The unaffordable higher minimum wage fallacy

I hear a lot about how companies can't afford to pay their employees and that these companies can't be successful without government subsidized wages and slave labor. Well I'm here to tell you your wrong. Here is another example in a sea of examples as to why this is a lie.

Let's look at Wegmans. An amazing store chain with competitive prices and a growing organic and living foods section.


The Grocery Store That Competes With Walmart Prices And Is Beloved By Employees

source

The perks start with pay, which for hourly store employees is a little more than $33,000 a year on average. By contrast, Walmart has admitted that more than half of its employees make less than $25,000 a year, although it recently announced a wage increase, and retail sales workers make a median $21,410 annual salary. Anonymous pay sites like Glassdoor and Payscale also show that a Wegmans cashier can expect to make more than $9 an hour, on average.

Seems like they value their empyees labor while offering a great price and selection.

Please explain.

a reply to: onequestion

I miss living near a wegmans, wegmans was the best

It's quite simple rather than most of the profit going to the board and shareholders you use the profit to reward your staff and keep prices low.

Nobody needs millions of £/$ never mind billions.

originally posted by: onequestion
I hear a lot about how companies can't afford to pay their employees and that these companies can't be successful without government subsidized wages and slave labor. Well I'm here to tell you your wrong. Here is another example in a sea of examples as to why this is a lie.

Let's look at Wegmans. An amazing store chain with competitive prices and a growing organic and living foods section.


The Grocery Store That Competes With Walmart Prices And Is Beloved By Employees

source

The perks start with pay, which for hourly store employees is a little more than $33,000 a year on average. By contrast, Walmart has admitted that more than half of its employees make less than $25,000 a year, although it recently announced a wage increase, and retail sales workers make a median $21,410 annual salary. Anonymous pay sites like Glassdoor and Payscale also show that a Wegmans cashier can expect to make more than $9 an hour, on average.

Seems like they value their empyees labor while offering a great price and selection.

Please explain.

Simply put, since the late 70's economic studies show that while workers productivity has increased, their wages have not increased, either numerically nor adjusted for inflation. Adjusting for inflation and purchasing power, many lower and middle classes wages have actually dropped over the last 30 years. If their wages were to have risen just with inflation, wages would be FAR higher factually, not even factoring in improved productivity/worker.

Moreover, the elite class' wages have increased dramatically, showing a "skimming" of that money.

It's simple, more of the value created by a company needs to be shared along the supply chain and pyramid. This is what is called moving from a "supply chain" to a "value chain," where value is shared more equitably along the line.

Costco also pays very well - and does very well.

Sadly, what stocks do the Wegman's employees invest in for their 401ks?

Those companies are expected to return high profit margins to remain valuable. All of us with 401k's have our retirement money tired up in shares of stock, shares in companies we hope do well. The better the companies our retirements are invested in -- the more money our retirement accounts make.

Sadly this is true...more of us are at fault than we realize. We want workers to live better, yet we demand a good return on our retirement investments. It's an often overlooked part of the problem.

I'm not sure how to fix it, as I'm sure people would scream bloody murder if I suggested a cap on profits (ie; after a certain percentage of profit, the company is required by law to send it downstream to their workers). That would never fly -- it's wealth redistribution at it's simplest.

a reply to: MystikMushroom

I disagree that it's wealth redistribution in that case, as an employee is an inherent part of why the company makes any profit at all. Such a law would be enforcing reasonable distribution of wealth, not redistribution.

The wealth from profit is being immorally and irresponsibly distributed currently, fixing that is not redistribution at all.

That word is thrown around too much, like people getting their fair share in the company they help make a profit is a bad thing.

It's not, no billionaire would have a dime without their workers. There is NO redistribution in giving more to one's employees.

a reply to: Puppylove

While I agree with you, many here would not. They would see the CEO and board of directors perfectly deserving of high salaries and running a corporation with insane profit margins at the expense of their employees. After all, those employees should just go work some place else if they're not happy, right?

What gets me is this kind of thinking is s-for brains thinking. If you don't pay the masses enough, you won't have any customers. The population has to have enough disposable income to spend on products and services. If everyone is just scraping buy, eventually the demand for products and services dries up.

The thing is, we're entering a global economy now -- and it can't be stopped. There are people in 3rd world countries perfectly content to make $150 A MONTH. How can Americans compete with labor that cheap? There simply aren't enough technical jobs in America for none of us to do labor-intensive jobs.

Successful retail is a mix of good product and service, reasonable prices and happy employees. They service the customers so the happier the employees the better the service, the more return customers.

Keeping greed out of the equation… or monopolize a market so it doesn't matter what the customers or employees think, where else they gonna go?

As time passes more corporations seek to grow by taking over markets , the bigger they become the more bureaucratic and autonomic the service, the bigger the everything, the less they do anything well.

originally posted by: MystikMushroom
a reply to: Puppylove

There are people in 3rd world countries perfectly content to make $150 A MONTH. How can Americans compete with labor that cheap? There simply aren't enough technical jobs in America for none of us to do labor-intensive jobs.

This is why people must rise up and stop the madness.

It's just a shame that the young these days would rather watch Pewdiepie than flood the White House with man-powered protest.

We're doomed, I'm afraid.

The young are taught that thinking anti-globally is racist and evil.

The old are kept out of their loop and eventually our voices won't be heard.

I was reading a comparison about what it's like to be rich at different levels the other day.

