Higher minimum wage = Hot Air by Politicians

I just had this discussion with people at work today. He is a synopsis of how it went:

Worker @ 19.5 hours: I heard Obama was going to raise minimum wage!!!
Me (Manager): You think that will solve you problems?
Worker: Yes, I will finally be able to afford a place of my own. (second job and government assistance)
Me: Pfft... you do know that this is a smoke screen right?
Worker: What do you mean?
Me: They can raise your wage to $10 an hour and it will do no good.
Worker: If I made $10 per hour I would be golden!!!
Me: Okay, lets say you owned a business, paid each employee $10 per hour and made a product and sold $20,000 worth of product It cost $10,000 to make each item due to payroll, and you ended with $10,000 in profit.
However, they double your salary and now you make $20 per hour and the cost of making each product increases. Now you make $20,000 in sales still, but because of your pay increase it costs $20,000 to make the product. Now your company is breaking even. Why would you stay in business?

The only way to make your $10,000 back is to increase the price of your product and pass the increase on to the consumer.

It's common business. Either increase the cost of your product or lower the cost of your manufacturing (sending jobs overseas).

How would increasing the minimum wage do anything?
It's a big smoke screen and mis-direction.
It sounds good, but it will never work. ( do research on all the previous times it was increased)

The problem out there is there are alot of unskilled workers who still need to support a family.

If it were up to corporations, they would pay employees half of what the minimum wage is now!

It cost alot more to support a family in todays world, but salary increases have not increased to support this

We need to even the playing field.We are the government.

Do we lay down and cower or face up to this threat!

Originally posted by Catalyst317
I just had this discussion with people at work today. He is a synopsis of how it went:

Worker @ 19.5 hours: I heard Obama was going to raise minimum wage!!!
Me (Manager): You think that will solve you problems?
Worker: Yes, I will finally be able to afford a place of my own. (second job and government assistance)
Me: Pfft... you do know that this is a smoke screen right?
Worker: What do you mean?
Me: They can raise your wage to $10 an hour and it will do no good.
Worker: If I made $10 per hour I would be golden!!!
Me: Okay, lets say you owned a business, paid each employee $10 per hour and made a product and sold $20,000 worth of product It cost $10,000 to make each item due to payroll, and you ended with $10,000 in profit.
However, they double your salary and now you make $20 per hour and the cost of making each product increases. Now you make $20,000 in sales still, but because of your pay increase it costs $20,000 to make the product. Now your company is breaking even. Why would you stay in business?

The only way to make your $10,000 back is to increase the price of your product and pass the increase on to the consumer.

It's common business. Either increase the cost of your product or lower the cost of your manufacturing (sending jobs overseas).

How would increasing the minimum wage do anything?
It's a big smoke screen and mis-direction.
It sounds good, but it will never work. ( do research on all the previous times it was increased)

Where as i agree that Small business might suffer, big corporations would not.

Now whats the ratio for people employed by large corps compared to those employed by big business?
People (all around the world) deserve to live properly regardless of how "Useless" they may be deemed. There will always be a need for "unskilled" people, pay them a living wage. Dont be tight.

reply to post by Catalyst317


I think your only half right.

Your argument is based on a 100% increase in pay which is not was is being suggested.
I didnt do the math but i think, at best the suggested increase could be as high as 20%, depending
on where in the country you live.
While you may be correct in assuming that this will effect the profit margins of some companies, it will most likly be offset by cuts to middle management. Things like non-contracted performance insentives will sure diminish.

Then you should also concider that most states do not follow these federal guidelines as you can see here
state wages

The half you are right about is the smoke screen and misdirection.
What you didnt take into account was the increase in federal tax revenues, and while 9.00 p/h
wont jump you into a higher tax bracket( meaning you pay more and qualify for less deductions), think about
one person paying ...lets say 200.00 more annualy , multiplied by how many millions of people this will effect....

reply to post by RadicalRebel


I only used 100% increase to make the math easier. My intention was to show that it does not matter about raising the minimum wage because the companies will raise their prices to offset the increase in overhead.

With record profits seen by corporations and companies, do people really BUY INTO the nonsense that companies will increase prices for their products or services by paying their workers a decent wage?

Its simply a scare tactic.

A minimum wage increase will get people OFF the government handouts and save tax payers tons of money. It will put much more money into circulation rather than be stashed away off-shore by the fat-cats who dont wish to pay a fair wage to its worker bees. The economy would soar in reality.

