OT: Minimum Wage Increase

[Thomas Rogers]

It is about time and I am glad it's about to get increased, but remember, it will impact some businesses and price increases may be passed on to you and I....



...



Oh, and I miss Rochester's "Country Sweet" chicken and ribs (click to watch the vid)...

 

[shawn stonbraker 2]

Yep. We'll be paying more for that Big Mac and Fries!!!

 

[Johnny O]

I've had to raise my prices. My people get paid a percentage of the jobs but the increased minimum wage affects our travel cost. PA raised it to $6.25 now and it will go to $7.15 on July 1. People won't want to pay more and I'll have less work.

 

[Judd Quarles]

I agree that people need a better wage, but with the shape I am in, I will probably not be able to hire as many part time people when I have to pay more to the ones I already have. Which means that we may not get work done as quickly, but it's just one of those things you must adapt to.



I have a small publishing business and have tried to keep my prices reasonable even with rising gasoline costs, utility costs, postage, higher insurance, higher local property taxes, and just about everything else you can think of has gone up in the past few years. And, of course, paying more in wages (if I was to keep the same number of employees) means paying more in payroll taxes to the IRS and the state.



Anytime prices increase, our customers complain but they have to realize that we can't afford to quit making a profit just so they will be happy.

 

[yankeegator]

Raising of the minimum wage is political grandstanding at its finest. Since there are a MINIMAL number of workers actually making the "minimum," all that raising the minimum wage does is make more POOR people. It merely equalizes the salaries of the lowest-paid workers; hence, it makes the "lower-middle class" the NEW level of poverty, while simultaneously causing an across-the-board increase in the base cost of living.

 

[Jeff C]

We actually discussed this in Macro yesterday. Round the minimum to $5 and the new minimum to $7. Before, when you could have had 7 people working, you can now only have 5.



Approximately 28% of the labor force making minimum wage are at risk of being laid off. This will only hurt the people it's intended to help.

 

[Ryan Schaecher]

Minimum wage is an absolute joke, for two main reasons (trust me, I've got a minor in economics and a second nearly complete in Business economics):



1) The minimum wage as already stated is a political game, partisian at that. There is no need to even have a minimum wage. Hong Kong does QUITE well without one.



2) The free market (which we are SUPPOSED to live in) should decide what a fair wage for the job is. You don't see a MINIMUM DOCTOR'S WAGE or a MINIMUM ENGINEER'S WAGE... why a MINIMUM GENERAL WAGE. If the job market will not support a $5 wage, the owner of a business will not be able to find workers for that (if the owner obeys the law and finds LEGAL employees).



Economics and "personal feelings" doen't mix. Economics is unemotional.



Case-in-point:

-The company I work for a has a position open. The salary starts at $55,000 based on experience and qualifications. No one wants it. Why? Gobs of travel and dealing with irate customers. I thought about it, but it's only a $6,000 increase from my current salary and I don't have to travel and I have a wife, daughter and child on the way. The only way to get someone to take that job is to raise the salary until someone says "SOLD!".



-Look at New Orleans a year ago. After businesses started to re-open, KFC and McDonalds could not find enough people to work there at even $6/hr. They began to pay in excess of $10/hr for a job that 6 months prior they were paying $5.15/hr. The market dictated this.



The MINIMUM WAGE is often times cited as not being high enough to live on. DUH! It was never supposed to be the "living wage". The MINIMUM WAGE is for the skillless, uneducated, and new workers to the economy. Even then, most of those people make above the minimum wage.



The raising of minimum wage does three VERY BAD things:

1) Removes the power of the market to decide fair market prices for labor, a commodity that from an economics standpoint is no different from steel or cardboard or and other "comsumable".



2) A higher "minimum wage" is just like a higher sales tax, it is a means of artificial inflation that causes higher prices without a corresponding increase in productivity. This is VERY VERY BAD!



3) A higher "minimum wage" will need to be adjusted constantly as the artificial inflationary pressures that the wage creates and causes higher prices means that in a year, the "minimum wage" has the same buying power as it does BEFORE THE INCREASE. The difference now is that less than 10% of the work force has reduced the buying power of the other 80% (there is approximately 10% of the work force that will get a corresponding raise if the minimum wage is increased.... see the Union arguements posted over the last (2) months for that subject).



