That’s true - but that’s a different issue. Presumably the people working at my hardware store are working there and not at HD for some reason - perhaps because HD won’t pay them any more than I am. Nobody is saying that small businesses shouldn’t have to comply with the minimum wage, or that it shouldn’t be raised because small businesses will have a problem. Just that small businesses can’t necessarily raise pay without raising prices. This is where it started:
Not only do some goods rise much more than other goods, some goods actually decrease in price.
People scream about the immediately noticeable price rises - remember when gas prices rose a couple of years ago - and say nothing when those same goods go down in price - gas prices are down but do you see anyone plastering Thanks, Biden stickers on pumps?
Inflation affects the very lowest salaried first and an increase in the minimum wage affects the very lowest salaried first. It’s hard to make a reasoned argument against raising the minimum wage to a living wage. The problem is that it’s very easy to make a political diatribe about raising the minimum wage. Guess which one wins.
I actually think there are good rational arguments against raising the minimum wage (and I can elaborate on this if desired). Just that they aren’t (in many cases and places today) better than the arguments for.
That’s not the way it works. First, people don’t have the information, since telling your salary is considered slightly dirtier than telling people what you do in the bedroom.
But there is inertia for many people changing jobs.
I did salary administration for a couple of years for a tech company where no one was even close to minimum wage. However new hires came in at market rates, which went up much faster than raises. There was definitely salary compression where people there a year made close to what good employees made after ten years. We tried our best to correct this, but we were limited based on the pool of salary money.
But we never got much pushback on this, not nearly as much as we should have.
As for the OP, it is not like the only customers of the store are minimum wage workers. Those coming in making bigger money can absorb the increase with less pain, so it is kind of a transfer tax on them to the lower paid workers, which is good considering income inequality.
For fast food, especially, driving people to eating more cheaply and more healthily at home would be a good thing. Plus, what part of the price increases come from suppliers? Especially soda. Coke and Pepsi have drastically increased their prices, and wages are not a major factor in it.
I would hope that a rational argument would cover both sides and advocate only for the one that is net positive.
You’re only looking at one side of the business model, and then only at half of that one side.
Regarding the idea that minimum wage workers only make up part of a business’s expenses, the simple math agrees with you. Suppose a labour intensive business has 50% of its costs coming from employee wages, and a substantial majority of the labour is minimum wage workers. Joey_P hypothesised a minimum wage increase from $8 to $12, so 50%. Presume some dilution from lower raises to higher wage earners and the business’s wage costs increase by 40%. Overall, that’s a cost increase of 20%. And look at all those minimum wage earning customers who just got a 50% pay rise who can afford to buy your product, even if the price increases by 20%.
The part that’s being ignored in that argument is that the non-wage costs are going to rise too. That’s because every other business supplying the business we’re using as our example is going to also have their costs rising. And depending of how many “links” there are in the supply chain, the multiplicative costs of wage increases from a supplier well down the supply chain can end up being significantly more than the source cost of the wage increase. A 10% increase in costs passed along 5 times turns into a 77% cost increase.
The other side of the business model that you’re not looking at is customer demand. The labour intensive business has to compete against less labour intensive businesses. A consumer, all thing being equal, might prefer a product from the labour intensive business. But if their price rises by 30%, while some other business a consumer might purchase from only has a price increase of 15%, the consumer might switch to the product with the lower price increase, even if that consumer has had their wages rise by more than 30%. Also, inflation causes caution. When people see prices rise, they cut back on spending. That will have an effect on the minimum wage workers, but even more so on consumers who didn’t benefit from the minimum wage increase. Reduced sales almost always leads to a business going bust. Which means some of the minimum wage workers who got a wage increase are now unemployed, which means they’re much lower level consumers. If that causes an unemployment spiral, that’s a very bad thing.
The above argument isn’t to say that minimum wage rises are a bad thing. But they need to be gradual and planned, rather than radical shocks to the economy.
Minimum wage jobs are not the lowest rung on the ladder. Raising the minimum wage puts upward pressure on the baseline “cost of living,” which means if you don’t have a job at all (or work under the table) you are even more screwed. And are employers likely to expand their minimum wage workforce, or are they likely to contract it?
