New bill pushing for $10 minimum wage; how will this affect economy?

reply to post by HauntWok


If someone owns a restaurant and they are forced to up their prices along with all the restaurants in this economy where people are overextended it will cause the people to start cooking at home and all the restaurants in the area will lay off people, some shutting down. I do not own a restaurant but the basics of business are similar. I know lots of business owners and I know lots of people. This will happen.

If you make 2500 per month after taxes and your house payment is 900 per month or more including escrow, that means your down to 1600 per month. Heat at 70/month, lights at 70/month, cable at 50/month, internet at 30/month, water, sewer, garbage at 100/month, phones at 50/month cell and landline, car insurance and plates 100/month, car payment or lease 380/month, gas for car 80/month, house maintenance 50/month, insurance copay medical and dental 40+/month, food for two 400/month, etc... that leaves you about a hundred and eighty bucks a month to play with or save. With increasing wages the food is going to increase also. It won't be possible for a couple to go to the restaurant as often if prices increase, they will eat at home.

reply to post by tinfoilman


My twelve volt cordless drills are just as powerful as the twenty four volt ones, the both do the job. I have all the nailers and equipment and the new stuff is no faster. If anything the new stuff is less reliable. So how are you going to speed up quality building construction? By cutting corners and rushing things? All those tools I bought over the years cost megabucks, maybe if I didn't have all that cost I could have paid my workers a buck an hour more for all those years. Evidently you don't work in the trades where you try to work hard and efficiently. If I wasn't so picky on the quality of my work I could have paid more. I never paid anything for advertising and had work almost year round. I got that work because of quality not because of speed.

Originally posted by dreamreader
Let's see... raise the cost of doing business by $2.75 per hour x 40 hours per week (being an optimist here) = $110 per week per employee.

As a small business owner who employs 20 people at that wage = $2200 per month. Now lets take $2200 x 12 months and get $26,400 per year.

So in order for me to cover the $26, 400 per year just on payroll alone (does not include all the other requirements such as taxes, unemployment insurance, etc) as there is a difference of $12,480 (26,400-13920= 12,480), I think I would have to lay off more people in order to keep maintaining a desired level of profit. Now mind you, if the cost of goods go up due to a market adjustment of more disposable income, my costs on materials will eventually rise and the cycle repeats itself.

So, unfortunately, no that will not work. Besides, I have had the opportunity to work with some folks that only make $7.25 per hour and I wouldn't want to pay them any more than that. Quite useless to be honest.

Which brings me to my next question... Do any of these people in government understand how a market works and not just by reading a book?

If you had workers that you needed and the cost of materials went up, a good business person doesn't make up for that loss by firing workers. That's just a myth. If the cost of your product goes up, and the demand and sales go down, there'll be less work needed and that's when workers get laid off.

Considering profit is the goal for businesses, wouldn't you lay off the people whether or not the minimum wage was increased if you didn't need them?

Originally posted by rickymouse
reply to post by HauntWok

 

If someone owns a restaurant and they are forced to up their prices along with all the restaurants in this economy where people are overextended it will cause the people to start cooking at home and all the restaurants in the area will lay off people, some shutting down. I do not own a restaurant but the basics of business are similar. I know lots of business owners and I know lots of people. This will happen.

No it won't. If wages continue to go up also the higher prices don't matter. It all just cancels itself out. According to your logic all restaurants would have went out of business decades ago. In 1938 the minimum wage was 25 cents! A quarter! How come we still have restaurants? In fact we have more of them than ever before. Your thinking is backwards.

Our system has allowed cheap loans and therefore massive economic growth and expansion due to available credit and more importantly high enough WAGES to pay those loans BACK. People eat out more at restaurants NOW than they ever did in 1938 when we had a much lower minimum wage.

The numbers have increased so HIGH that we have an obesity epidemic. The exact opposite of what you claim would happen. You have no idea how economics work. Unless you can explain to me why we have more businesses in this country now than we did in 1938 when the minimum wage was FAR FAR CHEAPER! Then you must admit you're wrong and have no idea why and that you have no idea how it really works.

After all, who's going to go out to eat when they only get paid $0.25 an hour? Really? A good steak costs like 200 times that.

I believe this is a smokescreen for the Democrats real agenda, which is create an even bigger incentive for workers to cross the border from Mexico. This will help the Democrats expand their base of minority voters.

The minimum wage isn't in a closed system.

This will also increase the money flowing into cheap labor markets, like India, Pakistan, Bangladesh, and the Philippines.

