The true cost of Low Wages. Who is really to blame.

a reply to: Puppylove

Ok here we go again, this is beginning to look circular because you seem convinced that by paying people more money it fixes everything so . . .

Economics 102 (the more advanced class, do try to keep up):

People start businesses to make money, not lose it. And they also do not do so in order to be a charity for all the people who do not have a skill set.

Minimum wage is a starting wage, not a living wage. You are not expected to make a living or raise a family on minimum wage. It is meant as a starting point. It is for kids in high school who want to make some spending money (or that have to help out the family), college students who need a little extra assistance, and as a last resort for people who have fallen on hard times and for one reason or another have to start back at minimum wage. If this last group is trying to live off their income or raise a family on it, then they will need multiple jobs (this is not unheard of and has happened throughout history).

In the past, people could get their bosses to give them more hours so that they could make more money with less jobs (and thus without juggling schedules). Alas, with new laws their bosses cannot afford to give them extra hours, indeed they are forced to give them less hours now than in the past (i.e. 29 instead of 39). This goes back to the basic fact that businesses are there to make a profit while providing a service.

You used the example of a burger joint where because an employee is now making double their old salary they are now buying double the burgers (or more people are buying burgers). Quite the opposite is true. These fast food burgers are the only thing many of them can afford. In fact it is cheaper and quicker/easier for someone to buy these cheap burgers than to eat healthy, so that is what most of the people who are trying to live off of minimum wage job(s) do. So if they got an increase in pay, they would eat less cheap food rather than more (and this is by your own reasoning).

So, now you have less people buying the 'cheap' food and costs at double what they were. (Remember the thing about profit?) So now the owner has to save money by streamlining his/her costs. In a fast food franchise system, the two biggest places where money is spent is payroll and food costs. Since they cannot cut costs on food (contracts with franchisors), they must cut costs on payrolls and since they can only cut those so much, prices go up too.

The most valuable asset to a business owner is skilled employee, but these are also the most expensive. So inevitably in the situation of forced wage hikes, here is the common result:
Reorganization of the business . . .

Starting employees (example - I have no idea what they actually make since I do not have a franchise):
1) 1 GM $24hr (40 hrs week)
2) 2 Shift Mgrs $18hr (36 hrs week)
3) 4 Assistant Mgrs $14hr (26 hrs week)
4) 8 Team Leads $12hr (24 hrs week)
5) 32 Line Employees $8hr (30 hrs week)

Payroll = $14,216 per week
-----------------------------------
New set-up:
1) 1 GM $22hr - Top management (often GMs) are offered a choice of either leaving (voluntarily so as to not look bad on resume) or to stay for less pay in a new position which is essentially the same but with different title. Their pay will drop, and responsibilities stay. (40 hrs week)
2) 0 Shift Mgrs - If lucky and the GM left, one of the two will be promoted to GM. The other (both if GM stayed) will be given same offer as GM, which is to stay for less money and more responsibility.
3) 8 Assistant Mgrs $16-17hr - This is now the only middle mgmt job to move up to now (just above minimum wage). (26 hrs week)
4) 24 Line Employees $15hr - Less employees means more work. Note that while making more money they are still at minimum wage. (29hrs week)

Payroll = $14,648 per week

That's right, they went from 47 people with jobs to 33 people with jobs (but that's ok right, because the people who kept their job got a raise). And the people who lost their job are staying unemployed because everyone else had cutbacks to. There is just no market for overpaid unskilled workers.

Not to mention payroll went up (costs went up), so they still have to increase prices.

Remember that owners are in business to maximize their profit.

So the net thing they look for is automation. Mechanical kiosks for making orders is a large cost upfront but in the long run saves massive amounts on payroll. By this point customers are used to the price increase so it stays. In fact there was another initial price increase to help pay for the kiosks.

Now there are only 16 line workers. Anther 8 people lost their jobs to minimum wage increase.

Is that real enough for you on the whole franchise thing?

Now if you want something that will actually make a difference to all these people working in franchises, pass a law that reduces franchise fees to a smaller percentage of profits without guarantees. That will save franchisees a good bit of overhead allowing for more profit. And history has shown that a business owner that makes more profit typically likes to keep the employees that got them there happy and rewards them with raises as well (at least the ones pulling their weight).

