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Thread: Minimum Wage and McBudgets

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    Senior Member GGT's Avatar
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    Default Minimum Wage and McBudgets







    Protesting workers this week will demand $15 an hour on grounds that cutbacks in hours, constantly changing schedules, and lack of benefits like health care, paid sick leave, and vacation make it impossible to have a decent standard of living. They are also battling the perception that such entry-level jobs are the preserve of teenagers and the poorly educated. Workers' average age, according to federal labor figures, is 29, and 25% of this group has completed some college courses.
    Colbert skewered the site for listing only $20 a month for health insurance and, initially, no amount for heating costs. (It has since budgeted $50 a month for heat.)

    http://management.fortune.cnn.com/20...source=cnn_bin


    It's a decent enough website with common sense tips for budgeting, but it's set up for teenagers looking for temp PT work (not their typical employee). Besides being unrealistic, it appears to be designed by the Financial Services company they link to for a "free" consultation (and $100 discount off their Financial Plan).



    On the other side of the debate are ECONOMISTS IN SUPPORT OF A $10.50 U.S. MINIMUM WAGE:

    http://www.peri.umass.edu/fileadmin/...on_website.pdf

    McDonald's, the economists concluded, could offset half the cost of a $3.25 hourly wage hike by raising the price of each Big Mac by .05 cents.


    I think a national $10.50/hour minimum wage is reasonable, overdue, and necessary. $15 might be a stretch at this time, especially with our dysfunctional congress. What do you think?

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    All Worship Ragnarök Loki's Avatar
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    We had this discussion last time. You've yet to give a reason as to why the minimum wage shouldn't be $50 an hour.
    Hope is the denial of reality

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    Senior Member GGT's Avatar
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    Again, that's not the suggested minimum. The $10.50 number comes from economists pegging wages to inflation, returning consumer purchasing power to 80's rates, and adjusting for structural changes in our labor markets. Or didn't you read the articles or any of the links?

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    Are you actually going to answer the question?
    Hope is the denial of reality

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    Senior Member GGT's Avatar
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    Quote Originally Posted by Loki View Post
    Are you actually going to answer the question?
    I answered the last time you pulled this stunt (but I'll answer again because it's late and I can't sleep).

    The minimum wage debate has become the living wage debate, due to changes in demographics and labor markets. Low wage jobs are no longer just teenagers looking for their first job, or 'pocket' money. But they do make up the largest growth in employment options, even for those with some college, college degrees, adults with children, middle-aged and seniors --- who need a job! It's not limited to fast food franchises, but includes anything retail or service-related. Hospitality, tourism, even the largest chunks in healthcare "growth" like personal care assistants, nursing assistants, home health aides, elder care, etc.

    Now, you explain why raising the price of a Big Mac by 0.05 cents would be a hardship for McDonald's. Or why raising the price of a Papa John's pizza by 0.10 cents would kill their franchise. Or why Walmart would go out of business if they paid all their employees at least $10.50/hour.

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    Quote Originally Posted by Loki View Post
    We had this discussion last time. You've yet to give a reason as to why the minimum wage shouldn't be $50 an hour.
    Because it's 2013 not 2068, duh.
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    Quote Originally Posted by GGT View Post
    I answered the last time you pulled this stunt (but I'll answer again because it's late and I can't sleep).

    The minimum wage debate has become the living wage debate, due to changes in demographics and labor markets. Low wage jobs are no longer just teenagers looking for their first job, or 'pocket' money. But they do make up the largest growth in employment options, even for those with some college, college degrees, adults with children, middle-aged and seniors --- who need a job! It's not limited to fast food franchises, but includes anything retail or service-related. Hospitality, tourism, even the largest chunks in healthcare "growth" like personal care assistants, nursing assistants, home health aides, elder care, etc.

    Now, you explain why raising the price of a Big Mac by 0.05 cents would be a hardship for McDonald's. Or why raising the price of a Papa John's pizza by 0.10 cents would kill their franchise. Or why Walmart would go out of business if they paid all their employees at least $10.50/hour.
    Nothing in there says anything about why the minimum wage shouldn't be $50.
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    SEŃOR Member Aimless's Avatar
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    Quote Originally Posted by Loki View Post
    Nothing in there says anything about why the minimum wage shouldn't be $50.
    There should be something between your ears that tells you why the minimum wage today shouldn't be $50 even though it could be $9. Have you consulted it lately?
    “Humanity's greatest advances are not in its discoveries, but in how those discoveries are applied to reduce inequity.”
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    I've yet to hear that any argument from GGT that would make me think she can figure out any reason for not having a $50 minimum wage.
    Hope is the denial of reality