It will do nothing to increase productivity.

reply to post by UltimateSkeptic1

I believe this is a smokescreen for the Democrats real agenda, which is create an even bigger incentive for workers to cross the border from Mexico. This will help the Democrats expand their base of minority voters.

That makes no sense.

1) I am assuming you are talking about illegal immigrants, who don't vote.

2) illegals don't generally get minimum wage jobs, employers pay them far below minimum wage, which is the problem because it creates a caste system that enslaves people. Americans aren't interested in doing the piecemeal work that illegals will do. Tell ya what, go out, plant environmental landscaping plants in a swamp for 5 cents a plant and come tell me how awesome it is after a few days and then you can bitch about the "Democrats agenda".

reply to post by Submarines


Actually you could do that, and not increase your prices...It's when greed is in your eyes would you up the prices on goods.

I want to open a business and I would take a cut out of my own money to make sure my employees had a job and were taken care of. It's called taking care of who takes care of you

Employees are the very backbone of any business no workers no business right? Unless your going to do it yourself but that's why you have workers so you don't have to.

Lets put it this way. Labor on average is about 25% of the costs for the average American business. So if we raise the minimum wage by about 30%, prices will have to rise 7.5% in order to cover the increased cost and keep profits the same. So that 30% increase will still mean about a 22.5% increase in disposable income for those working minimum wage.

I'll say it again...If you can't afford to pay your workers $10 an hour you don't deserve to be able to employ workers. It is really that simple. You shouldn't have to exploit workers in order to make a buck.

I also love how those defending the current wage love to say how they can't even find anyone worth $7.65 an hour. Maybe your payscale is the reason?

Originally posted by mytheroy
reply to post by Submarines

 

Actually you could do that, and not increase your prices...It's when greed is in your eyes would you up the prices on goods.

I want to open a business and I would take a cut out of my own money to make sure my employees had a job and were taken care of. It's called taking care of who takes care of you

Employees are the very backbone of any business no workers no business right? Unless your going to do it yourself but that's why you have workers so you don't have to.

You are partially right. But it's not just greed. If the owner of a company makes...let's say $300k / year take-home after years of building up his company. He buys a decent home, a nice car and other niceties as rewards for his hard work. Then the corporate tax rate shoots from 15% to 35%. Then he gets molested by the EPA, OSHA to spend thousands of dollars annually to protect and store chemicles he seldom uses, but needs for his business. Then his health insurance carrier tells him his rates are going up 20%. Not only this, but a competetor just opened up a few miles away and is ready to out-bid him 20% on the same services. And after all of that, the minimum wage jumps to $10.00!

See what I'm getting at here? If you owned this business, would you be willing to take those cuts? Be willing to sell your nice home, car and whatever else you bought so your workers can be better off? Of course you would want to do whatever possible to not hurt anyone financially, but if it's you or them...who's taking the cuts?

Originally posted by tinfoilman

Originally posted by rickymouse
reply to post by HauntWok

 

If someone owns a restaurant and they are forced to up their prices along with all the restaurants in this economy where people are overextended it will cause the people to start cooking at home and all the restaurants in the area will lay off people, some shutting down. I do not own a restaurant but the basics of business are similar. I know lots of business owners and I know lots of people. This will happen.

No it won't. If wages continue to go up also the higher prices don't matter. It all just cancels itself out.

If it cancels out whats the point? Of course the real reason is politics in order to get the low income voters to buy into their B$. Bottom line is that your one hour of work today at $6 an hour , will have just as much buying power (if not less) when they increase it to $10 an hour.

Except of course the gov't just gave every business an excuse to raise their cost of doing business. So what is the likely hood that those business will only raise their prices to meet the required difference? Not likely going to happen. Most likely they are going to take advantage of the situation and add an additional increase to their cost of operation and pass it down to the consumer. Its never easily accepted by the consumer when prices go up so the gov't just gave them an excuse to add a little extra here and there. So your new $10 dollars an hour wage has a little less buying power than you had with your $6 dollars an hour. With 6 dollar an hour you were probably getting 1 unit of x items with the new wage you will likely get .98 unit of x items.

Originally posted by interupt42

Originally posted by tinfoilman

Originally posted by rickymouse
reply to post by HauntWok

 

If someone owns a restaurant and they are forced to up their prices along with all the restaurants in this economy where people are overextended it will cause the people to start cooking at home and all the restaurants in the area will lay off people, some shutting down. I do not own a restaurant but the basics of business are similar. I know lots of business owners and I know lots of people. This will happen.

