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

originally posted by: Fylgje
a reply to: gentledissident

This is a greed fest at everyone elses expense. It isn't right. This system is broken. When a person has to take on 2-3 jobs and still live in poverty while the companies that they work for rake in record profits,-it is a failed system that has hurt humanity.

I'd like to see some of you support a family on what you pay. Either you don't understand or you don't care. Which is it?

We have evolved into a selfish species. In the big picture, it's just nature running its course. The ruling class has the power to keep a ruling class and a servant class in place. The servants help keep the order as well. They want the chance to become part of the ruling class. Our species should be able survive in some form with this arrangement. IMHO, it's inefficient and abusive, but that doesn't matter from an observer's standpoint. As a participant, I'd love for our species to become cooperative rather than competitive. I have a feeling many seemingly complicit participants feel that way also somewhere in their minds. My guess is that's why we spend so much time escaping into superstition and entertainment. We don't want to contemplate our actual situation.

originally posted by: Fylgje
Not accusing anyone here of this, but, too many business owners take home too much money and pay their employees too little, AND charge too much for their products. Some don't just want to make a good profit anymore, they wanna reach in the consumers pocket and clean'em out. Greed.

But it's not all the business owners fault. Wall Street speculators are to blame for inflating everything. It's just a free-for-all these days. When I was younger, I worked for my parents a little as they owned a few business', so I'm familiar with how gas stations, restaurant and hotels work. Capitalism is good as long as it's in the right hands.

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.

And in no small sense, this is why the regulatory morass we've created actually costs us - the barriers to entry into business these days are so high, that competition is restricted. If you knew the incredible overhead involved in running a corporation these days, in "compliance" and other regulatory costs, you'd never ever want to start one - which stifles both competition and innovation.

www.cnbc.com...

a reply to: AugustusMasonicus

Fair enough. But in the cases such as Walmart where the company makes 16 billion a year in profits and pays it's people 8 bucks an hour ( far less then it takes to support just yourself). If they raise prices to account for wages they should already be paying... Look at Cosco. Who's fault is it?

I would argue it's there fault. They are wildly profitable either way and are just raping society by doing that.


If you have to work people full time but need to pay people less then they can survive off of to be profitable. Is it actually a profitable business? Or is your buisness damaging society by lowering pay rates everywhere?

originally posted by: gentledissident

It's our fault that business has such unrealistic regulation and taxation. We are the government. We allow it to happen. IMHO, business should only be regulated for safety and pollution just like an individual. We can't say we have a free market economy and then tell the economy how to behave. Our nation demands capitalism. It should be allowed to have it along with all its shortcomings.

Agreed.
Good post.

The Economy behaves the best on it's own anyhow.

a reply to: ArtemisE

Walmart doesn't pay flatly across the board $8 an hour. Locally, night crews start out at around $14hr.

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

originally posted by: squittles

originally posted by: Fylgje
Not accusing anyone here of this, but, too many business owners take home too much money and pay their employees too little, AND charge too much for their products. Some don't just want to make a good profit anymore, they wanna reach in the consumers pocket and clean'em out. Greed.

But it's not all the business owners fault. Wall Street speculators are to blame for inflating everything. It's just a free-for-all these days. When I was younger, I worked for my parents a little as they owned a few business', so I'm familiar with how gas stations, restaurant and hotels work. Capitalism is good as long as it's in the right hands.

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.

Theoretically this is how it is supposed to work.
The well being of our nation should take precedence over other nations.
If you cannot find someone to fill a position, you raise the pay until you attract someone to fill it.
That is not what is happening though.

Instead, with the help of politicians, they bring in H1B's, open the borders wide to cheap labor and create Trade Pacts with foreign nations that are an antithesis to our own principles as a nation. But hey, we'll over look that when there are profits to be made since we are not paying for it, just don't bring it here.

There was a time when American Pride and Quality went hand in hand with the products we produced.
Instead of products that last and last like Maytag, Craftsman, Frigidaire and so on, we have cheap Chinese knock offs that last 1/10 the time if lucky. Planned Obsolescence for greater profits rather than the pursuit for quality and pride.

Anything to keep the dividends growing on Wall Street rather than pride and workmanship in our country and communities.

a reply to: jacobe001

Instead, with the help of politicians, they bring in H1B's, open the borders wide to cheap labor and create Trade Pacts with foreign nations that are an antithesis to our own principles as a nation. But hey, we'll over look that when there are profits to be made since we are not paying for it, just don't bring it here.

Indeed - I was describing a free market, not things as they currently are. Government intervention in free markets nearly always distorts things, and the tighter the government tries to squeeze the free market, the more it flees overseas.