4) A higher minimum wage means that small businesses will not be able to retain the same number of people or hire any additional people in order to keep costs constant. This means that there will be an increase in the unemployment situation (which the Democrats will blame the administartion for, except for the reality is that they caused it....).



The economy is currently one of the best and most robust in recent memory. How do I know this? Look at the numbers. Unemplyment lower than nearly any time in history. GDP growth in high single and low double digits is not uncommon. Personal spending is up. The % of the National Debt to GDP is lower now than nearly any time in the last 12 years. Even with high fuel and materials prices, inflation is low. Interest rates are at a modest level. Taxes are relatively low but Treasury Receipts are up. The State of Arkansas has a $175,000,000 (that's MILLION) SURPLUS (an example.... by the way, until this last election, we've had a Republican as Govenor for at least the last 8 years, in not since Mr. Clinton left office.... go figure). New home starts have been at all time highs in last three years. Home sal

 

[Thomas Rogers]

All good points, R Shek. I don't think there would be any real harm in this country if the minimum wage was repealled. But, as long as we are going to have it, it should be kept current...not changing it for a decade seems a little off.



TJR

 

[Dre L]

It merely equalizes the salaries of the lowest-paid workers; hence, it makes the "lower-middle class" the NEW level of poverty, while simultaneously causing an across-the-board increase in the base cost of living.

I was going to say, this sucks for people who make the new min wage, they just got a "salary decrease". All those years struggling for raises and now they're baselined with the new guy, and won't get a cost of living increase for it.



It should come with a requirement that everyone get a $2.00/hr increase, but then companies would just take that out of whatever "raise" you were getting this year, or reduce their subsidy for your benefits.



Same goes for the 5 employees at the cost of 7, business will take from one area to pay for the other. They probably would have laid off 2 employees anyway citing increased costs, even without the min wage increase.

 

[Thomas Rogers]

Nobleman says:

It should come with a requirement that everyone get a $2.00/hr increase

To be totally equitable instead of a $2/hr increase wouldn't you need instead an approximate 40% increase across the board?



That way the $2/hour increase for those making minimum wage is apples-to-apples with the $40K increase for someone making $100K/year.



I would love a 40% increase. Of course, I know I wouldn't want to live on minimum wage to get it...but that's why I made the choices I made in life so that I wouldn't have to.



TJR

 

[Johnny O]

A big reason why the Dems like to raise the min wage is not so much that min wage workers will vote for them as many union contracts are tied to it and the union wage then increases automatically. And union people do vote regularly and often.

My employees get a percentage of the jobs, which works out to $10 to $11.50 an hour but like I said earlier, the higher min wage affects our travel cost. Therefore I have to charge more, which can hurt you when you're in a line of work like mine where I'm a legit, insured, tax-paying business but most people work under-the-table. And most customers don't care, they just want cheap, a level of hypocrisy that I find astounding (but not surprising) since the Democrats outnumber the Republicans about 3 to 1 here.

Further, an increase in wages leads to an increase in the costs of other things since most of the taxes and insurances me and any businesses pay are based on a percentage of payroll. So assuming I was paying min wage (I don't), when it goes from $5.15 to $6.25 my costs don't rise by $1.10 x hours worked. You have to add in increased FICA payroll tax, state unemployment tax, Federal unemployment tax, and workmens' comp insurance (which for me is A LOT of money despite a good record). There is not a strong entrepreural culture here and most people have no concept of the cost of running a business, they think what I charge is an outrage and it all goes into my pocket.



--JohnnyO, B.A. Economics, M.B.A., and former college economics instructor.

 

[WXMotorSports DecalsPartsAccs]

WA State Min Wage is 7.93. All the fast food places are paying their employees 10-12.00 per hour. You can stand on the corner holding a sign for 12.00 an hour.



I don't have any employees right now but I do contract work out when I need it.

 

[Johnny O]

One reason I love the Internet. Easy to find out what's going on in other places.

WA State Min Wage is 7.93. All the fast food places are paying their employees 10-12.00 per hour. You can stand on the corner holding a sign for 12.00 an hour.

What I posted earlier this morning on another forum:



Welfare effectively subsidizes unemployment (besides the obvious) by keeping people in places where there is little employment while other parts of the country have a shortage of workers.

Easy to say to someone "go get a job" but in some places (like here) there aren't a lot of jobs, and especially for unskilled labor. Many of the unskilled manufacturing jobs that paid a decent buck have been run out of the country by taxes, labor laws, and environmental policy.

