Minimum Wage [On Topic]

[BIGUN 1,311]

Let me start out by saying that I'm a bit on the fence about this one and have been reading a lot on both sides of the coin. Plus, having owned a couple of small businesses myself and with the S/O currently owning one have some concerns about the raise. Some have commented about the length of my posts, but given that this needs more application analysis than breadth of discussion - well, it'll be a bit long.  

IMO; what may work at Amazon; does not work in all of America. Most of America's economy runs on small businesses. As of today - the s/o has eight employees all making roughly $10.00/hr. These are not jobs that require even a HS education. WIthin the community and the area; these are good first foot on the rung starting jobs, supplemental retirement income, or those with special needs. 

On the left hand; we have the position of; no adjustment to the minimum wage since 2009. There needs to be an increase because companies are not giving raises. As those on the minimum wage scale continue to make just that - their pay doesn't keep pace with the rate of inflation (even on the low end). 

On the right hand; 107% is a bit much (even over a five-year incremental increase). The only thing the left is doing is, "vote-buying." The only thing that's going to happen is the creation of an inflationary cycle as every business seeks to pass that cost on to the consumer.

Micro-Level Overview: While some will think that the corporations would absorb that cost out of the kindness of their hearts - it's unrealistic to think that everything revolves around  an incremental budget with a need to spend down to zero each year; rather than a zero-based budget and the need to keep an 8-12% EBIT.  In the case of the small business with gross revenues in the $500,000 range that has a high cost of goods sold - the next minimum wage may seem great for east & west coast economies; but not for rural America. Eight employees receiving the first year's one dollar incremental increase will directly affect that small business' EBIT by  ~$17,000 in direct costs plus labor burden (about $4k on top) for a total of $21K in added cost the first year. Over the course of the full five years; that small business that is at full income capacity at the 500K/annum gross revenue level is going to see an added total cost of  ~$85,000 in 2025. The only way to make a profit with that kind of impact is going to be to: 1) direct pass on to the consumer (raising prices for goods & services), or 2) reduction of goods and services to the consumer, or 3) reduce labor costs, or 4) a combination of all three.

From a overall political standpoint: There are those on both sides that say; MIT's Living Wage Calculator should be used and those on both sides that say; that won't work. The CBO sounds like its saying the increase is a zero-sum proposition that would lift 1.3 million out of poverty while losing 1.3 million jobs. And those that say any increase over 10% harms minorities more so than anyone else.    

What I don't hear anyone saying is - we don't need a minimum wage increase at all. Sounds like we're mostly arguing over the amount. Meanwhile, congress has passed the measure and IMO; without sufficient investigation as to the economic impact. And, from our level - $15 is going to be a difficult exercise for this small business to absorb without looking at reducing hours, jobs or good & services while attempting to increase prices. I'm still in the reading phase, so if you have information to pass along; please include a source citation.     

 

         

Edited July 21, 2019 by BIGUN
Add a source

[Coreece 190]

29 minutes ago, BIGUN said:

minimum wage

While this isn't directly related to anything you've posted specifically, I just want to say that I was staying in a hotel the other day and overheard management talking about how their employees are leaving because they can go to such and such places and get $12/hr - and this is in Michigan, a State that has had more than it's fair share of tough times.  It was just a bit surprising considering this was also a rural area and minimum wage had already increased significantly over the past several years from 7.15 to 9.25. 

It was just good news to hear.  I love it when employees are empowered to leave cheap ass employers.

Edited July 21, 2019 by Coreece

[wmw999 2,446]

Where I live there's an effort among a lot of locally-owned businesses to have as many jobs as possible be "living wage" jobs. I.e. not minimum wage. The food co-op where I do most of my shopping, and the garbage pickup co-op that takes our trash and recycling both do this -- the food co-op is mostly there, the trash co-op is there. So are lots of other businesses, at least for their full-time jobs, because there's a realization that there are, in fact, people who rely on these jobs for their actual livelihood, and housing is expensive here.

But this is a liberal enclave, where that kind of social experimentation is generally (obviously not entirely) accepted. Obviously Walmart doesn't partake, but since we have a significant percentage of locally-owned businesses, it's still noticeable. We do have a lot of people who deliberately shop locally, which helps the local economy.