No it won't. If wages continue to go up also the higher prices don't matter. It all just cancels itself out.

If it cancels out whats the point? Of course the real reason is politics in order to get the low income voters to buy into their B$. Bottom line is that your one hour of work today at $6 an hour , will have just as much buying power (if not less) when they increase it to $10 an hour.

Except of course the gov't just gave every business an excuse to raise their cost of doing business. So what is the likely hood that those business will only raise their prices to meet the required difference? Not likely going to happen. Most likely they are going to take advantage of the situation and add an additional increase to their cost of operation and pass it down to the consumer. Its never easily accepted by the consumer when prices go up so the gov't just gave them an excuse to add a little extra here and there. So your new $10 dollars an hour wage has a little less buying power than you had with your $6 dollars an hour. With 6 dollar an hour you were probably getting 1 unit of x items with the new wage you will likely get .98 unit of x items.

You really can't see the point of raising minimum from 25 cents after 74 years? You really think restaurants would still be in business if the minimum wage never went up and people were still getting paid a quarter an hour? lol, no NOT raising the minimum wage is what causes businesses to go broke, not the other way around.

The point is to keep minimum wage in line with inflation so workers get the same amount of value out of their work that they did before inflation. You raise minimum wage after the fact, after the inflation has already taken place. You're not raising it. All your doing is bringing it up to the same levels it was before adjusted for inflation.

How will this affect the economy?

The cost will be passed on to the consumer, prices will rise, unemployment will rise as companies will have to lay off workers because their payroll expenditures will be too high.

Rather than the market setting the minimum wage like it should be allowed to, the rest of the economy will be forced to move in an inflationary direction to counter the imbalanced input forced upon it. It is stupid, always has been.

Just another simple-minded idealistic effort by stupid liberals to level some imaginary playing field they think is "unfair".

Just reading through some of these posts. It's amazing how many people think they know what happens, and clearly have never run a business. People actually think that businesses take advantage of higher minimum wages to raise prices and make more money? Really? So there is no such thing as competition, huh? Business owners should be able to just set prices wherever the hell they want if everyone used that logic. Why do you think margins are so small in most businesses? Do you think owners like raising prices and losing customers? That's what happens. Get back to me when you figure it out. Actually, don't, because I already know.

But let's not forget who benefits the most from a wage increase...yep, the ones who just gave it to you, the Federal Government. By increasing the wage base, they increase the weekly and bi-weekly income of taxes gathered on your wages. Effectively, the minimum wage increase just increases the interest free loans that the government takes in by payroll deductions collected by unappointed tax collectors known as employers.

And let's face it, there are far more people making minimum and near minimum wage due to the recession that started in 2008, because those were the jobs available to the laid off that didn't spend 99+ week on unemployment. If there were true concerns, they would advocate one of the following:

1) Limited tax holiday. Let's say for the next six months, there would be no tax deductions from your check. That puts money immediately in the economy because most people are conditioned to spend more if they have more. And plenty of banks will be willing to give short term loans when money is being spent.

2) Adjust the income brackets to reflect inflation levels. Back when income taxes started in 1933, only those making more than $5000 per year had to pay taxes on their income. Current values would place that number in the $45K-$55K range. Doesn't place as much into the economy as quickly as a tax holiday, but the returns would be lasting for steady growth as well as taking the pressure off of minimum and near minimum wage workers.

3) Replace minimum wage with something akin to a 500% rule. In that there could only be a maximum of the top wage earner making five times the lowest wage earner. I'll be honest, I don't like this one at all. But talk about what an economic correction this would create for equalizing the value of money. For the minimum wage earner: a $7/hour janitor at a law firm, for example, a $100 item is about 14 hours of work (not counting living expenses) for the $500 an hour lawyer, it is 12 minutes of work. Under such a system, the lawyer would either get $35/hour or the janitor would make $100/hour. As I said, I don't like this one, but it would definitely fix the spread between rich and poor very quickly. In all reality the janitor would make $30/hr and the lawyer $150. And we would have to use something other than Federal Reserve Notes because the current value of them are too entrenched. But in the event of a total economic collapse, it might not be a bad idea.

But just moving the goal post with a "see, I gave you money" approach of bumping minimum wage, is the worst kind of political chicanery. Unfortunately people buy it every single time as "proof" the government works for them, when in reality an increase in minimum wage just places the already struggling under heavier pressure while filling the government coffers. Which given the high unemployment over the past 4 years is something the government has a vested interest in making happen in the first place.