Everyone seems to be worried about the top 1%. Well raising the minimum wage has nothing to do with them, because they are the CEOs etc of all these large corporations and lawyers and politicians and doctors. And none of them are going away any time soon. The only thing raising the minimum wage truly accomplishes is a higher cost of living for everyone and less jobs to go around. Not to mention now you have to be a skilled worker for an entry-level job.

a reply to: JDeLattre89

Ok so let me get this straight. Your argument is that this is bad because fast food and business that offer cheap crap unhealthy food go out of business and those that offer better food gain business?

Places that offer better food will grow and replace the failed fast food businesses.

It's not like people stopped eating. They just stopped eating crap. One businesses loss is another's gain. More healthier places will flourish in your scenario. I thought competition was good. Those jobs don't disappear, they just move to where the business is that now needs to hire more people to keep up with the influx of customers.

Honestly fast food needs to go the way of the dodo anyway.

a reply to: seasonal

Yep, the government money goes into the company pocket plus the money they don't pay.

The only money they aren't getting is the illegal drug money so we have the war on drugs. That war also makes money.

a reply to: JDeLattre89

Oh and so you don't think I ignored the rest of your post. I'm fully aware franchises and small businesses are screwed by over regulation, usually caused by those big corporations so that only they can afford to really compete and/or soak up all the profits.

Yes we do need to fix that. It's a multi-faceted problem with multiple issues. We can tackle multiple problems at once, right?

Both Small Business and their employees as well as the employees of big business are being screwed by the same people.

Small business tends to only see their issues, and to be fair we tend to only see ours for the most part.

We're both being screwed by the same people and both our complaints are equally valid and can be fought for together if we could simply ditch our tunnel vision and recognize where we both agree and the legitimacy of both sides.

a reply to: JDeLattre89

OR They realised that within this economic model it will be impossible to fight poverty in any other way but to collapse the model and start a new one.

We are turning a page right now but most people haven´t realised it yet. The globalisation and the 2008 crisis that we´re still living, look at the oil prices, accelerated this process and made impossible for a vast majority of workesr in the western world to regain their lost jobs. They can´t do their old job, it has been sent to china/india/whatever, they can´t learn a new job, its too much to ask a 45, 50, 60 YO person to learn how to code, hot to be an engineer... So what is the solution?

Bring the jobs/factories back, put robots doing it, violently tax the corporations and redistribute the revenue as a minimum/basic income (or whatever they are calling it)

Progressively over the next 10 years we will see robots doing most of the tasks at factories with only a few human supervisors and programmers.

This is a transition era we´re living. Up until now you had to program a robot to perform very specific and precise movements, they were big, dangerous, in the sense that you couldn´t get near it when its working, they were hugely expensive like 30k, 50k 100k 1mil

Now and in the near future robots will replace assembly line workers on simple tasks, these robots are cheap like 10k or less and work 24/7 with a degree of AI. How much does an employee costs in a year?

In 10 years these robots will be almost autonomous and be able to deal with the public, pick up products, pack them... Do a clerk job, possibly in an adapted shop environment.

The question will be, what do we do with the people? The old workforce. The old consumers.

We either kill them or let them die, promote contraception, promote homosexuality, give them porn, or give them a share in the robots "wage" as a minimum basic income so they can spend on the made by robot products. This way we keep a foot in the old economy and another in the new one.

This is what they have in mind for us, switzeland made a referendum on minimum basic income a few months ago, it didn´t passed, a few small towns in holland are testing the idea, I´ve heard that there are experiments in Toronto going on.

I think they want to test this on a small scale first. It makes sense.

Check out the chinese trying to catchup:
www.reuters.com...

a reply to: WanderingNomadd

It is more complicated than the video shows in my OP, don't get me wrong, but it is far from the idea in your head.

Much more complicated.

That video assumes the wage hike will only apply to cashiers. Nope. Laws don't work like that. It will apply to everyone making minimum wage. That includes shipping/receiving personnel (not just at Walmart but also at their suppliers), drivers, security guards, dispatchers... a whole list. The suppliers in the US (yes, there are a few left) will get hit as well, meaning their prices will increase. So what will be Walmart's response when their labor costs increase and their suppliers raise prices too?

