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Thread: Minimum wage

  1. #31
    Senior Contributor DOR's Avatar
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    Quote Originally Posted by Doktor View Post
    Asty, interesting how raising lower wages is good, but raising those slightly higher ones is a huge no, no.

    So, what you gona do to keep higher paying workers when they also ask for a raise?
    There's also a knock-on effect.

    Joe's making $16 an hour, 2.21 times the national $7.25 minimum wage.
    Bob make's $12, 65.5% more than the minimum.

    Minimum wage goes up to $15.

    Joe might rightly expect that his experience, skills and / or education make him now worth $33.15 an hour, and Bob $19.85. While an employer might get away with offering Joe $25 and Bob $17, there is a risk to morale, turnover and other bad things.

    But, since five people making $8 an hour were let go when the economy turned sour, and now that things are picking up are being hired back at $15, the company's going to have to find some way to control costs.

  2. #32
    Senior Contributor Doktor's Avatar
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    Quote Originally Posted by DOR View Post
    There's also a knock-on effect.

    Joe's making $16 an hour, 2.21 times the national $7.25 minimum wage.
    Bob make's $12, 65.5% more than the minimum.

    Minimum wage goes up to $15.

    Joe might rightly expect that his experience, skills and / or education make him now worth $33.15 an hour, and Bob $19.85. While an employer might get away with offering Joe $25 and Bob $17, there is a risk to morale, turnover and other bad things.

    But, since five people making $8 an hour were let go when the economy turned sour, and now that things are picking up are being hired back at $15, the company's going to have to find some way to control costs.
    Let me see, so now the company all of a sudden has 40-50% higher costs for salaries (here I assume the median minimal wage is $10, is it a safe bet?), on the same demand side. Don''t ask why they move to well... everywhere else.
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  3. #33
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    Doktor,

    Let me see, so now the company all of a sudden has 40-50% higher costs for salaries (here I assume the median minimal wage is $10, is it a safe bet?), on the same demand side. Don''t ask why they move to well... everywhere else.
    no, the personnel costs aren't as great as you imagine, and there are other factors involved (turnover, for instance). otherwise we wouldn't see companies raising wages on their own initiative, or companies that pay a significant premium over the minimum wage (Costco).

    see the graph I posted in response to gunnut above; there are a lot of other factors other than minimum wage that determine business success and employment.

    when I was discussing with gunnut's SF's specific case, it's important to note that the disruptive effects of a minimum wage increase are reduced when there's -already- wage pressure.
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  4. #34
    Senior Contributor Doktor's Avatar
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    Asty,

    The conpany where I work is kinda labor dependent, drivers, warehouse, sales... Increase of salaries for 50% in two years would be a huge blow, something like 5% on turnover will vanish. That's in a company where the gross margin is 20-25%. Tell me how is it good if the demand stays, since we are not selling products to the minimum wagers.

    The thing gets worse if go lower in the supermarket chains for instance, where 80-90% of the workers are on the lowest bar and the margin is lower.
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  5. #35
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    Doktor,

    The conpany where I work is kinda labor dependent, drivers, warehouse, sales... Increase of salaries for 50% in two years would be a huge blow, something like 5% on turnover will vanish. That's in a company where the gross margin is 20-25%. Tell me how is it good if the demand stays, since we are not selling products to the minimum wagers.

    The thing gets worse if go lower in the supermarket chains for instance, where 80-90% of the workers are on the lowest bar and the margin is lower.
    eh, if your company/industry is structured so that profitability is only achieved with a $7.25 minimum wage, I'd say that the company/industry is in trouble even without a mandated minimum wage increase.

    Walmart and McDonalds just announced plans to increase their minimum wage fairly significantly, and given their respective market sizes in their industries, that alone will cause fairly significant wage pressure at that level.

    moreover under the Obama Administration, American corporate profits are literally at historical all-time highs, so I'd seriously question how much this will hurt the corporate bottom-line.
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

  6. #36
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    In my opinion, if you can't afford to pay your employees a livable wage in exchange for honest work, your business should fail and make room for someone else with a better business model to satisfy the market's demand.

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    Asty, Steve,

    The wage is livable one, not comfy or cozy, but ends meet. Higher wage, no problem, the prices will go up.
    No such thing as a good tax - Churchill

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  8. #38
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    Quote Originally Posted by DOR View Post
    Joe might rightly expect that his experience, skills and / or education make him now worth $33.15 an hour, and Bob $19.85. While an employer might get away with offering Joe $25 and Bob $17, there is a risk to morale, turnover and other bad things.
    Hum. The default way over here would be that Bob would get $15 because that's the legal minimum. Joe would stay at $16, and be suggested he better be putting in some off-the-table overtime since he's earning that much. Joe would then be told that if he doen't like that the employer could always find a Bob who would do that overtime for $1 less.

    And then afterwards, since the employer has to "bear the burden of high wage" he'd wait a bit and finally fire Bob. And hire a second Joe for those $15.

    Or, the currently common alternative, he'd just oursource the work so it's no longer an employment relationship. To Joe and Bob, who'd incorporate themselves and return working freelance for him. For $8.

    And yes, all the above is actually a viable business model over here. I've seen it.
    Last edited by kato; 04 Aug 15, at 22:31.

  9. #39
    Senior Contributor DOR's Avatar
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    kato,

    That's plausible.

    We introduced a minimum wage in Hong Kong a few years back, and there was substantial pressure to raise the wages of people already making just over that rate. When the minimum was raised, those slightly above that level want more. Now, the major consideration that makes it a very different economy is that the labor market is the tightest it has been in 20+ years.

    We have 120,000 unemployed, and 80,000 job vacancies. Obviously a skills mis-match, but most of the openings are in low/no skill jobs such as retail, F&B and (exception to the skills caveat) construction. There are some jobs that people just don't want.

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