Minimum Wage and McBudgets

[Aimless]

Live within their means. Done.

Can I interest you in buying a few thousand black kids Lewk?

[Lewkowski]

It's funny, usually you guys would be the first to pull out the "ecological fallacy"

My remark to Lewk was about how he chooses to rabidly focus on the scenario that justifies the maximum amount of righteous condemnation of the working poor. I believe that falls under a separate category of fallacious or misguided reasoning.

Would you say the cost of supporting a nicotine addiction is as high as the cost of raising three kids as a single uneducated mother?

Perhaps you shouldn't have 3 kids if you can't afford them... Also its an absurd fallacy to say that every single job should be able to provide for a family of four.

[RandBlade]

Can I interest you in buying a few thousand black kids Lewk?

Anyone who's bred a few thousand kids really ought to have had the snip.

And why'd you have to mention the colour?

[Aimless]

Perhaps you shouldn't have 3 kids if you can't afford them...

Sure and we can forcibly put the ones who're planning to on birth control like Chaloobi wanted, but what are you going to do with the kids that are already here? Are you going to make them go away by not acknowledging their existence?

Also its an absurd fallacy to say that every single job should be able to provide for a family of four.

I didn't say every single job should be able to provide for a family of four You asked, scornfully, "Who the heck works minimum wage jobs for very long?" and I gave an example of one kind of person who keeps earning the minimum wage. You went on about minimum wage workers being poor because they spend their money on cigarettes and lottery and I said "not necessarily".

[Aimless]

Anyone who's bred a few thousand kids really ought to have had the snip.

And why'd you have to mention the colour?

Because most of them are black or brown and let's face it you're not going to get around the fact that race (or being a person of colour) is a social problem in the US.

[RandBlade]

Sure and we can forcibly put the ones who're planning to on birth control like Chaloobi wanted, but what are you going to do with the kids that are already here? Are you going to make them go away by not acknowledging their existence?

I think we should start by expecting their parents to look after them and not get stoned as "stress relief". I don't see you objecting to this why is that?

[RandBlade]

We can do this real quick I guess, using easy numbers. Say you have a retail store with 15 full time (hah!) employees making minimum wage. At 15 employees, for 8 hours each, and $7.25 per hour, thats $875 total for employee pay per day. Now lets pay them $10 per hour. That would be $1,200 per day, or a $325 increase. So lets say this hypothetical retail store makes $10,000 per day in sales (not profit). To cover the $325 increase in costs to pay the employees $10 per hour instead of $7.25, and keep the same profits, the store would have to increase the cost of an item by 3.25%. So for every dollar an item costs prior to the pay raise, your customers would be paying an extra 4 cents (I rounded up significantly from 3.25 cents) afterward. If someone wants to correct my math, please feel free to do so. This is just to illustrate that the higher costs aren't that significant towards the customers. However, something else this illustrates is that if a company wanted to charge an extra 4 cents on the dollar for a product and not increase employee pay, they'd be looking at an extra $118,625 per year, per store. They could then either roll that into an extra 16,362 hours of work paid at minimum wage for additional employees, or hire 7 additional full-time people at $15,080 per year ($7.25 per hour x 40 hours x 52 weeks), and still have money left over. What is more likely though is that extra money will just be kept by the company, since with larger retail chains, with thousands of stores, that extra money could be multiple hundreds of millions of dollars.

Edit: We're going to overlook that most retailers keep pay competitive within their own field, so employee minimum pay may start at something like $8 per hour or $9 per hour in states that have much higher than Federally mandated minimum wage. While this is not a living wage in most areas, its marginally better than $7.25 per hour. We're also going to overlook that most, if not all retail stores are not going to have on hand 15 full time employees per day also (unless they are the largest stores in their district, or show stores)...

I'd like to get where you got your numbers . This is utterly ludicrous.

[Enoch the Red]

My remark to Lewk was about how he chooses to rabidly focus on the scenario that justifies the maximum amount of righteous condemnation of the working poor. I believe that falls under a separate category of fallacious or misguided reasoning.

And you seem to rabidly ignore that there are many who are, at least in part, responsible for the dire financial straits they are in. I don't deny there are working poor who are poor for reasons outside their control. Do you admit that there might be those who are?