More Chinese products. Less American jobs.

I know, I know. This time it's going to work. This time things won't get worse. Never mind that every single minimum wage increase in our history has raised the cost of living. Want proof that it has?
Minimum wage rates by year
Consumer price increases

Now think about this: what will the minimum wage be in another 100 years? $100 an hour? $1000 an hour? What will a loaf of bread cost when wages are that high? $1000? How will anyone be better off?

Answer: they won't. There won't be any jobs then, except for the CEOs and engineers to make and maintain the machines that replaced people. We'll probably be making minimum wage by then as well, but by then it'll be so high it won't matter.

TheRedneck

You idiots can keep calling it low wages. I call it slavery and corporate warfare.

a reply to: JDeLattre89

People start businesses to make money, not lose it. And they also do not do so in order to be a charity for all the people who do not have a skill set.

And every person has a right to profit from their own labour. When the industry grows by 93% and the wages reduce by 24% It is quite clear the current Labor = Profit right has been impeeched heavily. By the same standard of time passed the middle class should recieve an average of 92k (a boost of 42k) to be equal with the growth of the economic industry. So if, as the economic industry grew, they recieved wage increases proportional to profit increases that is what the wage would be today. Its not one side asking for charity they are asking for what they would be entitled to if the system wasn't rigged. Those with money make the laws, Those without money can work as hard as they like they have no say in government. If people took down these giants it would'nt just be a matter of wealth, it would be a matter of justice.

Remember that owners are in business to maximize their profit.

Your arguing along the basis of profits outstrip human rights. Increasing profits at the expense of others wellbeing and standard of living is, whether "legal" or not, Immoral and was once considered illegal. A man is entitled to the profit of his own labour. Whilst a rich business owner is entitled to alot more than his employees he has to acknowledge their right to their fair share. That is not the case anymore as seen by the +93% -24% seperation. We have seen giants take what is not theirs by abusing the system. They determine what is a fair share whereas it should be determined by rights. When corporations determine what constitutes Law and which ones they have to follow we have a problem that precedes Job based slavery. They determine work conditions, living conditions and your rights. Corporatocracy.

Ill just finish by saying, as we still disagree after multiple headbutts, the economy is collapsing and this system doesn't work. Never has, never will. It stasticaly and factually does NOT work and, even worse for those currently safe, it IS getting worse and thats without throwing in the curveballs like technology.

In 10 years these robots will be almost autonomous and be able to deal with the public, pick up products, pack them... Do a clerk job, possibly in an adapted shop environment. The question will be, what do we do with the people? The old workforce. The old consumers. We either kill them or let them die, promote contraception, promote homosexuality, give them porn, or give them a share in the robots "wage" as a minimum basic income so they can spend on the made by robot products. This way we keep a foot in the old economy and another in the new one.

Technology is expanding at Incredible rates. Funny thing is people look at this as a positive step whereas for every robot worker invented two or three people lose a job. This is another reason why rights for workers need to be addressed and secured from the global takeover of Corps and Banks and the corruption of government.

People are unable to see past their own two feet though and are not really to bothered about future generations even if they have children of their own.

We went from the rule of monarchys, into a rule of the people, then to the dictatorship of government, next is Corporatocracy and Banking institutes, Aka perfected slavery.

a reply to: TheRedneck

Your own charts prove that minimum wage increases improved purchasing power.

Lets look at the year of an increase, and the change in CPI from the year prior to the increase until 2 years after the increase.
1944 33% increase in minimum wage. CPI went up 5.3%
1950 87.5% increase, CPI went up 10.42%
1956 33% increase, CPI 3.34%
1961 15% increase, CPI 3.4%
1967 22% increase, CPI 8.2%

Shall I continue?

Anyone know the role playing game of Shadowrun?

Minus the meta-humans, supernatural creatures, and dragons, that's our future if this continues.

a reply to: Aazadan

Please do.

Look at the trend. Minimum wage increases are immediate; COLI increases happen over the next few years.