It will only ever so slightly downgrade the heavenly life of excess experienced by the few fat-cats out there who laugh their way to the bank every week from the hard earned back-breaking labor the workers do for them.

Extremely Slight downgrade, (actually unnoticeable) for the Fat-cats living in excess. For the rest of the country and Americans, it will do VERY good for. A very noticeable improvement.

It is simply Fat-cat fear tactics in play saying products and/or service prices will need be raised to compensate decent wages.

They have played that card MANY times in the past and it was PURE BUNK. Fat-cat fear-tactics. Pure and simple.

And I certainly have no personal benefit whatsoever from a minimum wage increase as I am fortunate to make about 4 times the hourly minimum wage. My concern is to see a healthy economy return, and to see employees in America getting decent wages to allow them off the government handouts and save tax payer money.

A win-win for America that the Fat-cats dont care for very much so they resort to fear tactics to convince gullible people it is not in their best interests, when it really IS in their best interests. Shame on them. All in the name of greed.

The OP is not wrong.

I can understand why everyone that likes the idea of increasing the minimum wage likes it. I totally understand...but it always comes at a cost.

I can remember my first job while I was in high school. I made $3.35 and hour...woo-hoo! That was...erm...over 30 years ago.

What I have observed over the years is that everytime the minimum wage goes up, the cost of everything else goes up. The fallout of this is while it is great that those on the low end of the income scale get a bump, they only get to enjoy it for a very short time. Also...everyone else who was making say...$12.00 dollars an hour are NOT going to get a raise but their costs are going to go up. See the prison?

I'm not saying it is right that everytime the minimum wage goes up that the cost of everything else goes up to...it is just a reality. Corporations work on percentages of profit over cost. If it costs $10.00 to make something and you and your stockholders are working for a 25% gross profit...that product must sell for no less than $12.50. If the cost of producing goes up 10% and now cost $11.00 to make...the associated product will now sell for $13.75. See how this works?

I like to think of myself as a realist with hopeful thoughts. I "hope" that one day the world will be fair and we can all live in decent homes with food on our table...but the "realist" in me says..."ain't gonna happen"...

Originally posted by Catalyst317
reply to post by RadicalRebel

 

I only used 100% increase to make the math easier. My intention was to show that it does not matter about raising the minimum wage because the companies will raise their prices to offset the increase in overhead.

as opposed to...what?....raising their prices for more profit???.....get more people off of food stamps and welfare by having business pay them more money in wages.
or lower the minimum wage, so those workers making that much can buy a tent, and live outside in tent cities
www.shtfplan.com...

reply to post by ResistTreason


Unfortunately the large businesses WILL increase prices to offset payroll increases. Tying the minimum wage to cost of living is great idea except for one thing, it will absolutely kill small business. So unless small business (businesses that make less than 250,000/year in profit) are totally exempt, there's no way they could engage in the sure to come payroll/profit war. But then again, a good number of small businesses already pay above minimum wage.

Originally posted by bri6844
The problem out there is there are alot of unskilled workers who still need to support a family.

If it were up to corporations, they would pay employees half of what the minimum wage is now!

It cost alot more to support a family in todays world, but salary increases have not increased to support this

So because some shmuck decides to have a family before he can afford it the rest of us should have to pay a higher price at the store?

Dumb

Why not just send him 3 bucks to buy a pack of condoms so he doesn't put himself in that situation? Oh yea, if he was actually responsible he would have used them in the first place.

Sorry but they need to take care of themselves.

I know the point of the OP and agree, but explaining it to people is always tricky. So what I do is ask them to think of what it would be like if minimum wage was $100/hr.

The people that slaughter cattle have to be paid $100/hr minimum now too. Still remains a messy job that no one really wants so they will probably get paid $150/hr. Right? So he kills the cow. Now on to processing the meat. Do pay another guy to do that or the same guy that killed the cow? If someone else does the processing then the cow killer can kill another cow, but if the same guy does it you save another $100/hr unless of course the guy processing the meat realizes that skill is worth $200/hr. So right now you have one cow that you have to make at least $150-$350 dollars above the cost of the cow itself just to break even. You will of course want to make money for yourself after paying the labor, electric bills, knife sharpening, water, etc. so you will want to make at least $200 for yourself after expenses so let's just say $1000 profit on that cow. Because after all the lineman that brings electricity to your slaughterhouse is going to make $300-$400/hr and the electric bill is going to be about $40,000 a month now.

