The unaffordable higher minimum wage fallacy

a reply to: Vector99

Even tax equality is a short term fix to a problem that isn't going away.

The amount of jobs is shrinking. Manual labor is being replaced by automation.

a reply to: EternalSolace

I agree with that, but there is only so far automation can go before there is literally no demand due to no-one having an income. Outsourcing is a much bigger issue in my opinion than automation will be for the next few decades.

I have to come explain this so often because everyone seems to forget. If minimum wage say, doubles, just for instance. That doesn't mean that prices double in order to compensate leaving us with0% gain as people seem to imply. Prices only increase by the labor increase, and labor is usually 12-20% of cost, so this leaves workers with an overall greater spending capacity. Their increased spending accelerates the economy as they can now buy more products, and gives boosts to tax revenues as they generally spend100% of their income and are taxed on it. And yes, mom and pop businesses can handle it just as well because like any other business they just pass the cost increase on to the consumer...in a 10-20% boost in prices, that everyone is able to pay because they are making 100% more on this scenario. So please stop using fear mongering and false arguments to side track the very important discussion of increasing minimum wage. Lets also not forget the 30% of the U.S. that would instantly be off welfare and government benefits, thereby freeing up massive tax dollars.

originally posted by: Vector99
a reply to: EternalSolace

I agree with that, but there is only so far automation can go before there is literally no demand due to no-one having an income. Outsourcing is a much bigger issue in my opinion than automation will be for the next few decades.

In the short term, 100 years, I can see how outsourcing is a huge issue.

However, technology is advancing at an unprecedented level. I really believe that in 100 or so years, nearly all menial labor will be replaced with machines with the majority of jobs left in research, medicine, and engineering.

That doesn't leave a lot of room for people outside of those fields.

a reply to: pexx421

I've said that myself as one that knows what businesses usual goals are (minimum wage ones that is). The one thing most people don't know and need to be informed and consider, is employers pay taxes on YOUR worked wage as well, so a 10% increase cannot go directly to the employee. It would be more like a 8/2% - 6/4% employee/employer distribution rate. The % going to the employer doesn't raise their profits, it simply just covers the additional taxes they incur. That is only a fair bargain to start the negotiations (like they ever will though).

a reply to: EternalSolace

Once we get to that technological point I sure hope there isn't still world hunger. AI is likely by then as well though, hope that goes alright for us lol.

a reply to: Vector99

Do you see the power that hunger has over people relinquished by corporation and "Big Ag" in the next 100 years?

a reply to: EternalSolace

Not with the advancement of solar and battery power. It's becoming exponentially cheaper (a GOOD tech advancement) to convert to solar. I imagine, with huge pushes in lobbying from big power holding it up that long, that over the next 20-30 years most of the world will become solar efficient.

a reply to: CB328

Is this 10 cents a proven number, a swag, or napkin math? I suspect swag, to be honest.

You are right. The majority of businesses can give a decent raise to all employees. Smart companies budget 5% increase in overall payroll each year to account for merit/longevity increases. I have never worked in a place that didn't have a merit increase system....although I know there are quite a few.

But think about this: in food and beverage operations profits are already slim. Most run margins in the upper teens. Literally, in an average mom and pop restaurant if the freezer goes out it can close a restaurant just in lost food costs. Especially if inventories aren't tightly managed. Add to that the $1/hr, plus all the associated costs (FICA, Medicare, SSI, FICA, SUI, any employer portion of STD insurance, and workers compensation insurance)....

The problem is, its deciding what someone else should do with their money. Its like my son throwing a fit because I won't give him $20 out of the $100 bill i put back for groceries that will be needed right before payday. He has o idea what my obligations are, and has no right to demand that I put those obligations at risk.