Originally posted by AwakeinNM
How will this affect the economy?

The cost will be passed on to the consumer, prices will rise, unemployment will rise as companies will have to lay off workers because their payroll expenditures will be too high.

Rather than the market setting the minimum wage like it should be allowed to, the rest of the economy will be forced to move in an inflationary direction to counter the imbalanced input forced into it. It is stupid, always has been.

Just another simple-minded idealistic effort by stupid liberals to level some imaginary playing field they think is "unfair".

No the market doesn't correct because the market isn't what's causing the inflation. The inflation is caused by the Federal Reserve and Government interference on purpose. Therefore it can only be fixed by Government interference on purpose. Our interest rates aren't set by the market right now. They're set by the fed and that's what causes the problem.

The economy is supposed to have some inflation to make the whole thing work. It's designed into the system on purpose. The inflation is supposed to make prices rise.

Yes we're complaining that prices will rise, but that's what's SUPPOSED to happen. That's how the system was designed to work. If they don't rise, we'll have deflation that will lead to an economic crash. That's exactly what you don't want.

Except if we let the market take care of it, the business, since it's competing with other business will try to keep its prices low. To do this they will screw the employee who has much less control over the situation.

The business will try to skirt their inflation tax by never giving the employee a raise. That's not how it's supposed to work. What's supposed to happen is that as prices rise, wages rise also and they cancel each other out. I pay you more, but I'm charging more. Since you're getting paid more you can pay me more when you buy my product. Then it all evens out.

This makes borrowing money easier and cheaper. But it's not a perfect system. Some bosses will try to take the slack out of their employees instead of their customers, but that doesn't work. So every now and then the Government has to come in and make a slight adjustment and make sure the inflation is going towards the prices where they're supposed to go and not the employee's wages.

It's just a slight tweak. Nothing other than that, and it's been working for a very long time. Prices rising at a slow steady rate is a good thing. That's what's supposed to happen. Sometimes the gov has to make sure the wages are coming along with it.

After all, keeping your employee's wages low when they would have normally gotten a raise is still a form of inflation. It's just coming out their check instead of going towards prices. However, the difference is the employee has no choice. However if you do it the other way, and prices go up to much, then the employee has some choice in the situation. The employee can say, well you know what? I'm not gonna buy that. I'll look for it cheaper somewhere else.

i really hope they don't do this

reply to post by tinfoilman


Oh, sorry. I'm wrong and you're right. Let's leave it to the government to fix things and we can all sleep better at night.

Originally posted by AwakeinNM
reply to post by tinfoilman

 

Oh, sorry. I'm wrong and you're right. Let's leave it to the government to fix things and we can all sleep better at night.

We do sleep better at night. Minimum wage started at 25 cents in 1938. We're better off today than back then and our economy and investment has expanded by leaps and bounds since. All based on this very system of cheap credit.

Of course the same system may one day eventually leads to a massive crash where millions die, but the point isn't that I'm for the system. I'm actually against the system. I would much prefer a free market system where it is controlled by the market.

All I'm saying is that the system we have now isn't controlled by the market therefore the market can't fix it. We may need a new system when this one fails.

I know people are inclined to believe they will make X amount more if the minimum wage is increased but employers will be forced to lay people off way before prices begin to increase.

reply to post by tinfoilman


Do you really think people would work for a business that would pay them $0.25 an hour?

reply to post by interupt42


No that's why I hate it when people say raising minimum wage will cause businesses to lay people off. Like I've said earlier in this thread. That doesn't make any sense. Those jobs are going away anyway if the boss refuses to give the raise.

There's two things that will happen. Either the boss can't afford to pay them and will have to lay them off. Or if we don't raise the minimum wage then the inflation will become so high that the employee will have to quit and look for another job anyway because they don't get paid enough to survive.

You even agree with me. You said so yourself. Who would work for 25 cents? Eventually prices will go so high that their wage would get so low that they would have to quit and look for another job anyway. So raising the minimum wage actually doesn't cost any jobs. It's the inflation that's going to happen anyway that costs the job.

The only difference is this. If the boss has to lay me off I get unemployment. If prices get so high I can't even afford gas to get to work and I have to quit then I don't get unemployment. So it's better if we raise the minimum wage.

The only third option is if your boss decides to gives you a raise. Of course if that happened we wouldn't even be talking about it would we?