Skip ahead to walking into McDonald's to have a hamburger. Hot fast and not overly tasty but there is the Dollar Menu, right? Nope, it is now the $50 Menu. Because you had to sell your cow low enough to make a profit that you only have 2 guys doing the work of one cow per hour instead of 10 guys knocking out 10 cows per hour. And those are the cheap burgers for $50. A good burger will run you $150-$200 and a cheap steak will be about $500-$750.

Raising minimum wage has two immediate effects: 1.Cost of item increase due to raising cost of labor. 2. Unemployment increases to lower the cost of labor. The long term effect is that supply decreases and items increase in value due to lower supply and equal demand.

Would the opposite happen if minimum wage was decreased? Sorta, but slowly because the supply would eventually become greater than the demand. And eventually unemployment would increase due to businesses selling at a lower profit margin from the oversupply.

The last increase in minimum wage was July 24, 2009 to $7.25/hr as Federal Minimum. Unemployment numbers went off the charts. The U3 numbers (people that both receive unemployment pay and are still looking for work) today are still just below 8%. The number no longer receiving pay is around 16%. Companies are still waiting to see what Obamacare is going to cost them because many employers feel that it will not go through or their plans are to cut either employee numbers or hours. Throwing an $1.75 per person per hour into their budgets does not bode well. As many companies that opt for doubling their number of workers working less than 30 hours per week will be less willing to take on the added labor cost of more workers.

Simple math says people as individuals will be better off at $7/hr for 40 hours than $9/hr at 20 hours. Or we can just pass it to find out what is in it rather than listen to anyone that might see the writing on the wall and call them greedy rich evil people instead.

reply to post by Catalyst317



The problem with this country is people who have (fallacious) opinions like yours-- insisting that the guy at the bottom should "know his place" and shouldn't ever expect to make more than the unfair, tiny little slice he works (just as hard as you) to get. Because, of course, you guys in the middle, and those at the top, deserve such a bigger slice than the little guys do (usually for comparable work)-- so if any attempt is made to compensate the little guy more equally (mind you, not even equally-- just more equal, in the eyes of the minimum wage worker), you'll have to constantly jack up your prices, so you can keep getting larger slice of the pie than the little guy.

That's a paraphrase of what you just said, btw.

And it wouldn't be good enough for you, of course, that maybe if the little guy has some more cash in his pocket, that he will buy more of your goods, thus evening out the balance a little bit... no, you can't bank on that... you need to ensure that you'll always have more, right? (By continuing to raise prices on your probably already over-priced goods-- hope that works out real well for ya)

Originally posted by Hopechest

Originally posted by bri6844
The problem out there is there are alot of unskilled workers who still need to support a family.

If it were up to corporations, they would pay employees half of what the minimum wage is now!

It cost alot more to support a family in todays world, but salary increases have not increased to support this

So because some shmuck decides to have a family before he can afford it the rest of us should have to pay a higher price at the store?

Dumb

Why not just send him 3 bucks to buy a pack of condoms so he doesn't put himself in that situation? Oh yea, if he was actually responsible he would have used them in the first place.

Sorry but they need to take care of themselves.

Oh, you're totally right-- only the privileged and well-to-do should be allowed to start families.

Yes, let's use a type of "social darwinism" as a "closet" form of eugenics. Brilliant.



BTW-- the post you're replying to is only one side of the argument. The fact is that even single people are having a hard time making ends meet, and living comfortably, at minimum wage. (Especially with so many companies unwilling to give more than part time hours, so they don't have to pay for any kind of overtime or benefits-- a disturbingly common practice.)

[sarcasm] Yeah, let's keep making excuses for corporate greed, instead of returning our state of corporatism to the capitalism it was intended to be. [/sarcasm]

reply to post by iwilliam


That's not what I'm saying at all.

What I am saying is that if you want to start a family but don't have a lot of money then you need to be prepared to accept the responsibility that you are going to struggle and will have to work harder to provide.

Don't demand the government put you at a level of other people who can afford it simply because its a decision you made.

Instead of demanding that you receive more pay for a minimum wage job why don't you go out and increase your skillset so you can move into a higher paying job?

"Well I can't do that because I have a family to raise", see the faulty logic here.