You know, H1-B's aren't necessarily evil by themselves, except when companies abuse the system, pay the workers far-below market rates, and displace American workers. The workers themselves are somewhat like indentured servants; if they leave, they have to leave the country. (Again, not every company abuses the system, but I know many do.) The salary suppression in the tech sector began years ago, primarily due to H1-B - and it continues unabated today. I know many people in the tech field that haven't seen a raise in 10 years ...

Same with illegal alien labor - the availability of them, and the little-risk that their employers face in using them, means their low labor rates displace American workers.

In both cases, the laws are there to protect us, and those workers - yet in both cases, lack of diligence in enforcing these laws has cost American workers badly.

Today I was reading and pondering the Civil War. I was reading about the inflation of prices, and it got me thinking about something. You have a line between certain products that goes from the initial manufacturer to the consumer. Now if any one person along that line decides to hike up their prices, for whatever reason, the everyone that comes after them in that line must also raise their prices to stay in business.

Then those who come before them in the line, seeing that massive profits are being made, are going to raise their prices also most likely. It is a never-ending cycle of greed if the prices are raised for no reason, and actually there is probably only one person to blame. One can easily trace the price increase back to Wall Street in many instances. Take an oil company for instance. If the first person in the chain decides that they wish to make more money, they can raise prices. Those below them, wishing to maintain a certain profit margin, will also raise their prices. And what is the cause other than greed?

Of course there can be legitimate reasons for an initial price increase, but this is not always the case. What I find perplexing about oil companies is their PROFIT. We are talking so many billions of dollars that it is staggering. So one has to wonder if it is not greed driving price increases in such an instance. If the company were barely hanging on or something one could understand it. But when you are making 200 billion dollars in profit per year, it is hard to understand how a price increase is justified.

originally posted by: JiggyPotamus


Then those who come before them in the line, seeing that massive profits are being made, are going to raise their prices also most likely. It is a never-ending cycle of greed if the prices are raised for no reason, and actually there is probably only one person to blame. One can easily trace the price increase back to Wall Street in many instances.

That is where all roads end. The Financial Sector.

Many Mom and Pop stores, small and medium sized business and so on all across America did not have stocks traded on Wall Street.

The consolidations, mergers and bankruptcies have allowed the Too Big to Fails to become even bigger and consolidate even more power and wealth for themselves and their elite friends at the expense to main street America.

With that growing consolidation of wealth and power, they have been able to (buy) collude together with politicians (not capitalist competition) to grow even bigger by passing off legislation beneficial to them and detrimental to everyone else.

I wonder how those millions of small and medium sized business that agreed with the principle that money=freedom of speech, not realize they slit their own throats since the Multinational Corporations and Banks will bury them when it comes to buying politicians.

People say Big Government is bad, and the reason is because they have to much control and power over the country where they serve themselves and their cronies while impoverishing everyone else and taking away their freedoms as well along the way. It happens in all forms of political systems.

The same thing happens when too much of the economy is owned by fewer and fewer hands where they control the markets at everyone else expense. Especially when they are big enough to get in bed with the government.

originally posted by: jacobe001
How will I as a consumer know where all this Chinese Chicken is being used, such as McDonalds, Burger King, Wendies and mom and pop restaurants an so on. How will I as the consumer know where this chicken is used to make secondary products in the grocery store such as soups, pizzas, chicken patties and so on?

By asking and/or reading the label. And I am surprised the chain places are even mentioned given your obvious disdain for business making a profit. You could not pay to eat at those places

It is all about the consumer and nothing about the trade pacts put in by lobbyists first? Fine, then you will have no problem in stopping these Trade Pacts because according to you, it is the consumer and not the trade pacts that decide what the consumer buys.

Trade pacts have nothing to do with my Original Post. Trade pacts do not make you shop anywhere,you make you shop and if you choose to patronize establishments that sell imports that is your prerogative.

You are making the same mistake many others make that is destroying this country.
Short Term Profits and Gains RIGHT NOW, over Long Term Gains and Stability for THIS Country.

Except that if you actually read my posts you would see that I make a serious effort to never buy Chinese imports so spare me your indignation.

So shipping a good chunk of our technological know how, manufacturing plants and so on is to strengthen Commie China is good for the USA?

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).

originally posted by: stormson
i bet all those time business boomed, you passed that on to the customer too. you dropped prices, right?

Absolutely not as those times were used to offset when business was bad, build up funds and do capital improvements.

how about when your workers went above and beyond, i bet you gave them all bonuses, right?

I gave yearly holiday bonuses.

costs are passed on to the consumer, but profits passed on to your pocket.

That is the definition of a profit. Anything that was left after the fixed charges, improvements, debt retirement, etcetera, was mine. And rightly so.