So, it's anecdotal, but it seems to be a good stretch goal, as long as one honestly works towards it. In Massachusetts, insurance is pretty much always there (we have the state model for ACA, championed by Romney when he was governor), so health care is under slightly better control than some other places.

This is no panacea; we have a fairly high opiate overdose rate in the general area (not our town necessarily, but there are others). And this particular town is a higher-end town, as in it has those locally-owned businesses, and higher cost of housing. This seems to correlate with a higher percentage of people with better jobs, who are less likely to OD. Go to the ore depressed towns (Greenfield, Athol, Orange), and it's a different story. And people do have trouble finding affordable housing in our town. 

So there aren't any easy answers, but anecdotally speaking, there are different paths besides the "keep business costs as low as humanly possible to maximize profit, and remember that employees are interchangeable company assets, not individual humans who are contributors to the company"

Wendy P.

[BIGUN 1,311]

10 minutes ago, Coreece said:

I love it when employees are empowered to leave cheap ass employers.

It's not always cheap-ass employers. It's also cheap-ass customers not wanting to pay more for quality goods & services. 

[Coreece 190]

5 minutes ago, BIGUN said:

17 minutes ago, Coreece said:

I love it when employees are empowered to leave cheap ass employers.

It's not always cheap-ass employers. It's also cheap-ass customers not wanting to pay more for quality goods & services.  

That's fine with me - at least that way the employees and customers are in control rather than the excessively greedy.

If nobody wants to pay top dollar for your shit, then it's not worth it, and you shouldn't expect to have excessive margins.

Edited July 21, 2019 by Coreece

[JoeWeber 2,720]

55 minutes ago, Coreece said:

That's fine with me - at least that way the employees and customers are in control rather than the excessively greedy.

If nobody wants to pay top dollar for your shit, then it's not worth it, and you shouldn't expect to have excessive margins.

Now tell the truth, do you shop Amazon? Have you ever bought from Walmart?

[Coreece 190]

7 hours ago, JoeWeber said:

8 hours ago, Coreece said:

That's fine with me - at least that way the employees and customers are in control rather than the excessively greedy.

If nobody wants to pay top dollar for your shit, then it's not worth it, and you shouldn't expect to have excessive margins.

Now tell the truth, do you shop Amazon? Have you ever bought from Walmart?

Ya, and I'll tell you why.  I live in a rural summer tourist town, so 10 out of 12 months we're keeping the local businesses alive.  It's still a bit  more expensive than most places, but it's more difficult/expensive to transport shit up here anyway so it's understandable - no biggie.  But come summertime, $3/pints of berries becomes $9/pint, $4/lb hamburger becomes $6-8/lb, 4 for $1 corn becomes 3 for $4 just because a bunch of rich kids decide to piss away their family inheritance every fucking year up here.  I can't really blame the businesses for taking advantage of that, but at least give the locals (many of which are elderly/below poverty) a break for keeping your asses afloat in the off season - but like most people they just don't give a shit about anybody else but themselves, so fuck ya I go 20 minutes further to Walmart. 

And Walmart really isn't that cheap when you think about it.  They have cheaper canned food and a cheap line of kitchen utensils and home decor - and that's about it.  Their clothes and  higher end quality shit is just about the same price as anywhere else, if not more.  And their pink slime fresh meat bullshit is just about the most expensive you can find - so It's really no different than a dollar store bringing you in for cheaper hygiene products and then up-selling you with overpriced candy, soda and unnecessary accessories.  If you don't like it then go somewhere else, which is what I do.  I'll go to 5 different places for the best deals, not because I don't have the money, but out of principle.  It just pisses me off when people like my sister spend 8 dollars on 4 sticks of fucking organic butter without looking at the price - that's why it's 8 fucking dollars.

I also shop amazon because that's the only fucking place I can get the shit I need to run my own business, so what's your point Joe?  Amazon really isn't that much cheaper than most places - they're probably a tad more expensive but can deliver it to you within a day or two for practically nothing - and they've busted their asses to make that a possibility, so they deserve every fucking billion they've earned, and don't forget all the "mom and pop shops" doing business through them as well.