[GGT]

Ditto. No need for market distortions. But the GGTs of the world would prefer someone else (i.e. other private actors) should be paying for their policy preferences.

GGT, I'm amazed by your ability to write so much without addressing any of the issues that are actually raised in my post...

Pfft, I addressed your issues, just from angles you won't acknowledge are important in the big picture.

Supply and Demand -- more unemployed/under-employed than available jobs; falling or stagnant incomes cramping consumer demand, causing sluggish growth. An over-supply of workers might seem good to corporations because they can keep wages low, as long as there's an endless supply of desperate job-seekers. But it's not so good for people who want to work but can't find a job, or taking any job they can get but still need Public Assistance. A growing supply of working poor, with a shrinking middle class, should concern every business owner, even fast food multi-national companies.

Productivity and Efficiency -- Distribution and Transportation chains are more efficient than ever. Even "unskilled" workers with a HS degree operate POS computers, microwaves, and automated machines in food service. They cross-train, multi-task, and work "assembly lines" to produce an entirely consumable product.

Workers should benefit from innovations, modernization, and the transition to a service-based economy....just as the consumer does. They shouldn't suffer from the loss of industrial manufacturing or globalization, or see their wages shrink compared to COL, while CEO and executive incomes rise by 200-600%.

If you want every person to have a certain quality of life, have the government send them a check. Don't distort the market with wages that cannot be justified by market forces.

Ah, but aren't you against "the welfare state" in principle? And taxes that fund Public Assistance programs, especially corporate taxes? If you're concerned about market distortions you shouldn't ignore the role played by mega-corps (like McDonald's or Walmart) and their near monopoly on wholesale prices, cutting close to anti-trust laws.

If you're serious about wages being justified by "market forces", explain those executive multi-million-dollar salaries (with generous Golden Parachutes)....even during downturns, recessions, depressions, corporate losses, insolvency, bankruptcy, etc.

[GGT]

Perhaps you shouldn't have 3 kids if you can't afford them...

Then why would Texas stop teaching sex-ed in public schools, de-fund Family Planning clinics, or try to ban certain forms of Birth Control (including abortion)? Abstinence Only, huh?

Also its an absurd fallacy to say that *every single job should be able to provide for a family of four*.

That's not the crux of the minimum wage debate, though. The minimum wage was initially part of the Fair Labor Standards Act of 1938. http://en.wikipedia.org/wiki/Fair_Labor_Standards_Act

At one time it was calculated as 50% of national average income. In practical terms, that meant two fully employed people could support themselves and their children, when the average family had an average of three children.

[Ominous Gamer]

Live within their means. Done.

This does not answer anything that was asked. In fact it pretty much shows how unwilling you are in addressing or discussing problem in any meaningful way.

[Illusions]

I'd like to get where you got your numbers . This is utterly ludicrous.

You could detail how the numbers seem flawed to you or ludicrous. I'm personally interested not for arguments sake, but because part of what I related is actual experience, and I want to know how that is ludicrous.

[Lewkowski]

Then why would Texas stop teaching sex-ed in public schools, de-fund Family Planning clinics, or try to ban certain forms of Birth Control (including abortion)? Abstinence Only, huh?



That's not the crux of the minimum wage debate, though. The minimum wage was initially part of the Fair Labor Standards Act of 1938. http://en.wikipedia.org/wiki/Fair_Labor_Standards_Act

At one time it was calculated as 50% of national average income. In practical terms, that meant two fully employed people could support themselves and their children, when the average family had an average of three children.

I'm sorry but it doesn't take a genius to figure out if you have sex without protection you run the risk of getting pregnant. Hell if you didn't the first time you would think they would have figured out before round 2 and 3.... but of course its not their fault they can't afford the kids - never the individuals fault.

I didn't say that was the crux of the minimum wage debate, someone else brought in "oh noes how can a single mother with 3 kids live on minimum wage" which brings the natural response of... why should they expect to be able to do this? Its minimum wage something the vast vast vast majority of workers make more then.

[Lewkowski]

This does not answer anything that was asked. In fact it pretty much shows how unwilling you are in addressing or discussing problem in any meaningful way.

