Increased unemployment vs raising minimum wage

[bigdaddybus]

I struggle with where to stand in this issue.

I work a job where myself and a majority of my coworkers make between $50-75 an hour. What do I care if minimum wage is $15? If prices of consumer staples go up I will adjust my spending as needed.

Back when I was a private in the Army it worked out to around $6.75 an hour I made. Then they gave me free meals, housing, and medical on top of that. Looking back on that time now, that sure felt like a living wage. (able to save a bit, have a small entertainment budget, meet basic needs, and wasn't going hungry.) I couldn't imagine trying to live on $7 an hour today vs. then in the mid 90's.

I guess I would rather pay people more and cut social programs as social programs overall haven't impressed me

[TexasHusker]

I can't imagine why people believe $ 15. minimum wage is excessive.

I voted neither. It isn't the gubmit's or anyone else's job to define "high" and "low" pay. Those are relative terms that vary by person. And what someone earns should be dictated by the free market; not some lifetime politician in D.C.

"Excessive" is a relative term, too.

Minimum wage is minimum wage, regardless of where you index it. You could put it at $100 per hour and it still wouldn't be a "living" wage, because the prices of goods and services would be indexed to the amount, and it would still be minimum wage.

You could set it at $15 an hour easy enough. But people in business like me would have to essentially double our prices to break even in such a scenario: My labor cost would increase by 60%, or about $500K per year. Since my net profit right now is $190K a year, you can see that I would need to raise prices SUBSTANTIALLY to break even, and even MORE SUBSTANTIALLY to keep my $190K, plus even MORE SUBSTANTIALLY to increase the $190K's buying power, since EVERYONE ELSE is having to raise their prices, too, and my $190 doesn't support my lifestyle any more.

I am not in business as a hobby or a charity. I have risked my life's savings and a great deal of time to get into business, and in return I am hoping for a good return and good lifestyle. The gubmit is NOT going to squeeze all of my profits to artificially pay people more than the market, without me drastically increasing prices so that I can still earn my good return. It's either that or I shut the doors and get rid of the headache altogether.

Minimum wage is ALWAYS a zero-sum game. No one is ever getting ahead by raising it, because prices necessarily have to rise to counter the increased costs. I don't know why this is so hard for people to get their heads around. There is no free lunch.

[pflyers85]

I guess I would rather pay people more and cut social programs as social programs overall haven't impressed me

The problem is you aren't going to be able to cut social programs. Certain people will be priced out of work because the value of their labor is so minimal that it would never reach a $15/hr threshold to break even. If they aren't employable they are going to be even more reliant on social services. For the businesses that do decide to retain their employees at the higher mandated wage it will impact their pricing. Once the costs of goods and services go up its going to erode any gain in minimum wage and they will be right back to square one.

[disneysteve]

Minimum wage jobs are not intended to keep a roof over your head and support a family.

This is what I was going to say. I also agree that it isn't the government's place to tell a private business owner how much he/she needs to pay his/her employees. That should be based on market conditions and how much needs to be offered to attract the caliber of employee needed to run a successful business.

[MakeAStash]

I don't like a government telling me I'm not allowed to work at a pay rate of $X/hr when I'm perfectly willing to do so. It limits my job options too much.

[bigdaddybus]

Taxpayers are currently subsidizing those small businesses and large corporations alike. Anyone working current minimum wages cannot do so without state assistance, daycare assistance, etc. I have a relative that rents out cheap housing. Most tenants/applicants work in fast food (Mcdonalds) and are paying through section 8 (taxpayers). No fast food applicant is ever paying themselves. Taxpayers are covering difference between minimum wage and living wage, so that businesses get to keep more profits.

This sounds dead on to me

In my experience in the foster care system dealing with government aid such as the medical card, daycare assistance, job placement assistance, SNAP, govt assistance, wic food program, dental, etc. It just blew me away how many government employees work in this space.

Raising the minimum wage and cancelling a lot of these programs sounds like a massive cost saver for the government. Of those who claim tons of businesses will fail with higher minimum wage, what is your take on Costco vs Sams Club? Costco has an average salary over $20 and Sams has an average salary just over $10? Shouldn't Sams have taken over and run Costco out of business?

[disneysteve]

Of those who claim tons of businesses will fail with higher minimum wage, what is your take on Costco vs Sams Club? Costco has an average salary over $20 and Sams has an average salary just over $10? Shouldn't Sams have taken over and run Costco out of business?

As long as Sam's is able to attract the workers needed to run the business for $10/hour and Costo is able to attract the workers needed at $20/hr, both places can co-exist.

If Sam's finds that it can no longer attract people because Costco is grabbing all of the good workers and paying more, Sam's may need to raise the salary, increase benefits, or do something else to fill the staff.

As it currently stands, clearly people are taking jobs at Sam's for a reason. Maybe the location is more convenient to them. Maybe the hours are better. Maybe there are other benefits that are more attractive. People don't choose jobs solely based on the salary.

The question is what happens to Sam's Club if the government comes along and mandates raising that $10 rate to $15. How does that impact business, prices, number of workers they can afford to employ, etc.?

[corn18]

I am currently running a $50M business with about 50 employees below minimum wage. We manufacture high tech electro-optical equipment in MI. We don't pay them enough. Turnover is too high. Quality and efficiency are negatively affected.

