Minimum wage hikes and Statutory holiday rule changes killing small business

[YeOldeStonecat]

The minimum wage rising doesn't really affect our type of business, most IT shops don't hire staff at minimum wage, we hired skilled (or semi skilled) techs...typically a lot higher than minimum wage rates.

What we will see is lots of small business that rely on minimum wage unskilled labor, and chain businesses like McDonalds or big brick 'n mortar stores...they'll get hit harder.
*Entry level job...minimum wage goes up.
*The next position above that..say a seasoned staff, one level up in seniority...they were making a dollar or maybe two dollars more an hour. So now the minimum wage hike brings the new hires up above them...so their position needs to get raised too
*And the next level up..say a supervisor position...they were making maybe 3 or 4 more an hour...but now that the seasoned staff job is higher then them..they have to get bumped up too.
*And then the management...same thing.

It's a chain reaction that ripples through the entire range of employees...resulting in a HUGE sum increase of costs for the small business.

What happened to "earning" your pay raise? Merit raises? Work hard, earn more? Sadly those values are getting flushed down the toilet with these welfare being passed to businesses wage increases. Jobs as McDonalds and car washes and cashier jobs weren't supposed to be full time careers. They were summer jobs and weekend jobs for kids, and semi retired folk...those that don't need to make a living but just earn a little. Those that want a good paying career....we used to go to school, study, learn, get certified or training or schooling..and go out and get those higher paying jobs by EARNING them. And pay raises...I always went out of my way to work hard and earn merit raises back when I was little and doing even basic jobs.

...now businesses are mandated to support the lazy at high costs. Good wholesome old fashioned values are slowly being flushed down the toilet.

Luckily these new tax breaks will ease some of this. It's had a huge impact...we see tons of examples of it in the news, even enterprise size companies...nice cash bonuses and wage increases and hiring increases.

 

[NETWizz]

I guess I'm for the wage hike, people need to live a better life. If they have a better life, they will be happier employees, be more loyal, hope and work harder for promotion and stay longer. Not sure how the rules are in the US compared to CA but money makes people happy.

This is where we differ. I am NOT for a minimum wage hike because minimum wage was never meant to be a living wage nor permanent jobs. What it is intended for is young folks to get basic work experience doing simple tasks like taking orders at McDonalds or bagging groceries. More money doesn't make folks happy, but it will sure piss them off if they are not getting what they feel is fair, and I fully understand that. The worse possible thing to do is to give one employee a raise and NOT another because when that gets around there will be very strong feelings of animosity.

Loyalty cannot generally be bought. To me loyalty is earned and to get it someone has to be honest! They have to stand-by and celebrate the good times as a group as well as stand-by and sacrifice pulling their fair-share when times get tough. Loyalty is someone who has your back when you are not around. It is someone who keeps promises and even accepts blame to their own detriment... Someone who fesses up to their mistakes instead of trying to hide the problems. As a boss the best thing anyone can do is facilitate their employees doing their job and NEVER throw them under the bus for your mistakes. When there is a problem focus on solving it instead of playing the blame game. When they see you are someone reliable they can count on even when not in the room with them, they will be loyal.

Respect on the other-hand is two-fold. 1) is you MUST respect me because I am your boss is the type that everyone knows about, but the deeper respect is 2) that I HAVE done and CAN do your job. Nobody will fully respect a boss who doesn't even know what they do or has never done it. As for #1, you don't need to rub-it in; they know who their boss is. to re-enforce it, simply hire them at the interview and act professionally. YOU do things through actions like being the one who invites a group of your employees to a weekly meeting and YOU set the agenda. That said, YOU allow everyone input and show mutual respect. Basically, you reeinforce #1 by running the show not by demanding respect.

I think any professional or para-professional job (i.e. anything that requires a degree or arcane knowledge/experience/trade-school) certainly deserves higher than minimum wage pay. I have personally hired computer technicians without network experience to assist in a network roll-out and paid only $22/hour because a certain amount of experience is necessary for them to be safe around the equipment, to have them run pings, know the terminology etc. That said, I am not having that level of technician configure the equipment nor draw-up the network architecture and diagrams.