Its amazing how many people are currently still living at minimum wage. They haven't starved to death - hell they are actually purchasing inefficient (from a price perspective) food on a daily basis! (fast food). Amazing.

[Illusions]

Costs don't exist in isolation. My point is the example is nonsense without a firm sense of all the costs. EG, I would be far more interested in the percentages of each cost item and the margins of the whole business.

Well then I guess we're at a personal impasse because that information is either A) Outside my pay grade and not available to me or B) Unethical / against contracts of my employment to discuss. You've also made it abundantly clear that you won't accept abstractions of said data.

[GGT]

I'm sorry but it doesn't take a genius to figure out if you have sex without protection you run the risk of getting pregnant. Hell if you didn't the first time you would think they would have figured out before round 2 and 3.... but of course its not their fault they can't afford the kids - never the individuals fault.

You totally ignored the value of sex-ed taught in public schools, and easy access to affordable birth control.

I didn't say that was the crux of the minimum wage debate, someone else brought in "oh noes how can a single mother with 3 kids live on minimum wage" which brings the natural response of... why should they expect to be able to do this?

You're making assumptions not supported by facts. Millions of people did everything "right". They completed HS, got some college credits -- or even graduated with a degree. They climbed the ladder of success and opportunity, following The American Dream. They were gainfully employed, bought a home (with a mortgage, approved by a bank) and started their family. Same damn thing you've done, Lewk.

Its minimum wage something the vast vast vast majority of workers make more then.

Until they don't. You might be next on the cutting block. Replaced, displaced, redundant. After all, many insurance jobs can be done by computer programs. They can also use proper grammar, punctuation, and spell better than you.

[Lewkowski]

You're making assumptions not supported by facts. Millions of people did everything "right". They completed HS, got some college credits -- or even graduated with a degree. They climbed the ladder of success and opportunity, following The American Dream. They were gainfully employed, bought a home (with a mortgage, approved by a bank) and started their family. Same damn thing you've done, Lewk.

Those people you described aren't making minimum wage. They may not be enjoying the life style they had grown accustomed to but people who climbed the ladder of success don't go down to minimum wage. Do you even know the tiny percentage of the work force that works on minimum wage is?

[GGT]

Those people you described aren't making minimum wage. They may not be enjoying the life style they had grown accustomed to

but people who climbed the ladder of success don't go down to minimum wage..

In terms of household income and purchasing power, after the Great Recession, many working people did regress to minimum wage income, in relative terms. You might well be next.

Do you even know the tiny percentage of the work force that works on minimum wage is?

Do you know the number of fully employed people that are earning more than poverty wages?

[RandBlade]

You could detail how the numbers seem flawed to you or ludicrous. I'm personally interested not for arguments sake, but because part of what I related is actual experience, and I want to know how that is ludicrous.

No way was that ever done from experience! Its impossible. You clearly have never personally operated such a business or done the accounting for a business with those sorts of margins as they're just not remotely plausible. I'd like to see a copy of an EBITDA budget you've prepared/had a copy of in your "actual experience".

1: Sales - $10,000 a day is far higher than the average McDonald's sales figures. Even if it is possible it is busier stores which achieve this the mean average is below this and the modal average would be even further below this as its distorted by megastores. However even if we grant this figure the rest fail totally.
2: Labour Costs - The in-store labour costs typically for a store in this industry is 26% of sales. A store taking $10,000 in sales couldn't possibly run on an $875 budget (8.75%) and their costs would be more than three times that. You've put shifts firstly at 8 hours but a non-indoors-shopping centre (see Rent) McDonald's would frequently operate 24/7 and not just 8 hours. Crew must cover the restaurant for 24 hours then so now we're running at an average of 5 crew members at a time in a much busier than average location - I don't think so. There will be a lot more man-hours than you've budgeted for even just in a typical one - and given this is a busier than average store add even more. Not all crew are on minimum wage either, that is the starting rate. Those who get promoted up the ranks to Floor Manager, Kitchen Manager, Shift Manager, Assistant Manager, Store Manager (half McDonald's staff sometimes are some type of Manager) will have incremental pay rises above basic pay. Obviously if you increase the basic wage you must also increase their wages too incrementally.