Originally posted by iwilliam
reply to post by Catalyst317

 

The problem with this country is people who have (fallacious) opinions like yours-- insisting that the guy at the bottom should "know his place" and shouldn't ever expect to make more than the unfair, tiny little slice he works (just as hard as you) to get. Because, of course, you guys in the middle, and those at the top, deserve such a bigger slice than the little guys do (usually for comparable work)-- so if any attempt is made to compensate the little guy more equally (mind you, not even equally-- just more equal, in the eyes of the minimum wage worker), you'll have to constantly jack up your prices, so you can keep getting larger slice of the pie than the little guy.

That's a paraphrase of what you just said, btw.

And it wouldn't be good enough for you, of course, that maybe if the little guy has some more cash in his pocket, that he will buy more of your goods, thus evening out the balance a little bit... no, you can't bank on that... you need to ensure that you'll always have more, right? (By continuing to raise prices on your probably already over-priced goods-- hope that works out real well for ya)

Wow... this post came out of left field... I love how you make such assumptions to consider me some sort of authority figure in a corporation, when in fact, I work for a NPO and get paid half of what normal managers that do the same job as I get paid.

Get off of your self-righteous stool and read what was wrote. To paraphrase what I really said, raising minimum wage does no good because companies will raise their costs to offset the increase.

What needs to be done is to handle the rate of inflation. Only then will we be able to do something positive about our economy.

Originally posted by Hopechest
reply to post by iwilliam

 

That's not what I'm saying at all.

What I am saying is that if you want to start a family but don't have a lot of money then you need to be prepared to accept the responsibility that you are going to struggle and will have to work harder to provide.

Don't demand the government put you at a level of other people who can afford it simply because its a decision you made.

Instead of demanding that you receive more pay for a minimum wage job why don't you go out and increase your skillset so you can move into a higher paying job?

"Well I can't do that because I have a family to raise", see the faulty logic here.

Very well put. Star for you!

reply to post by Catalyst317


If America truely was a capitalist country, the laws of supply and demand actually worked you might have a valid point; but speculation and wide spread insider trading and corruption, has so distorted the American economic system that only insiders can prosper.

Rush's world is such a simplification of reality. Don't listen to him.....

In my humble opinion...

If you really and truly want to make the life of others more prosperous and fulfilling...

There is only one possible road...

Freedom.

Here comes my soapbox moment..




Many have this idea that the Gov mandating wages is the answer when time and again it has been proven to be only a temporary "pleasure" until the costs rise and wipe out the gains...fact.

The Gov...while mandating this...is also holding strict laws on free enterprise and entrepreneurship. They are holding both ends of the rope that they are using to hang people with. Raising the minimum wage does not create prosperity, it continues wage slavery.

I say...get the Gov out of the way...let people do what they can do to take care of themselves. If a person wants to get a cheap trailer and a cheap grill and sell cheap hot dogs along the side of the road...he should be able to do that. he should not have to pay for licensing and regulations just to get started. Sure, have a health inspection randomly to make sure the guy isn't poisoning people...but do not punish before he even gets started.

If someone wants to be a door to door masseuse...they should be able to without ridiculous rules and regulations.

All these regulations and codes do is stifle competition in the market place. If you are already up the ladder, what a better way to keep your "position" than to lobby for regulations that limit and/or remove competition...

The only true answer is complete economic and financial freedom for all. I am not talking about no oversight...there are some things that have to be monitored for safety...but...many things are regulated for the sake of regulation alone. There used to be a term..."Buyer beware"...if you choose to purchase poorly, that is your lack of research...it should not be up to the Gov to protect you from your own stupidity.

I believe things like prostitution and certain herbal substances should be legal. They can be taxed and it boils down to two people making a contract between them. There should be no place for the Gov in this arrangement.

I digress though. I believe in freedom and personal responsibility. I know many-many people believe the answer to our woes is in more and more Gov't control and for me and those that feel as I do...that is the exact opposite of what needs to happen to return to prosperity...

/end soapbox

Originally posted by olaru12
reply to post by Catalyst317

 

If America truely was a capitalist country, the laws of supply and demand actually worked you might have a valid point; but speculation and wide spread insider trading and corruption, has so distorted the American economic system that only insiders can prosper.

I completely agree. This is why I chose to title this thread as "Higher minimum wage = Hot Air by Politicians". It is a smoke screen that attempts to create a false sense of stability and a false sense of politicians caring for the American populace.