The term "livable wage" is silly. I have no issue with a minimum wage. But to call it a "livable wage" is just nonsensical. its such an abstract/subjective term. On a related note, it would make much more sense to tie minimum wage to COLA and just be done with it. Incrementalism is easier for business to deal with.

a reply to: CB328

Hmm...
What of the extra $0.10 of each ingredient that goes into the pizza? Cheese, wheat, tomato, pepperoni, egg, and garlic producers all have to increase their employee's wages, too... Now your boss is paying you an extra $0.10 per pizza while also paying an extra $0.60 in ingredients, an extra $0.20 in overhead costs to cover the increase in things like property maintenance and energy, and an additional $0.10 in advertising to cover Print shop wage increases.
$1 a pizza increase just to break even. Not sure I'd buy as many pizzas if they went up suddenly by a buck each, especially since my non-minimun wage isn't going to be going up comparatively.

a reply to: burdman30ott6

Pizza has gone up far more than that over the years already but no wage increases.

a reply to: bigfatfurrytexan

that 10c number IS indeed nonsensical, but a lot of what else you said is also. Maybe my 10c he meant 10%. If so, that would put a bit more in each person's pocket, and/or hire more people. Simple math for that is say a mom and pop budgets for 12% labor on $1000 a day in sales. So they expect to pay $120 for help that day. Additional employers taxes on employee revenue are already figured in to this expense, so for the base it is NOT an argument. For the increase it is. That allows 15 hours per day at $8/hour. That most likely means there is 3 people a day getting 4-6 hours.

Now increase that $1000 a day by $100. Your customers $5 meal goes to a whopping $5.50. The additional revenue gained amounts to $100 (mind you this is math for a mom n pop shop) $70/% of that will go to employee pay, the other $30/% will cover the employer's additional tax burden on wages. $70 extra divided by 15 hours equals an extra $4.66 per hour available.

Deciding what someone should do with their money when it comes to business, well the free market was a good concept, but greedy people took advantage of it and decided not to care about the work they could not do without a labor force, so it's time it's regulated.

a reply to: onequestion

YEARS! We're talking about an immediate increase here with the min wage argument. Further, we're talking about a hell of a lot more than a buck an hour in many states.

Bottom line: it is a bad idea... Min wage JOBS are called jobs rather than careers or professions because they are expected to be short term work options for folks while they fins an actual career path.

originally posted by: burdman30ott6
a reply to: onequestion


Min wage JOBS are called jobs rather than careers or professions because they are expected to be short term work options for folks while they fins an actual career path.

This shallow mindset is brought to you by (insert corporate sponsor here). Your regular mindset for a better humanity will continue after...oh hell it will never continue.

a reply to: Vector99

Employer contributions are paid out on an even for even (or nearly) with regards to FICA, SSI, and Medicare. Whatever my employees pay into those 3 items....my business pays.

On top of that, FUTA and SUI (federal and state level unemployment taxes) are levied based on a little more complex concept, but tie to payroll as well.

Short Term Disability Insurance, if there is an employer contribution, would also increase for employees that have that particular coverage as the risk for insurance increases with higher wages.

Workers comp is calculated based on risk (usually something like 3 risk levels, which are essentially low, medium, and high, based on the job duties being performed) and payroll costs (you will pay estimated monthly amounnts, and true up at the end of the calendar year, where you typically get a small rebate because they always overestimate monthly payments).

Is this all figured in? Yes and no. It is figured in to the overall business model from the perspective of you generally will have a percentage of labor you expect to see added on for your bonus plan, insurance costs, and taxes (that portion of your financial statement is called "Benefits and Compensation", as opposed to simply "Payroll"). So it is "figured in" conceptually.

And part of that concept also would then involve accepting higher cost of goods as your vendors also go through this. Because your next step will be to increase your price point. And thus the cycle closes.

And you know who is the only winner in any of this? The person collecting the higher payroll taxes at the end of the line. Everyone else in the process either loses, or stays the same.

a reply to: EternalSolace

There is always going to be service. I wouldn't be shocked to find that part of the off shoring movement wasn't to help clear labor for medical fields right as the boomers began to fill up the beds for nursing home + type care.