This is all really beside the point tho.  I no longer have a problem with the minimum wage situation here in Michigan.  I posted here several years ago about how unemployment reform due to the automotive crises indirectly gave businesses a financial incentive to give minimum wage employees the least amount of hours possible with sporadic scheduling to make it more difficult to work 2nd jobs to make up the difference.  That is no longer an issue given the minimum wage increase to 9.25, which IMO is fair, tho I think 10/hr is doable.  If you can't afford to pay your employees 10/hr then you don't deserve to be in business.  However, at this point, anything beyond 11/hr is excessive  IMO, and I would actively fight against it.

Edit - and to my original point, if those at Walmart up here are unhappy with 9.25/hr, there is a business directly behind them willing to pay $12/hr for the same qualifications but for a different job.  I'd also suspect that the hotel I was talking about may have to up their pay rates as well to keep up with the competition.  Like I said, really good news!

Edited July 22, 2019 by Coreece

[billvon 2,991]

8 hours ago, BIGUN said:

It's not always cheap-ass employers. It's also cheap-ass customers not wanting to pay more for quality goods & services. 

That's the bottom line - and why, without a minimum wage, employers will nearly always pay less than a living wage.  Because if they don't, then the customers will go to Wal-Mart, who will always pay the minimum wages they are legally obligated to pay.  (We have an example of this just above.)

That's the problem.  And minimum wage works, sorta, to solve that problem; it mandates a 'fairer' (i.e. closer to livable) wage.  And since it's a law, then Wal-Mart and Target and Costco can't get around it by cutting wages (and thus becoming more competitive.)  That way the store that lowballs its employees is not rewarded by the marketplace.

But at best that's a stopgap solution.  Because as time goes on, and the world globalizes, people are moving from Walmart to Amazon to Alibaba - and there's no way any American, ever, is going to compete with Chinese wages.

So a minimum wage hike is necessary in the short term, if only to keep much of America out of bankruptcy.  But it's solving the wrong problem.  There is a much larger problem of the growing divide between the poor and the rich.  We now have poor in this country who will never get out of debt, and we have rich who need never work again because their investments make them $100K (or much more) a year.  Year after year, that gap will grow as the rich reinvest that money and continue to accrue capital, while the poor simply get more in debt.  (And indeed, much of the reason the rich are getting richer is BECAUSE the poor are going deeper into debt.  Witness the subprime mortgage bubble.)

And that problem, in turn, is based on the concept of an ever-growing economy, one that is mathematically unsustainable.

So something very fundamental has to change, and paying poor people a little more is not that change.  One thing that can force the change is a collapse of our debt-based economy - but that's a very painful way to change.  Another way is something like a move to a central bank for debt (i.e. money) creation but that is sure to be opposed by whatever party doesn't propose it.

[Coreece 190]

4 minutes ago, billvon said:

And that problem, in turn, is based on the concept of an ever-growing economy, one that is mathematically unsustainable.

It's like that episode of Seinfeld when they tried to see how far they could get on an empty gas tank, hahaha.

[JoeWeber 2,720]

1 hour ago, Coreece said:

Ya, and I'll tell you why.  I live in a rural summer tourist town, so 10 out of 12 months we're keeping the local businesses alive.  It's still a bit  more expensive than most places, but it's more difficult/expensive to transport shit up here anyway so it's understandable - no biggie.  But come summertime, $3/pints of berries becomes $9/pint, $4/lb hamburger becomes $6-8/lb, 4 for $1 corn becomes 3 for $4 just because a bunch of rich kids decide to piss away their family inheritance every fucking year up here.  I can't really blame the businesses for taking advantage of that, but at least give the locals (many of which are elderly/below poverty) a break for keeping your asses afloat in the off season - but like most people they just don't give a shit about anybody else but themselves, so fuck ya I go 20 minutes further to Walmart. 

And Walmart really isn't that cheap when you think about it.  They have cheaper canned food and a cheap line of kitchen utensils and home decor - and that's about it.  Their clothes and  higher end quality shit is just about the same price as anywhere else, if not more.  And their pink slime fresh meat bullshit is just about the most expensive you can find - so It's really no different than a dollar store bringing you in for cheaper hygiene products and then up-selling you with overpriced candy, soda and unnecessary accessories.  If you don't like it then go somewhere else, which is what I do.  I'll go to 5 different places for the best deals, not because I don't have the money, but out of principle.  It just pisses me off when people like my sister spend 8 dollars on 4 sticks of fucking organic butter without looking at the price - that's why it's 8 fucking dollars.

