This was related to how my neighbor believes those folks got cheated by a lower tax cut. I agree not all do. We didn’t for years. But many do, not just owners, but CEOs, etc. Show me a CEO of a large company that makes less than 6 figures.
I’m not sure it should be lower, but I’m definitely in the camp that thinks it would make a good bottom now.
Some close now too. Business closing isn’t usually related to wages even if they say it is.
This happens too, because less in expenses means more profit for owners and shareholders. It’s not necessarily related to wages either. Keep minimum wage the same or halve it and jobs would still be replaced by machinery as it becomes available. It’s why a UBI may have to come into play in the future.
I saw a sign that the local subway is going to pay $16 an hour. We will see if that helps them get workers. Subway is a tough job imo. And it will depend on the hours they give their employees
It is not always bad but Jeff Bezos made $60 Billion last year–more than he could ever spend in a lifetime. You and I should not be helping pay housing costs for many (Amazon ranks 6th for the number of employees who are on food stamps) of his employees, so that he can continue to make an obscene amount of money at our expense. Bezos could have given all his 800,000 employees a $10/hour raise and kept 45 Billion of his earnings. McDonalds, Walmart, Uber, Kroger, etc are among those corporations with the most employees on food stamps whose CEOs are hoarding unprecedented cash partly because the taxpayers are subsidizing living costs for their millions of employees. If the profits truly did trickle down, they would forego some of their bonuses and pay their employees living wages without raising prices.
Having said that, there is a lot of research about how much some corporations would have to raise their prices to pay for $15/hr wages for their employees. For McDonalds, its 4%…they’d have to raise the cost of a $2 burger to $2.08. In 2015, a study concluded that if Walmart wanted to pass on the total cost of raising wages to $12/hr, they would have to raise the cost of their goods by only 1.1%.
The link is only to a graph, so there isn’t any causation information given for the slight drop in restaurant employment pre covid. How do you know it was because of wages? Seattle was the first city in the country to raise minimum wage (incrementally) to $15/hr and there are multiple studies indicating that there has been no net loss of jobs and there is some evidence that the pay raises boosted the local economy with more retail demand.
You are missing the point. If the wages go up at McDonalds I can’t go to China to buy my burger. But then the wages go up at the factories making tradeable goods, let’s say cars, and suddenly it’s cheaper to make those cars in Mexico or somewhere else outside the US.
We are now seeing a sharp increase in inflation. Maybe we’ll end up with spiraling wages accompanied by spiraling prices. Maybe it’s transitory and all will work out fine. But we are embarking on a grand experiment pumping money into the economy and no one really knows how it will turn out.
I think if minimum wage is phased in there’s more time to adjust for the increases. However, as noted wage increases do cause price increases. The article also notes the huge increase in the use of touchscreen ordering devices which may or may not be linked to wage hikes.
It’s important to note that McDonald’s menu pricing is set by individual restaurant owner/operators and influenced by a number of market conditions, including employee wages, commodity costs and taxes,” the spokesperson said. “We remain committed to offering customers high-quality, affordable options across our menu.”
Because consumers did not significantly cut back on Big Macs as a result of price increases, company-owned locations did not need to shut down or even lay off employees, the study found. However, the price increases that occurred also meant that the wage gain workers received was effectively less impactful, because they as consumers would have to pay more for goods such as Big Macs.
It’s been cheaper to make cars in Mexico for a couple of decades at least. It’s been cheaper to make most of the stuff we buy outside of the us for longer than that.
We have a lot of historical evidence that there is significant inflation after a period of very low spending (wars, the spanish flu, stock market crash, etc). Inflation now is driven in part by the increased demand that would have happened even without all the free money. But there is no doubt that all the “free money” has also helped to drive up demand, which always results in increased prices regardless of the reason. The increased demand has been very good to those of us in the middle class. There is a good chance that the increased wages of the working poor will outpace inflation, but we won’t know that for year or two.
Still the net effect of the wage hikes were very impactful since-per the article you linked-a 10% raise led to a 1% increase in the cost of goods. How much did the 10% wage hike save taxpayers in welfare costs? I bet it was more than the 1% hike in the price of the Big Mac.
I’d guess not because there are so many people on welfare, food stamps, housing subsidies etc…in this country and those budgets never seem to decrease.
It’s been awhile since I was at a conference about basic employment skills needed in the future, but at the time, the information that we were given was that every cashier position that is replaced by a machine is offset by 2 better paying jobs related to programming, manufacturing and maintaining that machine. The point at the conference was that unskilled jobs are more and more rapidly being replaced by high tech jobs which is the cause of many of the shortages in high tech labor. The US education system is not keeping up with demand in those fields.
Depending on how you define “large company” many of them also have a lot of employees. Cutting $1 million from CEO salary for a company with 1,000 employees allows for a 50 cent per hour wage increase to employees.
How do you know that business closings usually are not related to wages even if they say it is? I clerked for a bankruptcy judge for 2 years and don’t have that info. Advised many companies in finacial distress over the past 20+ years and that hasn’t been my experience. Though ultimately its typically a combination of factors that lead to bankruptcy/insolvency (joke being that if you ask them how they went bankrupt companies will usually say slowly at first and then very quickly). But increasing cost of labor won’t make it easier for them.
Of course automation is related to wages. If automation is more expensive than people, you stay with people. Increase the cost of people and you increase the likelihood automation is the better approach from a cost standpoint.
There seems to be an idea that all companies are rich and can easily afford to pay all of their employees more. Its good marketing in any event because we often hear talk of the most profitable companies as examples and saying how easily they could afford to pay more (easy sell) and then say all companies must pay more. Just like we have 50-55 large companies who don’t pay federal income taxes (through legal tax breaks–though for marketing purposes its better to call them “loopholes”) so we should tax all companies at higher rates.