 

[Krynn72]

So, does anybody have any non-anecdotal evidence that most minimum wage jobs are "supposed to be for kids" and etc? Do you guys have any evidence to suggest there are actually enough "real jobs" for adults? I suspect there's a lot more minimum wage jobs than there are teenagers to do them, which means some of them need to be done by people trying to make a living rather than trying to make beer money.

Cost of living has increased, but minimum wage has not. Even jobs a couple dollars/hr above minimum wage are still not a real living wage in this country.

But minimum wage hikes won't solve the problem, because the problem is that corporate execs and shareholders wont allow employee wages to eat into their own.

 

[Sky-Knight]

There are currently enough "real jobs" for adults, but you have to leave the city. If you're unskilled, go work for a mine, or a logging company. You'll make a good living. But again, you have to get out of the city! This however isn't going to stick as the force of automation is going to be removing jobs too quickly within two decades.

And Stonecat, you're actually wrong on that point.

Min wage increases the wages of anyone below the new watermark to the watermark. No one above that watermark gets a raise. This effect is referred to as wage compression, and it is a HUGE negative blow to morale in a company. But that's what happens, because it's cheaper to replace the grumpy people than it is to give them all raises.

Krynn's last sentence... yep... that's it right there.

Privately held companies will retool, and do what Stonecat suggests over time. But publicly held corporations are legally required to grow profit year over year. Places like Walmart don't care if they are profitable, they care they are more profitable than the last quarter. That's the entire problem with our flavor of capitalism, that's the reason why all products are cheap and disposable, that's why people are suffering. This one issue more so than anything else explains why the western world is in the condition its in, and why capitalism sucks.

The solution involves taking away corporate personhood.
Halting the practice of corporations owning other corporations.
And exercising anti-trust authority to break up these huge conglomerates that own everything.

That step three isn't likely to happen anytime soon in the US because those huge conglomerates own both dominant political parties, and they're very good at keeping the rest of us focused on fake garbage instead of reality. Example? This whole Trump = Hitler = Russian plant thing we've got going on. And the other side of the political spectrum wants a failing private market so they can government control everything and fail at Communism again.

 

[NETWizz]

There are currently enough "real jobs" for adults, but you have to leave the city. If you're unskilled, go work for a mine, or a logging company. You'll make a good living. But again, you have to get out of the city! This however isn't going to stick as the force of automation is going to be removing jobs too quickly within two decades.

And Stonecat, you're actually wrong on that point.

Min wage increases the wages of anyone below the new watermark to the watermark. No one above that watermark gets a raise. This effect is referred to as wage compression, and it is a HUGE negative blow to morale in a company. But that's what happens, because it's cheaper to replace the grumpy people than it is to give them all raises.

Krynn's last sentence... yep... that's it right there.

Privately held companies will retool, and do what Stonecat suggests over time. But publicly held corporations are legally required to grow profit year over year. Places like Walmart don't care if they are profitable, they care they are more profitable than the last quarter. That's the entire problem with our flavor of capitalism, that's the reason why all products are cheap and disposable, that's why people are suffering. This one issue more so than anything else explains why the western world is in the condition its in, and why capitalism sucks.

The solution involves taking away corporate personhood.
Halting the practice of corporations owning other corporations.
And exercising anti-trust authority to break up these huge conglomerates that own everything.

That step three isn't likely to happen anytime soon in the US because those huge conglomerates own both dominant political parties, and they're very good at keeping the rest of us focused on fake garbage instead of reality. Example? This whole Trump = Hitler = Russian plant thing we've got going on. And the other side of the political spectrum wants a failing private market so they can government control everything and fail at Communism again.

