage they don't need...

Credit is a loan disguised as wealth, a lie.

Nothing new, those who do not study and understand history are bound to repeat it.


a reply to: [post=17919098]AugustusMasonicus[/pos

originally posted by: pavil

originally posted by: squittles

This can happen - just not for very long, as a competitor will come along, who'll pay the employees better (and thus get better employees), and/or accept less profit, so can provide the same or better products/services for less cost, and that "greedy" company will either have to adapt to the competitor or fail - it's survival of the fittest.

Aren't you in a sense, probably not intentionally, describing Walmart??? They went about it in a fashion similar to what you describe. They (Walmart) have decided that providing the same products at a much lower price along with tight payroll and lower profit margins has resulted in them becoming the dominant retailer in the U.S. They have accepted lower profits Percent-wise than most of their peers and yet they are still "greedy"???

Well, no, not deliberately, that was a general statement - but whenever I hear people complain about Walmart's greed, especially from rich people, my thought is "do better" - if they're really that greedy, it should be easy to out-compete them, by using a "less-greedy" business model, say, one that pays all it's employees, from greeter to CEO, a "living wage" and nothing more, passing the savings along to their customers. The free market allows such inefficiencies to out-competed.

I think the whole "Walmart underpays its employees" meme has been beaten to death, so won't go there again - I'd just say that when computing their effect on a community, one needs to keep in mind the fact that shoppers can buy staples there for 10% and more compared to other retail chains. This is a *direct* benefit to low-income shoppers trying to feed their families.

I am well aware of that as are most consumers. If one factor increases and it is warranted, say entry level wages, it does not mean we are opposed to it.

After Obamacare kicked in, some businesses went through the trouble to list the cost incurred due to ACA on the check. After all the talk how it would ravage the economy, it turned out to be a couple of cents. I felt taken for a ride. All those against the ACA kept talking about how it would destroy the economy, drive customers away and then it turns out to be an increase of a couple of cents on an average order. If you incur a bill at the Ritz then the increase is maybe a couple of Dollars, but you are eating at the Ritz, so you could care less because you have money.

What pisses me off is that if energy costs go up, its taken silently by the provider and passed on silently to the customer, same if the costs for raw materials go up or any other factor.

But when it comes to an increase in cost that is attributed towards a worker, then of a sudden it is this huge debate on whether or not health care should be provided by the business or the public should spring on whether or not businesses should pay a wage their employees can live on or the public should spring. Any increase is taking silently up the rear, unless it goes towards someone you are in the position to put your boot in the neck.

originally posted by: jacobe001

US is an Oligarchy

"Despite the seemingly strong empirical support in previous studies for theories of majoritarian democracy, our analyses suggest that majorities of the American public actually have little influence over the policies our government adopts."

Thank you for bringing this up. I was waiting for someone to challenge my "we are the government" statement. Yes, we are powerless to change The Corporation that is ruling America. We shouldn't even try. That's acknowledging an illegitimate government. We should avoid participating in any way with it. We should drop out and stop feeding The Corporation. Our own government will emerge. That's true freedom.

The Emperor has no clothes.

a reply to: gentledissident

I believe that is the only answer also. Stop feeding the Beast.

Good thread, very informative.

My ex wife and I had a retail business as well for 6 years. It did well the first couple years, until 2008 (wonder why). For the first 2 or 3 years we could not go anywhere or take time off. We were in there on Sundays when the place was closed, mopping the floor, doing repairs and equipment installs, etc. Not until we got a really good front desk employee could we trust the place with someone. Even then, the place was instrumental in the failure of our marriage.

We also had to pass through cost increases to the customer - credit card charges, product price increases, rent increases, etc. When the income side of the P&L comes from customers' pockets,passing on costs is the only way to balance it.

I would never have a retail business again, ever.

So now I am starting up another company, bringing a manufactured product to market. I must be nuts. The risk/reward is much greater, though.

originally posted by: ScientiaFortisDefendit
My ex wife and I had a retail business as well for 6 years. It did well the first couple years, until 2008 (wonder why).

If you would have listened to some of the business gurus in the thread you would have put aside some of the profits (which you should not be making too much of anyway, otherwise you are greedy) for just such a reason.

Good luck in your new endeavor, I hope you do fantastic.

a reply to: AugustusMasonicus

Hey I listened.

I decided if I really want money, I need to practice being psychic until I get it right and can repeat it on command. Now that's something you can make fast profits in without having to deal with all these "issues".

I saw some of these people are making over 1000$ an hour....just blabbing stuff. And I bet they are fakers mostly. Just imagine if I ever get it down? I'll be rolling in the dough $$$.

But to "start this new business" I will need a finished product, and currently it's still in the development and testing stages.
Hey what's that quote again?

"Young man, why would I feel like a failure? And why would I ever give up? I now know definitively over 9,000 ways that an electric light bulb will not work. Success is almost in my grasp."

Yes only 1000 more tries to go!

originally posted by: BuzzyWigs
a reply to: AugustusMasonicus

Why would I run a business as a charity?

Because there are people who need charity. 501c3 organizations (non-profit, for those unfamiliar with US terminology) do what they do to help other people who need help...and they love being helpers.

That's very nice and feels very good, but non-profits get some sort of FUNDING, don't they? And the people who work for non-profits, though some volunteer, often get a SALARY, too. That's so they can eat because, you know, food costs money. So let's say I am a potential business owner and I have a choice whether to start a for-profit business, or a 501(c)3 and further, that I am not independently wealthy. How am I going to successfully do that?

Well, I'll tell you. Somebody, somewhere, is going to have to pay because despite all the people who want free stuff from me, I have to eat, too. It's my energy going into this endeavor and I'm going to need some sort of compensation not only for myself, but my own family, including children. I can't do this feel-good non-profit stuff and die of starvation. So I can do a couple of things.

1.) Convince some people with excess income to give me some. The way you normally do this is to guilt-trip them. Just tell them what horrible people they are for having so much money and suggest they can assuage their guilt and get into Heaven if only they will give some of their money to me. This is a time-honored technique practiced by Christians, Muslims, and Jews alike for Millennia. If you give me money, you can feel good about yourself.

2.) Convince the government to give me money through grants. This is interesting because the government basically steals the money from people who have earned it and will give it to me so I can pay my expenses in providing non-profit "services." Having the government do it is a really slick way of pulling this off because the government employees themselves have no worries. They ALSO have jobs paid for by taxpayers.

SO, even if you choose the 501(c)3 method you still are going to take a slice of this pie, except this time you don't earn it through providing a service, you just take it from other people, then give it to still others who begin to think that they ought to get this stuff free without working for it.

But the OP wasn't talking about starting a charity; he was talking about running a business. THAT'S the topic. And his major point is that YOU, the consumer, pay for everything. That's why it is insanely stupid to hear people say, "X business doesn't pay their "fair share" of taxes and they ought to pay more!" Good God, how stupid can you get? All that means is that you are asking for the price to go up. YOU are the one that is going to pay every single dime of those 'corporate taxes.' And then you wonder why the government gets bigger and bigger and you get poorer and poorer.