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    Quote Originally Posted by Loki View Post
    I've yet to hear that any argument from GGT that would make me think she can figure out any reason for not having a $50 minimum wage.
    Which would be a relevant response if the objective were "Winning over GGT" rather than "Understanding" or "Discussing in good faith". Here's a summary of one line of reasoning for why $9 might be okay but $50 might not be: "It'd be too much for too little." Here's yet another possible summary: "Diminishing and ultimately negative returns." Here's a third: "The numbers wouldn't work out in our favour." You keep forgetting that your favourite brand of slippery-slope reasoning only yields meaningful results when the two outcomes you compare are really almost exactly identical to one another.
    “Humanity's greatest advances are not in its discoveries, but in how those discoveries are applied to reduce inequity.”
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    Except one can't have an intelligent argument about the minimum wage with someone who doesn't acknowledge that there might be some downside to having a minimum wage.
    Hope is the denial of reality

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    Senior Member Flixy's Avatar
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    Quote Originally Posted by Loki View Post
    We had this discussion last time. You've yet to give a reason as to why the minimum wage shouldn't be $50 an hour.
    I hear you guys have representatives for your government. Why not one representative for every thousand citizens?

    I mean, that is a shitty argument. Besides, you seem a bit selective because last time there were reasons given on how to determine the minimum wage. If you ask me, it should be enough to live on - otherwise it's no use to work, might as well be jobless and get income from criminal ways. I mean, if it doesn't pay having a legit job.. There is more to this than just economics.

    edit: only saw your above post now - of course it has downsides too.

    Oh, and I realise that living expenses are different across the US, so if you ask me it should probably be determined on a state level, or at least adjusted. I don't know if your current minimum wages are enough to live on, so I don't know if it should be raised or not, TBH.
    Keep on keepin' the beat alive!

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    So you think wages should be determined according to the needs of the workers, and not according to things like supply and demand? I hear some countries tried that one before. Basically, the only reason the minimum wage doesn't bring about economic collapse in the Western world is that it's only marginally higher than what the market would pay those same workers anyway (or it only affects a small portion of the work force). Which is to say that it's a terrible policy that completely ignores some fundamental laws of economics. I know this is hard to understand, but it's not the job of private actors to make sure that other private actors are well-taken care of. 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.
    Hope is the denial of reality

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    If you think about it the guy making 8.75 million dollars per year will still do his job, the EXACT same if he made 5 million a year. It's a matter how you simply spread the wealth the company is making. I Agree they do optimize profits by trying to pay their employees (at least the low level ones) as little as possible, (clearly they could pay their higher-up employees less). It's an interesting question, the market will work on it's own without a minimum wage, only downside is the market is brutal it'll just let people who are not fit enough just die/starve, but socially we care about them.

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    The purpose of pay is not to make someone work harder, but to incentivize him to work more hours (and to keep him from moving to a competitor, obviously). There is a lot of things people could be doing with their time, and each marginal hour of work has to provide a greater utility than the alternatives.

    It's not the market's role to take care of people who are not fit to work. I should note that the main impact of a minimum wage is to create extra people who are now no longer employable.
    Hope is the denial of reality

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    Senior Member Flixy's Avatar
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    Quote Originally Posted by Loki View Post
    So you think wages should be determined according to the needs of the workers, and not according to things like supply and demand? I hear some countries tried that one before. Basically, the only reason the minimum wage doesn't bring about economic collapse in the Western world is that it's only marginally higher than what the market would pay those same workers anyway (or it only affects a small portion of the work force). Which is to say that it's a terrible policy that completely ignores some fundamental laws of economics. I know this is hard to understand, but it's not the job of private actors to make sure that other private actors are well-taken care of. 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.
    I'm not necessarily opposed to government subsidies for jobs that aren't worth minimum wage, or getting people on benefits who have no real chance to get a subsidized job. We used to ave something like that over here, only for jobs that couldn't compete with the regular job market to minimize distortion (e.g. 'city guards', home care workers, etc.), with the aim of keeping jobless employed and providing them with work experience, and ultimately getting back into the real job market. Beats just sending them a check, or are you denying that keeping people working is beneficial to society? Plus those jobs also directly benefit society, which is a plus. Jobless people affect society in more ways than just the job market...

    By the way, in your post you already answer your own question in a similar way that I answered it last time too: it's a balance between the benefits to society and distorting the job market, which means, like you say, it should be marginally higher than the market wages for such jobs, and only affect a small portion of the work force. In other words, not $50/hour.
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    Useless jobs provide very little benefit to society. Not only are you preventing these same people from finding a more productive job (why would they?), but you're providing people in a similar position a strong incentive to aim for those same useless jobs instead of harder-to-find (and possibly lower-paying) productive ones. Again, just think about what would happen in a country that provided jobs for every unemployed person (let's even ignore the cost of providing those jobs). If you think bad things would happen, I don't quite see why you're willing to tolerate those same bad things but on a smaller scale. Bad policy is bad policy whether it's on a small scale or large scale.