Get used to it, that is how a business operates.

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.

originally posted by: Chickensalad
Im going to throw my hat in on the side that the OP does in fact see the customers as a way to offset increases. I also agree that people used to go into business because they loved what they did. Of course money is a factor but being your own boss and providing the customer with the service you feel they deserve is an even bigger factor.

And with your vast business experience maybe you can outline for everyone how you offset business increases without passing them to the consumer.

Truth is, my area is full of small businesses that refuse to pass on increase expe ses onto us customers. They absorb them and do there damnedest locally to fight such increases. I know this because I actually know a large portion of them.

The bussiness practices you speak of are more along the lines of Bane Capitol or the local walmart/large corps. You bleed a bussiness for maximum profit and when you no longer see the profit you like, you sell.

The truth is your story is anecdotal as unless you own them or are their accountant you have no clue what they are doing. The other possibility is you live somewhere magical where the cost of business does not go up but when it does the businesses are able to mitigate this by just wishing it away.

Please, enlighten us, how do they absorb them and still stay profitable?

a reply to: ArtemisE

Regardless of who the company is they are still going to pass any increases on to the end user. Their taxes go up? You pay them.

a reply to: BuzzyWigs

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.

That's very true. $14/Hour wouldn't get much in Los Angeles. It would get less in Chicago and I doubt it would get you from New Jersey to the surface streets in New York at one hours wage.

On the other hand, In my area? $7.35 is min wage. That goes with rents for decent places in the $500 range and still free standing houses in the city one can rent without going too much further. Cost of living....scale of wages. They are NOT the same by any stretch across 50 states.

To change them or suggest it should be changed wholesale will benefit some. A very specific 'some' by demographics and pretty much city folk. Fine and dandy, and to each their own ...except it's not when the Feds do it. It's everyone. Whether it works or breaks people, depending on zip code.

Sorry I found this post so late.....

To the OP your post is totally BS................


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. Of course if the price consumers are willing to pay drops below what your cost is or what you will make in other places, you will not enter that business but this is the bottom line. The primary decision is based on consumer demand.

Tax money (ok most tax money) does make it back into the economy.

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.

a reply to: Wrabbit2000

To change them or suggest it should be changed wholesale will benefit some. A very specific 'some' by demographics and pretty much city folk. Fine and dandy, and to each their own ...except it's not when the Feds do it. It's everyone. Whether it works or breaks people, depending on zip code.

That is a very good point.
I just spent a few minutes trying to find out what Walmart pays in Mexico City, to compare it to say, NYC or Chicago.

So perhaps: what should be happening is the governors agreeing to meet, discuss the minimum wage IN THEIR STATE (an average, as obviously some cities/towns will have disparities because of the "supply and demand" concept, but as it applies to EMPLOYEES vs local 'competition' for employees.)

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?"

There has to be a balance. You want dedicated employees? Pay a wage worth working for.
You want to keep customers? Provide a service/product/customer support that's worth paying for.

Anyway (...sorry, rambling.)

So the governors could have their annual Hawaiian Team-Building Convention Week and discuss/decide a 'percentage' of appropriate wage increase. (Or, we could skip the Convention Week and just have the POTUS say "raise the minimum GOING wage in your state....Say, well, hmmm. ... twenty five percent.) At $7.35 that would equal a bit under $10/hour.

If the local going 'minimum wage' is $10, then it goes up to $12.50.

That's a great idea!!

originally posted by: BuzzyWigs
So the governors could have their annual Hawaiian Team-Building Convention Week and discuss/decide a 'percentage' of appropriate wage increase. (Or, we could skip the Convention Week and just have the POTUS say "raise the minimum GOING wage in your state....Say, well, hmmm. ... twenty five percent.) At $7.35 that would equal a bit under $10/hour.

If the local going 'minimum wage' is $10, then it goes up to $12.50.

That's a great idea!!

I am not opposed to each individual state passing their own, if any, minimum wage law. That is how the Constitution should function, allow each state the right to self determination. 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.

a reply to: BuzzyWigs

Actually, the way you put it is exactly the way I think it is now and should remain. The Federal Government setting something like minimum wage is a horrible idea, for what we both agree on. Manhattan isn't Miami. Miami, Florida is absolutely no relation to Miami, Oklahoma.

However, states make sense and ours rises every so often on that basis. I also agree that when the min. makes sense to what people want for their area, businesses that stay right on it will lose to those willing to lose a bit of profit margin for the return of quantity and customer loyalty. The market at work...when Government stays out of it.

It's when they dig their hands right into the mix without looking or even caring to really look hard that it gets all jammed up and hurts folks directly. IMO. Governing from the State works. Governing from the Nation's Capital feels kinda like they did with King George.