I am not so sure it is a morale killer when minimum wage folks get a wage increase and nobody else does. I mean it really doesn't bother me if a Chick-Fil-A worker gets a raise to $10 or $11 an hour. What will bother me is when my lunch suddenly costs $11 instead of $9.

 

[coffee]

So, does anybody have any non-anecdotal evidence that most minimum wage jobs are "supposed to be for kids" and etc? Do you guys have any evidence to suggest there are actually enough "real jobs" for adults? I suspect there's a lot more minimum wage jobs than there are teenagers to do them, which means some of them need to be done by people trying to make a living rather than trying to make beer money.

Cost of living has increased, but minimum wage has not. Even jobs a couple dollars/hr above minimum wage are still not a real living wage in this country.

But minimum wage hikes won't solve the problem, because the problem is that corporate execs and shareholders wont allow employee wages to eat into their own.

Minimum wage does nothing to help those that are an hourly employee. This is a simple fact of economics that is proven time and time again. Sadly I feel this is something not taught in the classrooms of today.

When you raise the minimum wage you are paying your employees more for the same amount of work they have always done. Therefore there is no production of goods or services to pay for this rise in wage. Thus, The cost of the wage increase must be covered from some where. This cost is normally covered by an increase of the cost of goods or services produced. Thus, As the minimum wage increases so does the cost of goods and services. The end result is that the buying power of the worker is off set by the increase in the cost of services or goods produced.

Indeed, The low paying jobs of fast food and such businesses are entry level only. Of course there is an amount of older workers taking these jobs because they need to supplement their income in their older age.

In the end you will find that if you really want a better standard of living you must either cut back on non essential buying or improve your job skills in the work force. It is by this means only that you will truly get a head in life and increase your standard of living.

Personally, I find it very fascinating that in such a business forum there are many that feel that raising the minimum wage is a cure-all for the hourly worker. I would think that no one would understand this better than the small business owner.

 

[Krynn72]

When you raise the minimum wage you are paying your employees more for the same amount of work they have always done. Therefore there is no production of goods or services to pay for this rise in wage. Thus, The cost of the wage increase must be covered from some where. This cost is normally covered by an increase of the cost of goods or services produced. Thus, As the minimum wage increases so does the cost of goods and services. The end result is that the buying power of the worker is off set by the increase in the cost of services or goods produced.

Yep, as I said, minimum wage increases dont help, because as you said "the increase must be covered from somewhere" and it will never come from the wages of the most overpaid people because they tend to have all the power over the company. I'm not talking about small businesses of course, but there are plenty of "fat cat" execs and etc in huge corporations who do jack **** and make enough to cover the effect of minimum wage increases their company experiences. And by far the worst offenders are stock holders. I personally think the concept of getting paid without putting in beneficial, practical work for it is the cause of most of the world's present day and near future problems.

 

[coffee]

Yep, as I said, minimum wage increases dont help, because as you said "the increase must be covered from somewhere" and it will never come from the wages of the most overpaid people because they tend to have all the power over the company. I'm not talking about small businesses of course, but there are plenty of "fat cat" execs and etc in huge corporations who do jack **** and make enough to cover the effect of minimum wage increases their company experiences. And by far the worst offenders are stock holders. I personally think the concept of getting paid without putting in beneficial, practical work for it is the cause of most of the world's present day and near future problems.

If you have a 401k or any type retirement account you are a shareholder. I am a share holder and so are millions of employees at companies of all sizes. Shareholders incur risk. Risk is rewarded when they make the right decisions. I do this almost daily and takes a great deal of time in research to accomplish. I get paid for risk taking and research. This is no different than when you sit down to audit a company for perhaps a network upgrade or solve one of their many problems. So, In essence you are saying that you shouldnt get paid for sitting in your chair at a computer researching a problem or doing an audit that takes valuable time to do?

Executives do not incur the cost of minimum wage increases. In fact, The company as a whole does not incur this cost. The cost is off set by an increase of the cost of goods or services provided by the company.