I also shop amazon because that's the only fucking place I can get the shit I need to run my own business, so what's your point Joe?  Amazon really isn't that much cheaper than most places - they're probably a tad more expensive but can deliver it to you within a day or two for practically nothing - and they've busted their asses to make that a possibility, so they deserve every fucking billion they've earned, and don't forget all the "mom and pop shops" doing business through them as well.

This is all really beside the point tho.  I no longer have a problem with the minimum wage situation here in Michigan.  I posted here several years ago about how unemployment reform due to the automotive crises indirectly gave businesses a financial incentive to give minimum wage employees the least amount of hours possible with sporadic scheduling to make it more difficult to work 2nd jobs to make up the difference.  That is no longer an issue given the minimum wage increase to 9.25, which IMO is fair, tho I think 10/hr is doable.  If you can't afford to pay your employees 10/hr then you don't deserve to be in business.  However, at this point, anything beyond 11/hr is excessive  IMO, and I would actively fight against it.

Edit - and to my original point, if those at Walmart up here are unhappy with 9.25/hr, there is a business directly behind them willing to pay $12/hr for the same qualifications but for a different job.  I'd also suspect that the hotel I was talking about may have to up their pay rates as well to keep up with the competition.  Like I said, really good news!

The point is that it's not as sound bite simple as your first explanation implies and your second explanation disclaims. Clearly you have some choices. For example, you don't need to live where your circumstance and philosophy don't pair. But you do and thus need to frequent vendors with predatory pay practices to make ends meet. Unless, of course, it's not that close to the bone for you and it's actually more of a desire to keep as much of your money as possible subject to certain convenient conclusions.

For the record, my businesses have never paid minimum wage to anyone for any job. Our walk through the door minimum pay is 14 bucks now. I expect that will go up. Around here that pays rent, utilities, car insurance, food etc. and leaves some money for clothes, meals out and stuff. Not high living but it seems to me that your minimum pay rate should be closely associated with an employees minimum expenses. It's not saving the world or solving the real macro issues but it sort of helps while those are being resolved.

 

 

[Coreece 190]

2 hours ago, JoeWeber said:

Clearly you have some choices. For example, you don't need to live where your circumstance and philosophy don't pair. But you do and thus need to frequent vendors with predatory pay practices to make ends meet. Unless, of course, it's not that close to the bone for you and it's actually more of a desire to keep as much of your money as possible subject to certain convenient conclusions. 

Nah, I simply live where I live and they're simply filling a void in the rural market and creating even more business opportunities. 

And btw, "predatory pay practices?"  Really?   You might as well just call it human trafficking and get all churchy about my shopping habits.

Edited July 22, 2019 by Coreece

[JoeWeber 2,720]

16 minutes ago, Coreece said:

Nah, I simply live where I live and they're simply filling a void in the rural market and creating even more business opportunities. 

And btw, "predatory pay practices?"  Really?   You might as well just call it human trafficking and get all churchy about my shopping habits.

I'll leave it to Christians to get all "Churchy", not my thing. But, yes, predatory pay practices is exactly what I meant. Walmart's employee's are subsidized by your tax dollars. Do some research.

[Coreece 190]

15 minutes ago, JoeWeber said:

I'll leave it to Christians to get all "Churchy", not my thing.

So then what's your point other than to get all churchy about where others shop?

Edited July 22, 2019 by Coreece

[JoeWeber 2,720]

27 minutes ago, Coreece said:

So then what's your point other than to get all churchy about where others shop?

This: "That's fine with me - at least that way the employees and customers are in control rather than the excessively greedy."

You are inconsistent. Walk the walk. I support me getting rich while also supporting fair pay. You say you need to shop where my tax dollars subsidize workers because you have thin business margins and unfortunately live where the fortunates live. 

[Coreece 190]

6 hours ago, JoeWeber said:

7 hours ago, Coreece said:

So then what's your point other than to get all churchy about where others shop?

This: "That's fine with me - at least that way the employees and customers are in control rather than the excessively greedy."

You are inconsistent. Walk the walk. I support me getting rich while also supporting fair pay.