Who knows. But there is always going to be service, until such point that you can get a burger served up without finding bearing grease dripped into it by your McAutomaton. And there is, until AI and the singularity, going to be research and development.

But you are right. Until we have AI to take over many of the functions that humans still are required to do, it is going to be very painful for us. The solace: exponential growth should bring that around sooner rather than later.

Then it will all boil down to human nature. Can people with wealth/power tolerate the notion of automation to a point of abolished economies?

a reply to: bigfatfurrytexan

The *nearly even* you mention is generally on higher wages. On lower wages it is less. On paper initially it may be more, but as far as tax write-offs go, well you're a business owner I would guess. You know how that works.

As far as mandated insurances, if your insurer charges you excessive rates, find another one. The risks of your business are usually pre-determined, with the only exception being overtime or excessive overtime, as that is considered a huge liability by most WCI/UIP's, but can also be blanketed in most coverages when it is expected.

Even if the assumed cost in what i said was 70% employer 30% increase for employees, that still works out to $2 an hour more, at a 10% increase. To comment on the COG increase of that same 10%, well a business doesn't run to stay even, so the 10% increase to the business is not equal to the 10% increase on mark-up price.

a reply to: Vector99

Depending on business/industry, as mentioned, any increase in labor % can put the operation at risk. It isn't uncommon for a food operation to run 12% margins (especially for a place running volume as their strategy, and especially during slower periods). To fund a pay increase, and any/all associated costs, it is either going to hit margins or itll hit price point.

like i said, most businesses can (and have budgeted) average pay increases that exceed the 1.7 COLA. its not a problem for most businesses. But the small mom and pop places...especially in more economically stifled areas where local pay scales are already on the low end. I've heard $15 as a minimum wage. Here, where I live....that would blow the top off of what are currently considered "high paying jobs" (an LVN, for example, may make in the $15/hr range, depending on where they work). No one in any doctors office or nursing home makes that much without being a nurse or director. Nursing homes, in particular, are going to feel the pain (unless Medicare actually starts paying out for long term care again).

a reply to: bigfatfurrytexan

That's why my original idea towards the subject was a fluctuating minimum wage based solely on business income. It is NOT possible for a mom n pop to keep up with a corporation, simply due to cost of goods, labor, insurance, rent, etc.. BUT if that mom and pop could legally pay less than a corporation that feeds off of sheer size alone (hello, aren't monopolies supposed to be illegal?) well, if you want to profit on high volume sales, it takes a LOT of people to facilitate that. You want to run that kind of business, you gotta pay more.

a reply to: Vector99

Truth be told, I will argue that the "Flipping burgers at McDonalds is a career path" attitude is the one most likely applauded by those huge corporations, friend. Nobody should come to the conclusion "By God, I love the smell of piss and I want to be a toilet cleaner for the next 45 years of my life!" This is why these JOBS were traditionally the targets of young men and women in high school and college who were trying to get enough scratch together to pay for another semester or travel somewhere that was hiring actual career path positions.

This is traditional... I understand we live in an era that tries its damnedest to pervert all things related to tradition, but I tend to say our current era SUCKS and part of the suckage is due to people settling at a fraction of their potential. Hell, it's part of the reason America's school children are, on average, dumber than nearly 1/3rd of the developed world's students. The complete abdication of personal effort geared towards being better than "just getting by," yet investing all kinds of energy into "I exist therefore I am owed something by those who have what I want" is horsecrap. To be real blunt, it is one of the reasons I sat teetering between praying for America and hoping the whole applecart went ass over teakettle in 2008. There's a huge part of me which wants to see a cold dose of reality and social Darwinism slapped into what is becoming the "average" American. When a man slides down a mountainside and finds himself on a sheer ledge with 400 feet of open air underneath him, he's met with a choice. He either climbs.... or he dies. Nowhere on there is the option of throwing a tantrum on the side of the mountain until the state comes out and builds the man a ladder to get to safety on. If you want something out of life, EARN it... don't sit around in a position never intended to be an ivory tower and bitch about nobody handing it all to you.