It’s complicated. Minimum wage increases help some, but at a cost to others. Very difficult tradeoffs.
So why are the states with significantly higher Minimum Wages doing better financially. They tend to be the ones paying the way for the entire nation.
Your argument sounds good on paper but in real life would appear to empty of results.
So let’s do something about that, too. Help people get employment, and crack down on the folks flouting the employment laws.
One possibility is that states that are doing well for other reasons are already paying higher wages for low-skill jobs, and so a minimum wage hike doesn’t accomplish much. Anecdotally, here in the Bay Area, fast food has long been paying well over minimum wage.
Generally speaking, we can expect that MW hikes that don’t actually affect many people are the most politically viable. They have little benefit and also little downside. If they really had a meaningful effect, people would start to notice the high prices and object more.
So you could be your own boss?
Often the positives and the negatives aren’t all of the same sort, making it difficult to decide what’s “net positive”.
Even things having to do primarily with money have different sorts of effects on people in different situations.
That’s often true. Yet you have to make decisions no matter what. If you don’t want to make them using rational arguments, what course should you take? Emotional outbursts? Throwing darts at a wall? A Magic 8-Ball?
I didn’t mean that I don’t want people to make rational arguments. I meant that in cases in which it’s difficult to see where the net positive is, I don’t want them to claim that there clearly is one and to argue only for that one; I want people to recognize when there are good arguments on more than one side. Yes, sometimes it’ll be necessary to pick one; but that shouldn’t be done by ignoring the costs.
Most people aren’t willing to invest (risk) hundreds of thousands of dollars of their own money to start a business and then work overtime for a salary of just $150K, especially if alternatives exist that offer the same salary without the risk to your own capital.
This all sounds great and noble. But if you’re paying your employees above-market wages (and charging more for your products/services to enable it), eventually a competitor will show up and put you out of business, because they’re willing to pay their employees less, enabling them to charge less for their products/services. There are a few niche markets where this isn’t true (e.g. “fair trade” coffee, for which paying the workers and above market wage is a product feature), but for comparable products and services, the vast majority of the buying public will make their choice based on price alone - and a business that’s not paying the absolute minimum necessary for materials in labor will inevitably be outcompeted. The only way around this race to the bottom is a government enforced minimum wage.
If a minimum wage is a necessity, can you explain how Singapore seems to do fine without one?
I’ve seen it happen in a specific context (in a warehouse workplace) - minimum wage increased to a point that was above the wage of the lowest paid workers picking orders by hand, but was also about halfway between that wage, and the higher wage for trained forklift drivers - the company felt that they needed to increase the wage of the forklift drivers so it was still proportionally higher than the on-foot pickers, because there was an industry expectation that forklift drivers get x% more - without the increase, it would become difficult to recruit and retain forklift drivers.
Norway doesn’t have a minimum wage, but we have very strong unions that has lead to a de facto minimum wage. We also have a system in place where export industries negotiate their salaries first, and the the other unionized industries cannot get a bigger increase than that.
Companies here are highly automated. All the stores run with a minimum of staff. You can really see it when you go to other countries. There are so many people working!
I remember when dealing with an American company, they could have someone sit in on a meeting just to take notes. That’s unheard of here. It’s too expensive.
So that is a real thing that will happen. It also has negative sides, since there are fewer “easy” jobs available. But mostly we have a high employment rate. So the idea is that all those people working the low-value jobs (they must be low-value if they are not worth the new minimum wage), can do something more useful.
According to the AFL-CIO’s Paywatch report, the pay gap now is about 272-to-1 between workers and American CEOs. The pay gap between the typical American worker and their CEO in the 60s and 70s was about 20-to-1. Japan and most other countries have similar 20-to-1 ratios.
20-to-1 is reasonable. 272-to-1 is ridiculous. The minimum wage and benefits to employees would most likely be much better, and employee morale would be much higher if the American gap were reduced to closer to 20-to-1, or at least below 50-to-1. And, I don’t believe the quality of upper management would suffer if the cap was mandated and they had no alternatives for securing mega-million-dollar incomes.
But then (the argument goes) we wouldn’t get the best CEO available, as they won’t work for a paltry few million!