The dude just blew $.5B on a boat. Throw in upkeep etc., and that boat would be $1B. Then he will need an island or two… those billions would not stretch that far.
I don’t know how they do it everywhere, but the city of Seattle has a lower minimum wage for companies with fewer than 500 employees. I would be in favor of setting the cutoff lower than that, but I do appreciate that as one solution to the problem you mention. The minimum wage for teens in Seattle is also 15% lower than the “regular” minimum wage.
The upshot for the economy and taxpayers is that setting the minimum wage lower for “small” companies increases their opportunity to grow the business into a large company with better wages.
Having said that, as far as the restaurant industry in Seattle was concerned, several studies have found that even with significant increase in minimum wage there was no net loss of jobs.
Although it can also encourage companies to stay “small” (i.e. grow to no larger than 499 employees in the Seattle minimum wage example).
This can apply to any regulation that may be reasonable for large companies but potentially burdensome for small companies (or just the volume of regulation being a trivial cost to a large company but a burden on a small company). Relief from or simplified regulations for small companies may be desirable in some cases, but the definition of “small” versus “large” company can create unintended effects around the threshold.
HIgh cost of living areas (like Seattle) will be less impacted by higher minimum wages. And what percentage of restaurants have fewer than 500 employees?
So you’re arguing that CEOs should keep their multi-million salaries because it would “only” increase their minions pay rate 50 cents (or give them each $1000)? The CEO needs that extra million, but the $10/hour worker should be ok with 20K and increasing that 5% (x 1000 employees) is worthless? Use any numbers you like for employees and “small” raises, but I personally feel those at the bottom can use the money far more than those at the top, esp once you get into the Top 0.5 - 1% of incomes.
But of course, those at the top can’t live with less (how can anyone???) so yes, expect inflation if they have to raise salaries or come across any other expenses. The minions will have to cover it via higher prices or fewer jobs or whatever - and if not, then taxpayers can chip in for them.
I’ll admit I’m only relying on those businesses I know personally (meaning those kids or teachers at school started/inherited and didn’t run well - but of course it can’t be their fault, so they need something to blame it on). It’s usually bad management.
There are also some that were doing fine before Amazon put them out of business. One I know personally did well, then people started coming in the store to try things on, take pictures of exactly what fit, then go home to order it online since it was cheaper. Yes, it was cheaper. Online didn’t have to pay “small town” store rent, electric, water, taxes, and other overhead (only one or two employees other than the owners). Customers would “use” the store and skip giving them money. Some were so proud of it they would go to chat rooms and tell others how to “get these things cheaper by doing the same.” Mom and Pop were the losers.
It sounds like you think this shouldn’t be changed… because, why? That many large companies getting tax breaks is some sort of good thing? All of the smaller, less well off companies and people should be those subsidizing their workers and paying for everything else like roads, police, etc? Why?
I asked you earlier if you thought we should cap income but you didn’t respond then. Now it seems you have. In the affirmative. Which is one approach. Should it apply only to CEOs? Athletes? Doctors? Actors? Media personalities? Musicians? Other people?
Also not what I said. But you continue to show that you believe that everyone that runs or owns a company is rich/at the top. Don’t think that is true. And you make it sound like the economic reality that when costs of inputs go up, prices of products/services sold will increase is some type of evil plot. Its just basic economics. Its true with raw material price increases. Ultility and occupany cost increases too. Taxes as well.
There are a lot of reasons businesses fail. And its rarely just one thing. Bad management can definitely be one of those though.
Well at least you see that businesses that charge higher prices can lose business and some go out of business.
And again, not what I said. The 50-55 companies that pay no federal income taxes can be addressed. Just limit the tax breaks that allow them to pay no federal income taxes based on a certain level of net income. Those companies are getting tax breaks that are available to other companies as well. One is accelerated depreciation. Allows companies to expense 100% of cost of certain investments rather than depreciating them over a tax useful life. Purpose is to increase economic activity. Recall a CEO of a large local company saying a number of years ago that he got the joy of going to his board and telling them they were getting a $1 billion tax break for equipment they had to buy anyway. Others have loss carry forwards that help encourage people to start companies and help new companies to grow. I am all for eliminating those tax breaks for those 50-55 companies. What I am not in favor of is using the existence of those 50-55 companies to raise taxes on the millions of other corporations out there who are not in the same boat.
Just like you see people saying how easily Apple, Microsoft, Amazon, McDonalds and Walmart could pay higher wages. And then using that to justify millions of companies being required to do the same thing. Goal for some people is to create a narrative that all companies are rich and can afford to pay more.
It’s so tough for kids. Our daughter graduated from college in 2020 with a double major in photography and art history. I know I am biased, but she really is a great kid - hard-working, enthusiastic, and talented.
The Portland Museum of Art has a job opening that looks perfect for her. It involves preparing art exhibits. This is part of what she did at the student art gallery in Susquehanna and she really liked it. I was very excited until, helicopter mom that I am, I looked up the job description. “The Assistant Preparator position is a part-time, on-call, non-exempt, hourly, employment-at-will position. The position is for periodic, occasional work.” It also states, “Regular attendance at the workplace is required.” Huh, we aren’t sure when we we will call you, but you’d better show up immediately. Sigh. That doesn’t do her a lot of good. But if it’s a foot in the door to the museum, maybe it’s worth it.
True, and that does not apply to our daughter, ha. She got a LOT of unemployment money last year and she’s gone right through it. We’ve made it clear we can’t help her. We offered to let her live at home and pay nominal rent. We’ve also told her we have lots of work to do around the house that we would pay her for. Right now, she’s working four days as a week as a nanny and it pays well, but the job ends on June 8. Oh, well, I will try not to worry about her!