 

[Sky-Knight]

I am not so sure it is a morale killer when minimum wage folks get a wage increase and nobody else does. I mean it really doesn't bother me if a Chick-Fil-A worker gets a raise to $10 or $11 an hour. What will bother me is when my lunch suddenly costs $11 instead of $9.

You're thinking outside, think inside. If you work for a place and you've busted your butt to earn a raise, and then the law comes along and gives the pissants on the company role the same raise and you don't get one to keep you "above" them... yeah, you get ******.

My largest customer operates retail stores, the fall out was immediate, and intense. Good thing we knew it was coming, but with only 60 days to prepare it was a mess.

And if you're forking over $9 for lunch I want to know where you're getting it. I started packing my own food and driving around with it decades ago because eating "cheap" isn't possible at any sort of restaurant. And no, the min wage going up isn't going to make your Big Mac cost more, it's just going to make it take longer to be made, and eventually there won't be a teller at all you'll get your burger from a slot in a machine like Japan.

https://www.eater.com/2017/1/26/14400334/big-mac-atm-mcdonalds

Again min wage basically says, you'll pay this for an hour of a human's life. If the job isn't worth paying that, then you use technology to do it instead. Min wage increases against automation means faster automation.

Finally, this: http://www.pewresearch.org/fact-tank/2017/01/04/5-facts-about-the-minimum-wage/

And yes, the left is using this to attempt to address the very real issue of wealth disparity, and it's the wrong tool for that task. We do have company owners taking too much, that's a real thing, and it's one of the primary drivers of the Great Depression. It needs addressed. Though I haven't a clue how... that's an ugly problem.

But anyway, time to invest in automated restaurants... those are going to be around a very long time.

 

[fencepost]

A couple things I'll just chime in a little on:

• The problem with minimum wage increases as they're done now is that they're not indexed to inflation or anything else, so the purchasing power of minimum wage workers decreases over time then there's a price shock as it gets adjusted to make up part of that gradual loss. Personally I think the minimum wage should be linked directly to legislative (and legislative staff) salaries. Lawmakers get a pay raise because they need it to keep up with inflation? So do minimum wage workers. Lawmakers think those scum-sucking proles don't deserve any increases? Great, the lawmakers had best not turn around and complain about how expensive it is to have an apartment in DC with the rent going up every year.
  
• What percentage of the cost of items you're purchasing is the labor? A fairly small percent. There was a lot of analysis of potential price increases when the $15 minimum wage stuff kicked off a few years back, and (using the Washington Post's Big Mac article as a base), a Big Mac would go up around $0.17 and a whole McD Big Mac meal would on average go up around $0.30. I'm pretty sure that rough level of 5% or less increase would hold at least partway up the stack - though if you're doing $50-100 steak place lunches in NYC the minimum wage being paid to kitchen workers is an even smaller percentage of the total bill.

 

[Sky-Knight]

AZ's min wage after it tops out at $12 / hour in three more years is actually indexed to inflation to push a cost of living raise on the wage annually. Not all min wage laws have that fault.

Also, here in AZ the state sued itself to try and halt the law from going into effect. Why? Because the state itself employed a bunch of people at min wage, and the law didn't have any appropriations authorized to cover the shortfall. AZ's state constitution requires appropriations to be a part of any initiative that increases cost to the state. Fortunately, the state Supreme Court rejected that argument.

My issue with the AZ effort was the 60 days until new year, and WHAM $2 / hour increase. If it had just gone up $.50 / year until it hit $12 and then adjusted for inflation from there we'd have been fine. But that $2 / hour spike with only 60 days of warning to all the employers in the state was a pretty nasty thing to do.

 

[fencepost]

An unexpected increase of 20% or more seems absurd - even an expected single jump of 20% would be a problem. Was AZ's law written in part by people who knew they couldn't stop it but hoped they could kneecap it? You know, the folks who get elected, gut a bunch of things, then use the failure of those things as proof that "See? Government doesn't work!"