The realistic labour cost budget percentage (if the business is well-managed and on-budget) is 26% of sales. So $2600 not $825. An increase in basic rate from $7.25 to $10 is an increase of over 50%, for simplicity I'll give you $1300 then, rather than $325.

3: Payroll Tax - Increase earnings, increase taxes liable on those earnings that are payable by the company. This needs to be covered too.

Now what makes it even worse is that you've to "equalise" the increase in cost sought a penny-for-penny increase in price: As if an increase in price would 100% go straight to bottom line and not have any other calls on it or knock-on effects:
1: Food Costs. Food is the only cost bigger than Labour (with massive inflation already at the moment) with typical food cost being 30% of the price. You seem to think you can implement a 50% increase in wages paid for by increasing prices of food that they charge without causing any food price inflation on prices they pay for? Don't think so.
2: Taxes - Companies are sliced and diced many ways for tax and higher earnings can cause higher taxes. Now in the US Sales Tax comes after price so unlike here a large part of a price increase won't go straight to government but other taxes are liable.
3: Royalty Fees - A franchisee pays the wages but a fixed percentage of takings goes in royalty payments to the franchisor. Increase the price, increase this cost directly.
4: Marketing Fees - As above, a fixed percentage of sales contractually ring-fenced to marketing as opposed to royalties.
5: Rent - It is not unusual for business rents to be a percentage of sales: Increase price, increase rents. Especially in shopping centres, that's how centre management gets their cash. The Trafford Centre nearby for example charges rent of 18% of sales. Head Office would then charge an incremental rent on top of this (in my old franchised business the franchisee was responsible for 105% of rent with 5% going to operating costs by the franchisor who takes the head lease).
6: Insurance - Business Insurance is often a fixed percentage of sales as a busier business needs more insurance costs. 2% of sales is not unusual.
7: Fees - Cash handling fees, card fees etc are often a percentage of sales.

These are just SOME of the DIRECT costs of increasing price none of which you took into account. You seem to think there's a 100% margin in extra price but if that was the case they'd already be getting increased. Costs typically exceed 95% of the price you pay, not 8%.

Finally you don't seem to have put into any consideration of the rampant inflation that would be caused by increasing wages by over 50%

[Aimless]

Yeah Illusions why couldn't you have used numbers from some OTHER kind of business like a retail store in NYC??! Why did you have to make up numbers for a 24/7 McDonald's??!?!

And how could you not have taken into consideration the rampant inflation that would result from increasing the wages of a TINY percentage of the workforce which would become even smaller due to the unemployment caused by the raise??!

[RandBlade]

Yeah Illusions why couldn't you have used numbers from some OTHER kind of business like a retail store in NYC??! Why did you have to make up numbers for a 24/7 McDonald's??!?!

It doesn't matter what the business is almost every single one of those factors will be relevant to almost any retail business. Or do you think that a retail store in NYC doesn't pay rent or insurance or fees or taxes or cost of goods sold or payroll tax or ...

Again apparently Illusions has "actual experience" of calculating EBITDA so I'm curious what that is. Or maybe his "actual experience" is he's sold/bought a burger in a McDonald's once and made a bunch of crass assumptions and has never seen let alone been responsible for proper management accounting calculations before.

And how could you not have taken into consideration the rampant inflation that would result from increasing the wages of a TINY percentage of the workforce which would become even smaller due to the unemployment caused by the raise??!

You think that if some get a greater than 50% pay increase that others above them in the pay scheme won't demand a pay increase? And so on and so forth? Or do you think those working for 50% greater than minimum wage will sit content to now be on minimum wage? Especially when the solution provided by Illusions to pay for the increased wages is to increase prices (the very definition of inflation)

[Aimless]

Again apparently Illusions has "actual experience" of calculating EBITDA

This is getting to be a thing with you but seriously man Citation Needed

You think that if some get a greater than 50% pay increase that others above them in the pay scheme won't demand a pay increase? And so on and so forth?

Pfft, they could always get demoted and earn $15/hour. However I recalled just now that the $15 itself would apply to many more than the tiny portion that work minimum wage today.