Good, then you should be happy to know that Walmart starts it's employees at $11/hr with full time workers making an average of $14+/hr - That's just about double the federal minimum and more than what most people make doing other jobs up here with similar qualifications.

 

7 hours ago, JoeWeber said:

You say you need to shop where my tax dollars subsidize workers because you have thin business margins

That is most certainly not the reason I go grocery shopping at Walmart several times a year.  I told you why, but like many people, you just make up your own bullshit and believe whatever the hell you want just so you can get all uppity and judgemental with people for no apparent reason.

And as for the subsidies, how is that really different than where you prefer to shop, where employees are likely to make less than they do at Walmart?

[BIGUN 1,311]

10 hours ago, billvon said:

And since it's a law, then Wal-Mart and Target and Costco can't get around it by cutting wages (and thus becoming more competitive.)  That way the store that lowballs its employees is not rewarded by the marketplace.

But at best that's a stopgap solution.  Because as time goes on, and the world globalizes, people are moving from Walmart to Amazon to Alibaba - and there's no way any American, ever, is going to compete with Chinese wages.

Precisely along the lines of which I speak. I get that people are angry about those big three making billions while their employees can't afford to buy a bicycle. However, most small businesses don't work on that model. I think the main difference is that most small businesses have to live & work in their communities. They see how their wages affect people. The community verbalizes their work and pay scales thru social media.  Employees can be a great sales tool for any organization within the community. 

I/We are not opposed to a minimum wage increase, but 107% is going to be a big pill to swallow for most small businesses and there should be a concern about job loss and the effect on 1.3 million lives and their families. Personally, shame on everyone that, 1) there needs to be a federally mandated minimum, and 2) that we knee-jerk ourselves into this situation every ten years of having to pass a blanket X dollars/hour every so often. 

I think if we slow down in this hostile political environment and move with some purpose - we might find that a one-time increase tied to some index (i.e., CPI+ x% for minimum wage increases each year) would lead to a more long-term solution.        

[airdvr 210]

My take on minimum wage is fairly simple.  I believe it needs to be increased however, I've never met a business owner with employees who doesn't already think he is paying them too much.  The cost will just be passed along to the consumer and in 5 years or so inflation will have eaten up the gains.  Also, many jobs will simply be eliminated.  We've already become a nation of part time employees.  I place the blame for this squarely on requiring employers to provide insurance coverage for full time employees.

On a related note: the House just voted on a bill that includes eliminating the sub-minimum wage for persons with disabilities. 

https://www.disabilityscoop.com/2019/07/19/house-votes-to-end-subminimum-wage/26924/?fbclid=IwAR3qQuvRUgwWlSoaEYHeiYw48W7i1H9eidDGAL1jjFtav7XwWJotKbTupQA

We believe this is a bad idea.  The majority of people who fall into the category are not capable of working in a traditional job setting.  They can, with supervision work in some areas however, there is no employer who would be willing to pay many of these individuals full pay for working at 10-25% of a normal pace.  The end result will be less opportunity for these folks to contribute.

[JoeWeber 2,720]

9 minutes ago, airdvr said:

We've already become a nation of part time employees.  I place the blame for this squarely on requiring employers to provide insurance coverage for full time employees.

Not really but there is an excellent point in there. All of life's basic necessities can not be met with a minimum wage that small businesses can afford. The thing is that whether an employer provides it or not people need health care. That's why I'm a fan of some sort of opt in government plan. If you want more than that or your union negotiated a far better plan fantastic, but there should be something. The net effect is that an affordable minimum wage becomes more doable for the worker. Same with free community college or trade school, cheap government sponsored no fault auto insurance or even subsidized bus travel for that matter. Things of that nature. It's not socialism to pull down a little more money from hundred billionaires or even hundred millionaires to pay for these things.

[Rick 67]

We have 30 employees here at our company. I think we have only a handful that are under $15 per hour right now but we have a lot of skilled craftsmen that have spent there working life gaining the skills they need to work in our industry or the new guy we hired last year that just graduated form welding school.

The guy that sweeps the floor is at $12 I believe. He also has no desire to learn any more skills or advance to any other position in the company. If he has no interest in taking advantage of better opportunities inside the company why should we be forced to pay him $15?  