So we are looking at how we retain these workers and the first answer is to pay them more. Then benefits. Then training. Then provide them with a path to move up. Then job satisfaction. We plan to do all of these things in the next year to be able to hire and retain good employees.

It will cost us some money and that comes out of profits. But wait, I save money by not having to hire new people all the time. My quality and productivity go up which saves more money. Their moral and job satisfaction goes up, which, theoretically, saves more money. I figure it pays for itself and then some.

I also plan to implement a bonus plan so that if the company does well, they do well. This is a no brainer. Get them vested in the success of the company.

That's how I see it. May not apply to the service industry, but it sure applies in manufacturing.

Tom

[Jluke]

It will cost us some money and that comes out of profits. But wait, I save money by not having to hire new people all the time. My quality and productivity go up which saves more money. Their moral and job satisfaction goes up, which, theoretically, saves more money. I figure it pays for itself and then some.

Kind of reminds me of something I read the other day...

CEO: What if we invest in our people and they leave?
CFO: What if we don't invest in them and they stay?

Good plan!

[pflyers85]

Raising the minimum wage and cancelling a lot of these programs sounds like a massive cost saver for the government.

That only works under the lofty assumption that businesses do not raise prices on their goods/services or cut back on their labor force to afford the higher mandated wage. Do you really think most businesses are just going to sit idly by and pay certain workers more than the market value for their labor and let that eat into their profits?

This idea that we can just improve low wage earners standard of living and purchasing power with the stroke of a pen is pure fantasy.

[bigdaddybus]

That only works under the lofty assumption that businesses do not raise prices on their goods/services or cut back on their labor force to afford the higher mandated wage. Do you really think most businesses are just going to sit idly by and pay certain workers more than the market value for their labor and let that eat into their profits?

This idea that we can just improve low wage earners standard of living and purchasing power with the stroke of a pen is pure fantasy.

So you are in favor of massive government programs that support the underemployed? such as daycare assistance, SNAP, housing assistance, medical card, govt dental clinics, etc.

As a foster parent I have had the pleasure of learning all about these programs and their efficiency is just a train wreck. I struggle with all this as I was raised by far right wingers that believe everyone should "work hard and pull yourself up" and let the poor wither and die. I don't support this mentality based on my faith. I have lost relationships with family members by fostering/adopting kids as to them this just isn't my problem to get involved with.

[bigdaddybus]

I am currently running a $50M business with about 50 employees below minimum wage. We manufacture high tech electro-optical equipment in MI. We don't pay them enough. Turnover is too high. Quality and efficiency are negatively affected.

So we are looking at how we retain these workers and the first answer is to pay them more. Then benefits. Then training. Then provide them with a path to move up. Then job satisfaction. We plan to do all of these things in the next year to be able to hire and retain good employees.

It will cost us some money and that comes out of profits. But wait, I save money by not having to hire new people all the time. My quality and productivity go up which saves more money. Their moral and job satisfaction goes up, which, theoretically, saves more money. I figure it pays for itself and then some.

I also plan to implement a bonus plan so that if the company does well, they do well. This is a no brainer. Get them vested in the success of the company.

That's how I see it. May not apply to the service industry, but it sure applies in manufacturing.

Tom

It applies in the service industry I am in.

I work for an $80B company. We spend a massive amount developing people and we have top of the line benefits, 401K, pension, and training programs to move up within the organization. With that we still have massive turnover in entry level positions from people who start with us, get trained by us, and leave for a quick pay increase somewhere else often with a less comprehensive benefit package.

[sv2007]

I also plan to implement a bonus plan so that if the company does well, they do well. This is a no brainer. Get them vested in the success of the company.

I'm curious to see how the bonus thing works out and how you plan to distribute it.

I remember from training that bonuses don't work well when given to everybody; it works better when concentrated on a few. And this was at a company known to give generous bonuses.

[bigdaddybus]

Here is how I have seen bonus programs work, and work pretty well I think. bonuses based on two different multipliers. company performance and individual performance. (bonus is % of base pay)

Assume the company did well so the base bonus announcement was 10%
- if you performance review was poor your bonus was 0%
- if you performed avg your bonus was 10%
- if you performed above to excellent your bonus was between 11-14%
- MGMT bonuses were 18%

this program is on top of annual base salary reviews

[sv2007]

Here is how I have seen bonus programs work, and work pretty well I think. bonuses based on two different multipliers. company performance and individual performance. (bonus is % of base pay)

Assume the company did well so the base bonus announcement was 10%
- if you performance review was poor your bonus was 0%
- if you performed avg your bonus was 10%
- if you performed above to excellent your bonus was between 11-14%
- MGMT bonuses were 18%

this program is on top of annual base salary reviews

I've worked at a company with bonus structured like that and I didn't like it.

At that company, the multiplier was division-wide and is computed on profits/growth of the company and division and on how well the division portion matched its projections.

I feel it is not individual enough. My individual % was 18% and this number was set for 3 yearsr The company multiplier is applied to the individual % (e.g. a 3x multiplier = 18 * 3 = 54%).

I got $0 in my 1st and 2nd years; and 27% on 3rd. Fluctuates too much based on company performance (esp in a highly cyclic industry).

The above is only the cash bonus. The company did do stock grants based on individual performance; thankfully.

Although it feel good knowing that we are all in it together with this type of bonus; but I much more prefer individual bonus structure so each bonus time there's no resentment.