One thing at struck me...once you break the billionaire mark, buying a $250,000 Lamborghini is like someone who makes $40,000 a year spending $27.00 (rough estimate).

So to that rich guy, buying a Lambo is like me spending $27. I can easily spend that on a nice lunch where I live. That's insane.

And it gets even better -- at the highest levels of wealth money isn't even used, services and favors are exchanged. Money is for millionaires, not billionaires (and us poor little people). Truly rich people don't even use money.

EDIT: I should clarify that they don't exchange money. What I mean is, "Hey Bob -- can you have your people look over this merger for me? Thanks -- I'll hook you up with a week at my private island!"

Barter and exchange using their power and influence is what's being tossed around at the highest levels. It's only people like you and me that run around chasing scraps of paper with numbers printed on them like madmen.

originally posted by: Unrealised

originally posted by: MystikMushroom
a reply to: Puppylove

There are people in 3rd world countries perfectly content to make $150 A MONTH. How can Americans compete with labor that cheap? There simply aren't enough technical jobs in America for none of us to do labor-intensive jobs.

This is why people must rise up and stop the madness.

It's just a shame that the young these days would rather watch Pewdiepie than flood the White House with man-powered protest.

We're doomed, I'm afraid.

The young are taught that thinking anti-globally is racist and evil.

The old are kept out of their loop and eventually our voices won't be heard.

I am staunchly against raising the minimum wage. However, I do think this country and its citizens have done themselves a disservice by not putting country first.

The reality is that businesses have to compete and price more often than not is what drives consumer decision making. As long as consumers aren't willing to pay a premium to support businesses keeping jobs here and higher wages, there will always be this struggle where corporations have to continually look for places to cut to remain competitive. It is either going to be through low minimum wage jobs or productivity gains using technology.

Personally, I don't mind paying a little more for better service and to keep jobs here. However, the reality is that most people can't connect their desire to save 50 cents with jobs being sent overseas.

a reply to: Edumakated

That's completely untrue. Companies are not paying low wages in order to compete in the market they are paying low wages for higher profits.

a reply to: Edumakated

How do people afford to pay a premium price for a service they can't afford to begin with?


All the meanwhile the CEO's from Walmart, Bestbuy, and Kroger are laughing on their billion dollar yachts getting richer while cutting hours to their employees so they can buy that trillion dollar yacht.

originally posted by: EternalSolace
a reply to: Edumakated

How do people afford to pay a premium price for a service they can't afford to begin with?


All the meanwhile the CEO's from Walmart, Bestbuy, and Kroger are laughing on their billion dollar yachts getting richer while cutting hours to their employees so they can buy that trillion dollar yacht.

When you get so high into the stratosphere you're worth multi-billions, you have "people" that do pretty much everything for you.

A lot of the daily decisions are made well below the top CEO of a company, even many of the larger decisions too.

The higher you go the less effort you put out, but the more importance and weight your "yes" and "no" decisions matter. You're being paid to say yes or no -- that's it. You are being entrusted and paid billions because people believe you know how to maximize $$$ -- by saying "yes" and "no" to business questions.

I wish I got paid more to say "yes" and "no". As it is if I say "no" I usually end up having to do whatever it is anyway.

a reply to: MystikMushroom

Good synapsis

a reply to: MystikMushroom

I'll never understand why the public hasn't figured out that collectively, we could sink and destroy them.

I don't think I'll live to see the day.

originally posted by: onequestion
a reply to: Edumakated

That's completely untrue. Companies are not paying low wages in order to compete in the market they are paying low wages for higher profits.

Businesses are not started to "provide jobs". Businesses are started because the investors in said business are trying to make a profit. Jobs are merely a by product of this action. Businesses will generally pay as little as they need to get the workers required for whatever job needs to be performed.

The free market sets the going rate for employees performing certain jobs. Skilled employees are scarce and thus they are paid more because that is the only way a business can hire them. Minimum wage jobs are paid the minimum because there are a boat load of unskilled workers so supply outstrips demand which depresses wages. The easiest way to raise the wages of the unskilled is to reduce the number which means stop importing even more unskilled illegal immigrants to compete for these jobs.

What is ironic as a poster above mentioned, many of the people complaining are heavily invested in these companies through their pension plans, 401ks, etc. How do they think their retirement accounts are able to get the returns to support these plans? The companies seek to increase profits because capital flows to profitable companies from investors.

So what if a business wants to earn more profit? That is what they do. At some point, some businesses allow short term profits to crater the company. The history books are littered with large corporations that went out of business due to bad management decisions which can include not paying employees well. This is the free market.

a reply to: Edumakated

i agree with you on how the system is working.

Do you agree with the system?

originally posted by: EternalSolace
a reply to: Edumakated

How do people afford to pay a premium price for a service they can't afford to begin with?


All the meanwhile the CEO's from Walmart, Bestbuy, and Kroger are laughing on their billion dollar yachts getting richer while cutting hours to their employees so they can buy that trillion dollar yacht.

There enough people who can and that is who the businesses target. It is called market segmentation. Good lord, some of you need to take some basic econ and marketing courses.

Ferrari doesn't sell cars to everyone. They know who their market is and that is how the product is priced. However, a lower budget car like Hyundai is targeting a different audience. Whole Foods is not going after budget shoppers. However, Wal-Mart is going after price conscious shoppers. Whole Foods has higher margin, lower volume while Wal-Mart is lower margin, higher volume.

CEOs make a lot of money because they are running large global organizations. Very few people are qualified to get to that position and the incomes reflect that scarcity.