I am curious where the $15 per hour came from in the first place. It's a nice round number but were is the research that shows that is where min wage should be?

[BIGUN 1,311]

15 minutes ago, Rick said:

where the $15 per hour came from

California Passed $15 An Hour Two Years Ago. How's it working? https://www.forbes.com/sites/chuckdevore/2018/08/06/california-passed-15-an-hour-two-years-ago-hows-it-working/#24d183324fa4

Edited July 22, 2019 by BIGUN

[billvon 2,991]

3 hours ago, BIGUN said:

Precisely along the lines of which I speak. I get that people are angry about those big three making billions while their employees can't afford to buy a bicycle. However, most small businesses don't work on that model. I think the main difference is that most small businesses have to live & work in their communities. They see how their wages affect people. The community verbalizes their work and pay scales thru social media.  Employees can be a great sales tool for any organization within the community. 

I/We are not opposed to a minimum wage increase, but 107% is going to be a big pill to swallow for most small businesses and there should be a concern about job loss and the effect on 1.3 million lives and their families. Personally, shame on everyone that, 1) there needs to be a federally mandated minimum, and 2) that we knee-jerk ourselves into this situation every ten years of having to pass a blanket X dollars/hour every so often. 

I think if we slow down in this hostile political environment and move with some purpose - we might find that a one-time increase tied to some index (i.e., CPI+ x% for minimum wage increases each year) would lead to a more long-term solution.        

OK so how about this:

The minimum wage was set in 2009 at $7.25.  Increase it to $9 to match inflation, then increase it 10% a year until it reaches $15 per hour equivalent, then increase at the rate of inflation.  That way no "shocks" to businesses, workers get a minimum wage that they are (apparently) happy with, and knee jerks are avoided.

It would be nice if this were done locally, but even today, ~20 states have a minimum wage equal to (or even less than) the federal minimum, so the federal standard carries a lot of weight.

(And as I mentioned before this doesn't solve the underlying problem, but it will help - and the underlying problem is a topic for another thread.)

[billvon 2,991]

26 minutes ago, Rick said:

The guy that sweeps the floor is at $12 I believe. He also has no desire to learn any more skills or advance to any other position in the company. If he has no interest in taking advantage of better opportunities inside the company why should we be forced to pay him $15?  

So he doesn't need additional assistance in the form of subsidized food, power or rent.  You pay either way.

[JoeWeber 2,720]

1 minute ago, billvon said:

So he doesn't need additional assistance in the form of subsidized food, power or rent.  You pay either way.

That's the thing. It's just head in the sand thinking to believe the costs aren't being borne by each of us like it or not.  

The problem is that the word socialism causes right wing heads to burst so we pay the bills very inefficiently. Instead of calling it socialism why not think societal living instead? Simply recognize that as long as you participate in societal living certain costs must be borne. If that is just not workable for you then find a way to opt out.

[Rick 67]

59 minutes ago, billvon said:

You pay either way

That is right. I know the minimum wage is not sufficient for pretty much anyone that is trying to support themselves. But I think the $15 per hour is a big leap from there.

I see a lot of discussion about "entry level jobs" or "jobs that are supposed to be for working teens". Not everyone has the intelligence or the ability to go to school to improve their lot and may end up stuck in those jobs for lack of better opportunities. I don't think they should be left to starve. 

[rifleman 70]

The main problem as I see it, is that corporations like Amazon and Walmart aren't paying a living wage to their employees (when they could easily do so) and are using the taxpayer's money to subsidise their profits. When employees claim food stamps and other benefits, it's not the employee that's making anything from it. If they were paid a living wage then they wouldn't need taxpayer support and might even be able to save a little. The only people who benefit from the taxpayers' support of employees are the corporations, their CEO's and their shareholders.

In the UK, we're working towards a living wage but the government also has two levels of minimum wage. £7.25 ph between the ages of 21 and 25, and £8.25 ph over 25. Young people under the age of 21 have no protection and are basically at the mercy of their employers.

There's also a group called the National Living Wage Foundation which offers accreditation to businesses who are prepared to meet their criteria and voluntarily pay their calculated living wage (currently £9 ph outside London and £10.55 in London). At present, they have 5,500+ employers signed up. 

If someone is having to work three jobs to make enough to live then something is wrong with the system.