 

[YeOldeStonecat]

And Stonecat, you're actually wrong on that point.

Min wage increases the wages of anyone below the new watermark to the watermark. No one above that watermark gets a raise. This effect is referred to as wage compression, and it is a HUGE negative blow to morale in a company. But that's what happens, because it's cheaper to replace the grumpy people than it is to give them all raises..

I'll firmly disagree..but I suppose you can find some examples of lame ass business owners who are not fair to their employees. but of course those jilted employees are free to leave (at least in the United States)....to go work for a decent employer who is fair. But i do know a lot of other business owners in my area which are fair to their staff...and the cascade affect has hit them hard because they are fair to the rest of their employees to keep the tiers of pay fair to all.

And I supposed a lot of this has to do with where you are, regionally, I'm sure there are many "distressed" regions with nothing but <0 skill minimum wage jobs where things are abused by business owners who are less than fair to employees. Labor camp jobs. I can't speak for those areas, I'm in quite an opposite area...fairly well to do area. Where we do have choices. Greater percentage of college grads and above. Higher wage area. Quite a strong job market in my corner of the state too...granted...we have a horrible governor driving a lot of businesses out of our state.

Anyways...minim wage itself..won't affect our business, we don't have any staff that get minimum wage. Even our cleaning lady that comes once a week..that's a flat fee service. But I feel for other small businesses...many of which are owned by friends....and that do have positions which are fairly low pay.

As for "just for teens" or not...well..it's based on the region I'm born and raised in. there aren't a lot of base jobs here, it is mostly skilled...save for the big indian casinos but we don't count those. IMO if you're an adult and out shopping for minimum wage jobs...either you failed at school, you set your bar too low, or your parents failed doing their job and you didn't have the backbone to raise that bar. I have blood in me that strives to earn and work harder to earn more and raise that bar all the time.

 

[YeOldeStonecat]

[QUOTE="Krynn72, post: 630016, member: 94551"

Cost of living has increased, but minimum wage has not. [/QUOTE]

When I turned 15 and started working..minimum wage was 3 dot...thirty something an hour. Isn't it above that now?

 

[Krynn72]

When I turned 15 and started working..minimum wage was 3 dot...thirty something an hour. Isn't it above that now?

I meant more that it hasn't kept up. My rent goes up every year more than minimum wage does.

 

[Sky-Knight]

I'll firmly disagree..but I suppose you can find some examples of lame ass business owners who are not fair to their employees. but of course those jilted employees are free to leave (at least in the United States)....to go work for a decent employer who is fair. But i do know a lot of other business owners in my area which are fair to their staff...and the cascade affect has hit them hard because they are fair to the rest of their employees to keep the tiers of pay fair to all.

And I supposed a lot of this has to do with where you are, regionally, I'm sure there are many "distressed" regions with nothing but <0 skill minimum wage jobs where things are abused by business owners who are less than fair to employees. Labor camp jobs. I can't speak for those areas, I'm in quite an opposite area...fairly well to do area. Where we do have choices. Greater percentage of college grads and above. Higher wage area. Quite a strong job market in my corner of the state too...granted...we have a horrible governor driving a lot of businesses out of our state.

Anyways...minim wage itself..won't affect our business, we don't have any staff that get minimum wage. Even our cleaning lady that comes once a week..that's a flat fee service. But I feel for other small businesses...many of which are owned by friends....and that do have positions which are fairly low pay.

As for "just for teens" or not...well..it's based on the region I'm born and raised in. there aren't a lot of base jobs here, it is mostly skilled...save for the big indian casinos but we don't count those. IMO if you're an adult and out shopping for minimum wage jobs...either you failed at school, you set your bar too low, or your parents failed doing their job and you didn't have the backbone to raise that bar. I have blood in me that strives to earn and work harder to earn more and raise that bar all the time.

The "bad" employers you refer to would be 100% of my customer base and everyone else I've worked with. AZ is a rather poor state, wherein more than 50% of the employed people here earn minimum wage or less. And while we are back to full employment, under employment is through the roof here.