    I fail to see the benefit. What does society gain from forcing private actors to pay some (but not other) workers more than they are worth and making some of the least skilled workers unemployable (because they can't justify the higher wage)? All I see is market distortions and perverse incentives to remain unskilled (assuming one is employed).
    Hope is the denial of reality

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    Raise the minimum wage if you hate poor people who are disproportionately impacted by higher costs for basic items. After all retail and fast food would be the ones who have to offset the cost of higher wages with higher prices... the rich don't care since they can afford the basics anyway.

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    Quote Originally Posted by Loki View Post
    It's not the market's role to take care of people who are not fit to work. I should note that the main impact of a minimum wage is to create extra people who are now no longer employable.
    I agree we can have no minimum wage, then just tax the higher earning members enough to compensate for how much we believe the lower earning employees should be making, or is a livable wage.
    Last edited by Lebanese Dragon; 07-30-2013 at 11:21 PM.

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    Senior Member GGT's Avatar
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    Quote Originally Posted by Loki View Post
    I've yet to hear that any argument from GGT that would make me think she can figure out any reason for not having a $50 minimum wage.
    No need to be patronizing.

    Quote Originally Posted by Loki View Post
    Except one can't have an intelligent argument about the minimum wage with someone who doesn't acknowledge that there might be some downside to having a minimum wage.
    Or a dick. Switching the debate to whether having a federal minimum wage is good/bad isn't gonna fly, not in this thread and not in the real world. Deal with it.



    Quote Originally Posted by Loki View Post
    So you think wages should be determined according to the needs of the workers, and not according to things like supply and demand? I hear some countries tried that one before. Basically, the only reason the minimum wage doesn't bring about economic collapse in the Western world is that it's only marginally higher than what the market would pay those same workers anyway (or it only affects a small portion of the work force). Which is to say that it's a terrible policy that completely ignores some fundamental laws of economics. I know this is hard to understand, but it's not the job of private actors to make sure that other private actors are well-taken care of. 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.
    "Supply and Demand" isn't some esoteric theory only classical economists study in the name of freee markets. But when they disconnect 'market forces' from wages, or things like safe working environments or equal employment opportunities, they do a disservice to their field. There are other types of economists whose studies and conclusions consider the very people who create economies in the first place, keep them humming, and hopefully make them grow.

    Since ours is a consumer-based economy, and now predominately a service-based economy (instead of industrial manufacturing), that matters quite a bit. Those "fundamental laws of economics" don't necessarily consider transitions and transformations of the 21st century, and how that impacted working people....you have to look to behavioral and political economists for that.



    Quote Originally Posted by Loki View Post
    The purpose of pay is not to make someone work harder, but to incentivize him to work more hours (and to keep him from moving to a competitor, obviously). There is a lot of things people could be doing with their time, and each marginal hour of work has to provide a greater utility than the alternatives.
    It's not the market's role to take care of people who are not fit to work. I should note that the main impact of a minimum wage is to create extra people who are now no longer employable.
    You slide between these concepts without addressing either.

    Paying people for their work has many reasons and purposes. First, because otherwise it'd be indentured servitude aka slavery. Secondly, human "productivity" has limitations, even with modern technology. Those 'competitors' often base their business models on exploiting the growing numbers of unemployed....training costs included. They don't need to care about losing workers, or training new ones, since there are still about ten people for every available position. Supply and Demand definitions take on a whole new meaning when applied to people looking for work.


    Quote Originally Posted by Loki View Post
    Useless jobs provide very little benefit to society. Not only are you preventing these same people from finding a more productive job (why would they?), but you're providing people in a similar position a strong incentive to aim for those same useless jobs instead of harder-to-find (and possibly lower-paying) productive ones. Again, just think about what would happen in a country that provided jobs for every unemployed person (let's even ignore the cost of providing those jobs). If you think bad things would happen, I don't quite see why you're willing to tolerate those same bad things but on a smaller scale. Bad policy is bad policy whether it's on a small scale or large scale.
    Bad policy is having NO minimum wage. It's even worse when there are millions of people working at wages that became poverty wages decades ago.

    I fail to see the benefit. What does society gain from forcing private actors to pay some (but not other) workers more than they are worth and making some of the least skilled workers unemployable (because they can't justify the higher wage)? All I see is market distortions and perverse incentives to remain unskilled (assuming one is employed).
    Those market distortions and perverse incentives are more applicable to big corporations like Walmart, McDonalds, Burger King, etc.