TheRedneck

a reply to: TheRedneck

Here is an Unbiased commentary with reasons for and against from a small business owner.

a reply to: Puppylove

You missed the point, fast food was only an example of franchise type businesses. If people have less spending/buying power, how are they all of a sudden going to be shopping at more expensive places?

a reply to: CrapAsUsual

You almost had a good thought going there. One major problem:

Bring the jobs/factories back, put robots doing it, violently tax the corporations and redistribute the revenue as a minimum/basic income (or whatever they are calling it)

By 'violently taxing' the corporations, you give them no reason to be in America. Thus they stay overseas giving jobs to the people who need them there.

But yes, your age of automation will be coming in if we force higher wages upon the business owners.

The next question will be: Will the machines want to keep us around?

a reply to: JDeLattre89

They won't have less. You've done nothing to prove they'll have less that hasn't been countered somewhere.

Your example of why the fast food company fails was because they bought food somewhere else.

The problem with that is you're ignoring that that somewhere else is now more successful and getting more business.

It's a complex issue, so much more complex than raising wages results in an equal raise in cost, that's not even close to true.

a reply to: JDeLattre89

The machines are coming to take our jobs anyway. It doesn't matter what we do either. The cost of human labor will always be more than a machine so we will always be replaced by one if it can do our job. That's just simple economics right there.

What will eventually have to happen is some kind of radical new form of how we use the economy in society. This is another reason why you're seeing the effort to control all forms of money, make it the same globally and also remove all cash completely.

We only have another decade or so depending on who you ask until this will be as serious a problem as there is for society as a whole. "They" have already been working on solutions which you can sort of see in the works now. They don't seem very good for "the people" if you ask me, but they are working ideas that will function and keep things rolling.

I would suggest if we don't want that future that some very smart and creative people come up with some other solutions before it's too late and we all live in a very crappy tomorrow.

a reply to: WanderingNomadd

If you don't think that businesses have been running governments since governments have been formed, then you need to go read some actual history books.

And yes, the age of the machine is almost upon us. What we do with such is the big question though.

But you keep missing my point. The corporations are what is wrong with the economy. However, what you are proposing (hiking up minimum wage) does nothing but boost the power of the corporations further. This is because the major corporations (walmart, google, amazon, etc... etc...) are the only ones that can continue to function (at a loss at first followed shortly thereafter at a major profit due to monopolization) in such a situation. As long as big corporations are buying government, this conversation will continue.

As far as how to provide for the rights of workers. . . well that is what true capitalism is about. Let the market dictate the wages and profits. And yes, that means unskilled workers work for minimum wage while those that excel can demand better pay.

a reply to: Puppylove

Finally we are getting somewhere. IT IS A COMPLEX ISSUE!!!

Yes, I agree, it is not just that raising wages increases costs. That is only where it starts.

And no, I am not ignoring that somewhere else is getting more business, that was one of my previous points. The major corps are the only ones that get more business from this template because they are the only ones that people can afford to go to at that point. Except for maybe all the new welfare recipients who would be making just more than those working at the new minimum wage. For every two people who get the increase at least one person loses a job.

At last, the only thing that this truly accomplishes is that it removes the middle class as a threat to the upper class, because the middle class ceases to exist and with it the small businesses and the jobs that come with them.

a reply to: mOjOm

Yes, I agree with all the above.

a reply to: JDeLattre89

Here's the problem, by saying let the markets deal with it your throwing the entire working class under the bus. We need to eat to live, we need to work to live. We don't actually have a choice not to work, not really. So we can't actually vote by choosing not to work where there are jobs because we think they pay too little. We have to accept them. So saying to let the market decide really is throwing us all under the bus.

With one hand your telling us, the workers to # off, and accept what meager scraps come our way, but to then also give a crap about how big business is #ing you over?

Either you care about us or we're not going to care about you. It's that simple. Either you care about raising the minimum standard of living, and we can work together to beat these big business assholes or you can tell us you care not one iota about our standard of living in which case we don't care about yours, and we're both fighting big business separately.

Facts are, we're not making enough for our labor, once you acknowledge that, we can start acknowledging your issues as well.

Ignore that, and we're straight up working against each other.