[RandBlade]

This is getting to be a thing with you but seriously man Citation Needed

You could detail how the numbers seem flawed to you or ludicrous. I'm personally interested not for arguments sake, but because part of what I related is actual experience, and I want to know how that is ludicrous.

I see you snipped my sentence taking it out of context but why be intellectually honest?

[Aimless]

I see you snipped my sentence taking it out of context but why be intellectually honest?

It's a good question you ask. Let me answer it for you: Intellectual honesty would've helped you realise that the experience he was referring to was only in support of the numbers for daily revenue, staffing levels and simple wage costs at whatever kind of retail store it is he's employed. Taking things "out of context" is of course what you did when you turned his remark about actual experience into a statement about calculating EBITDA

[RandBlade]

It's a good question you ask. Let me answer it for you: Intellectual honesty would've helped you realise that the experience he was referring to was only in support of the numbers for daily revenue, staffing levels and simple wage costs at whatever kind of retail store it is he's employed. Taking things "out of context" is of course what you did when you turned his remark about actual experience into a statement about calculating EBITDA

No. He claimed to have "actual experience" at being able to work out the increased price required for the increased cost of higher wages. Simply having a stab in the dark about sales levels and staffing levels (which was totally incorrect in its own there is not a chance on earth his figures could be real) does not give you a clue as to how costs and profitability work for the only way that you can do that is that you need actual experience in calculating the other factors involved behind EBITDA. Or admit you're taking a stab in the dark and don't have a clue about anything else involved but to claim "actual experience" in the way things work while only looking at a fraction of the story is implausible.

Its one thing thinking you have an idea about staffing levels and sales, its a totally different thing being able to work out profitability (or losses) if you're going to make an appeal to authority. That is something I have done for a living and DO have "actual experience" of and any simplistic model is just childsplay and not realistic.

If you're making opinions based on fundamentally flawed facts and figures then fine, just realise your outcomes are fundamentally flawed.

[Ominous Gamer]

Its amazing how many people are currently still living at minimum wage. They haven't starved to death - hell they are actually purchasing inefficient (from a price perspective) food on a daily basis! (fast food). Amazing.

Your best answer for figuring out how those in poverty live comfortable debt free lives is: not dead = comfortable.


Seems like you've justified the dumbass title again.

[RandBlade]

Not dead, not needing to budget, not buying cheap food, are able to afford to spend well over a third of income on luxuries.

Yeah he's a dumbass. Those who really struggle to make ends meet - and there are many - scrimp and save, budget properly, look at what they can afford and what they need. They don't blow it on shit. Those who're blowing their cash on shit aren't struggling, or at least aren't from reasons outside their control.

[Aimless]

No. He claimed to have "actual experience" at being able to work out the increased price required for the increased cost of higher wages.

It seems I have to keep doing this until you improve your reading skills as well as your level of honesty: CITATION NEEDED

Let me help you with this: press Ctrl+F and type "exp" and click the "next" arrow a few times on this page and on the previous page

[Ominous Gamer]

Not dead, not needing to budget, not buying cheap food, are able to afford to spend well over a third of income on luxuries.

Yeah he's a dumbass. Those who really struggle to make ends meet - and there are many - scrimp and save, budget properly, look at what they can afford and what they need. They don't blow it on shit. Those who're blowing their cash on shit aren't struggling, or at least aren't from reasons outside their control.

I missed were this was cited in the thread. Where did we determine that a majority of those on the lower end spend a third of their income on luxuries. Best I saw was Loki's link that said they spend a combined 6.5% on entertainment and cigs.

I saw where you said 34% without citation, how that evolved into "well over a third" is a question in and of itself.

[LittleFuzzy]

Pfft, they could always get demoted and earn $15/hour. However I recalled just now that the $15 itself would apply to many more than the tiny portion that work minimum wage today.

Yes. A) the mooted increase in minimum wage to $10.50 covers not just those earning the current minimum wage but all those earning between that and the new proposed one (a number that has not been mentioned yet). B) yeah, it will place upward pressure on non-minimum wage jobs. The higher the current wage the smaller the effect, the closer the current wage is to the new minimum the stronger the new upward pressure.