    Those wealthy corporations are exploiting their workers, and tax payers, too. When they don't pay their employees a Living Wage, those folks have to apply for subsidized Child Care, Healthcare, food assistance, rent and utility assistance. But they also balk at corporate taxes, high income taxes, pretty much any taxes that fund those things.

    That's corporate welfare, and it's ugly.

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    All Worship Ragnarök Loki's Avatar
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    Quote Originally Posted by Lebanese Dragon View Post
    I agree we can have no minimum wage, then just tax the higher earning members enough to compensate for how much we believe the lower earning employees should be making, or is a livable wage.
    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...
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    Heh I just finished watching the video. Its pretty funny (especially 365 days lol) however... if people actually followed a budget they would be better off. Its somewhat sad that having a spending plan is mocked in America but the simple reality is even if you have more money if your stupid with it you will still fail at life. The reverse is true - someone is on the lower end of the wage scale but saves and doesn't over indulge can still have a comfortable debt free life.

    (Percent of people who have budgets per gallup - http://www.theblaze.com/stories/2013...-surprise-you/ )

    (People with high wages who still fail) http://bleacherreport.com/articles/1...in-nba-history

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    Quote Originally Posted by Lewkowski View Post
    Raise the minimum wage if you hate poor people who are disproportionately impacted by higher costs for basic items. After all retail and fast food would be the ones who have to offset the cost of higher wages with higher prices... the rich don't care since they can afford the basics anyway.
    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)...

  24. #24
    The "budget" that lewk is referring to. By comfortable debt free life he must mean working 2 jobs, imaginary health insurance, no a/c, owning but not using a car, etc.

    http://thinkprogress.org/economy/201...uget-low-wage/
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    Quote Originally Posted by Lewkowski View Post
    Heh I just finished watching the video. Its pretty funny (especially 365 days lol) however... if people actually followed a budget they would be better off. Its somewhat sad that having a spending plan is mocked in America but the simple reality is even if you have more money if your stupid with it you will still fail at life. The reverse is true - someone is on the lower end of the wage scale but saves and doesn't over indulge can still have a comfortable debt free life.

    (Percent of people who have budgets per gallup - http://www.theblaze.com/stories/2013...-surprise-you/ )

    (People with high wages who still fail) http://bleacherreport.com/articles/1...in-nba-history
    Okay look if you make $200 less a month than you pay in rent then a budget isn't going to magic you up an extra $200 all on its own, never mind the cost of food, gas and kids. The most interesting thing about the McD budget is that the people who created it are clueless. I think McD should ask for its money back from these tits.
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    Quote Originally Posted by Illusions View Post
    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.
    Are you including the extra costs that employer has to pay when wages go up?
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    Quote Originally Posted by Illusions View Post
    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.
    Come on man those dividend payouts have to come from somewhere and rubberstamping those payouts has to be done by SOMEONE and that someone has to get a fair salary for his work.

    That said I believe the example you outline is a little too undetailed to give a clear picture of the real impact on the retail store and its owner's business.
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    Quote Originally Posted by Veldan Rath View Post
    Are you including the extra costs that employer has to pay when wages go up?
    Since they vary by State, size of the company, number of employees, and benefits offered by the company (such as 401K matching, healthcare pay-in, donation matching, etc), I did not. I welcome somebody offering mock numbers for this as well, but I don't expect it to make the cost per dollar exceed 5 cents passed on to the customer.

  29. #29
    base on corporate figures the cost of a big mac would raise 68 cents if mcdonald's salaries were doubled.

    curious if anyone considers that detrimental.

    EDIT:
    and loki's shortsightedness wins again!
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    16,441
    Quote Originally Posted by Illusions View Post
    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.
    You're missing one rather obvious point. If the company could have gotten away with raising prices 4 cents before, why didn't they do so? The most likely reason is that the increase would drive away more customers that would be earned by that increase. So by increasing prices in order to pay higher wages, they'd be losing even more money than they'd be paying in extra wages. And that means they'd need to fire people. Now if you add the fact that the company might be working with very narrow profit margins, that difference might very well be the difference between staying in business and going bankrupt.

    Quote Originally Posted by Aimless View Post
    Okay look if you make $200 less a month than you pay in rent then a budget isn't going to magic you up an extra $200 all on its own, never mind the cost of food, gas and kids. The most interesting thing about the McD budget is that the people who created it are clueless. I think McD should ask for its money back from these tits.
    If you make $200 less than what you pay in rent, you properly should either be looking at renting something cheaper or look for a roommate. Last I checked, people don't have a human right to a one-bedroom non-shared apartment.
    Hope is the denial of reality

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