I own a cleaning company. I ran the first want ad for my new office in a neighboring county last week. After a day and a half the phone melted and I had to call the newspaper to pull it. ("Make it stop, make it stop! I can't take anymore!") Meantime the population is very excited: "WOO-HOO, SOMEBODY'S HIRING!!!"

Instead of being happy at having so many applicants (I need ONE part-time person), I actually got depressed over what this means for the local economy.

 

[WXMotorSports DecalsPartsAccs]

JQ - I'll be facing that issue next month when I move into my new location which has a retail front. I want to be open seven days a week but with some family commitments I can't work two weekends a month. I'll need a part-time person that has to have skills, Graphic Design, Web Design and knows how to make signs. And, can communicate one on one with a customer and close a sale. I don't think I can find that at min wage or less than 12.00 an hour. I'd like to have an intern to cover those hours but I think that would be hard to find. I know another sign shop that was looking for a similar employee and they said it took them 3 months to fill the position.

 

[Johnny O]

Might be easier to find someone full-time and rotate weekends if you can afford it. I don't know your business, I'm just sayin'.... I like being able to delegate because it gives me time to be here.:lol:

 

[Dale Carlson]

For $7.93 an Hour, It’s Worth a Trip Across a State Line



and should be sub-titled: "A Real-life Laboratory for the Debate"



From the NYTimes

 

[Tom Schindler]

Therefore I have to charge more, which can hurt you when you're in a line of work like mine where I'm a legit, insured, tax-paying business but most people work under-the-table.

Is that any different then trying to compete with a company that builds something in another country with slave labor?



Why not fight to pass laws that will level the playing field? Solve the problem at it root and not use band-aids to keep it under control.





Tom

 

[Thomas Rogers]

Caymen asks:

Is that any different then trying to compete with a company that builds something in another country with slave labor?

It's very different.



In the case of those employers that pay people under the table, they are breaking the law.



In the case of a company that outsources and offshores and is able to pay lower wages because of the significantly lower cost of living in a foreign country, they are breaking no laws.



That's the difference.



And since you are analogy man today, what exactly is the difference between a large company moving manufacturing to China vs that same large company moving it from Californian to Tennessee? Both are doing the same thing, moving to where the labor and therefore their costs are lower, and both hurt the areas and the people they move from.



Oh, I know the difference, in one case you hurt Americans and help Chinese, and the other your hurt Americans to help Americans. If that's the inevitable argument then I still don't see it because even in the case of "helping the Chinese", such a move is done to help the company, and helping the company is good overall for other employees, and Americans that buy the lower cost products. It's better than artificial protectionsm that may allow the company to limb along for another decade, but ultimately evolution takes hold and it WILL DIE. Survival should be for the fittest. Those that can adapt and grow survive, those that can't are gone.



That's the way I see it. Unless of course you just want to keep the Chinese down because you think its the only way you can keep America fat. That's pretty much the subtle admission of almost every protectionist I have ever spoken too.



TJR

 

[Tom Schindler]

And since you are analogy man today, what exactly is the difference between a large company moving manufacturing to China vs that same large company moving it from Californian to Tennessee?

For a world economy to work, the playing field must be the same.

In the case of those employers that pay people under the table, they are breaking the law.

You have said before that hiring illegal aliens is good for Amewrica, now they are breaking the law? Those that are here illegally are being paid under the table. You said, in the past, that it is good for the economy.



What EXACTLY are you saying?





Tom

 

[Ryan Schaecher]

Why not fight to pass laws that will level the playing field?

Like, say National-Right-To-Work and close the borders?



Why not fight to have the laws that make it an uneven playing field repealed? Namely get the minimum wage repealed, get the governments' hands off income, get rid of the Social Insecurity Program, Medicare and all the other similar taxes we pay.



Until the price of labor is under control by market standards, there is nothing that can be done to change weither or not a product made in Korea will be able to compete with a product made in the US. Koreans don't pay nearly as much in taxes or health care that we do. They can charge less. To level the playing field, the Gooberment would have to put tarriffs and import taxes in place. This would be a bigger bomb dropped on the economy than a raise in minimum wage would be.



You want to level the playing field? Your Union contract is more than likely tied to the minimum wage. An increase in one would be an increase in the other and a decrease in our ability to compete on a manufacturing level in the world.



Sucks, huh?