 

[sapphirescales]

What percentage of the cost of items you're purchasing is the labor? A fairly small percent.

Wow. TOTALLY incorrect. In fact, the largest expense of MOST companies is their EMPLOYEES. If only $0.17 of every Big Mac was labor, then McDonalds could give every one of its employees $25/hour and increase the cost of their Big Mac by $0.17. Sorry, but it doesn't work that way.

To make matters even worse, this is MCDONALDS we're talking about here! They sell MASSIVE numbers of Big Mac's. What about smaller companies? The smaller a company is, the larger percentage of their expenses go to labor.

There are a few exceptions to this rule. For example, electronics have TERRIBLE margins of less than 2% on average. MOST of the cost is material cost. Only a small percentage of their cost is labor.

 

[fencepost]

I mis-phrased that. It's not that the labor cost is a low percentage, it's that the increase in the labor cost will be a small percentage. Sorry I was unclear.

The study that gets regularly cited for these things: http://doi.org.https.sci-hub.hk/10.1080/15378020.2016.1159889

As I'm reading that, based on 2013 numbers food cost was ~33%, payroll and benefits ~28.5% (varying depending on local wages). Using a value of 10.64 as the typical hourly wage for reasons discussed in the study, a jump to $15/hour would require around a 4% increase in the price of each menu item to cover the increased labor costs.

So, if we call the labor cost of the burger 1/3 of the cost, and there's a 20% increase in labor cost, the increase is 0.2 * 0.33 = 0.066 or a 6.6% increase in cost.

 

[sapphirescales]

I mis-phrased that. It's not that the labor cost is a low percentage, it's that the increase in the labor cost will be a small percentage. Sorry I was unclear.

The study that gets regularly cited for these things: http://doi.org.https.sci-hub.hk/10.1080/15378020.2016.1159889

As I'm reading that, based on 2013 numbers food cost was ~33%, payroll and benefits ~28.5% (varying depending on local wages). Using a value of 10.64 as the typical hourly wage for reasons discussed in the study, a jump to $15/hour would require around a 4% increase in the price of each menu item to cover the increased labor costs.

So, if we call the labor cost of the burger 1/3 of the cost, and there's a 20% increase in labor cost, the increase is 0.2 * 0.33 = 0.066 or a 6.6% increase in cost.

Unfortunately that's not accurate. If the employees cost 28.5% of the total expenses, then a raise of roughly 50% cost of those benefits will increase the cost of the item by half of 28.5%, or 14.25%. What the businesses will end up doing is cutting benefits and playing around with insurance, retirement plans, and other numbers to raise their higher employee cost as low as possible. The're betting that their gullible minimum wage workers won't be able to do the math, and they're right.

The problem with your math is going from about $10 to $15 is a 50% increase, not a 20% increase.

There's an additional problem here. Whenever a company has to spend more money, they try to make more money PLUS more profit to help cover it. It doesn't matter that they're essentially breaking even by increasing prices by that 14%. They'll increase it by 30% and give the big boys at the top a HUGE bonus for solving the new minimum wage "problem." The greed of the corporate execs knows no bounds.

EDIT: I know the numbers I quoted only takes into consideration the expenses and not the profit, but greed will make their prices go up by MORE than their increased expenses.

 

[fencepost]

There would undoubtedly be some wage compression going on, so the full increase would be a lower percentage of the overall business expense - for example, if you have a salaried location manager making $60k, a minimum wage increase from $10/hour to $15/hour doesn't also mean you're going to raise that person's salary from 60k to 90k.

My 20% mention was sloppy - I brought that number in from the discussion of Arizona's "shock" increase that we were talking about earlier in the thread.

I'll also note that one of the things the study I linked to examined was the cost of a rise to $22/hour, which I believe they calculated would result in a roughly 25% increase in prices but I'm going to go make breakfast instead of looking at it again.