I’m not surprised. DeSantis is trying the same thing in Florida, to offset the lost farm workforce due to mass deportations. We’re basically cattle to these people.
The McDonald’s argument is old and outdated. Back when a family could comfortably afford necessities and some luxuries, those were seen as after-school jobs. It’s a very different world now. Any full time position should be able to afford someone all necessities. If not, it’s the very definition of exploitation.
I got into a lot of debates as to how. Raising the federal minimum wage alone isn’t enough. Our nation’s cost of living varies far too widely for that to work without destroying small businesses. We need systemic reform with more smart subsidies and democratic socialism to keep necessities low. Possibly even regulatory pricing. Inequality will only worsen with AI replacement.
I agree it isn’t enough. I want UBI and Medicare4All and post-secondary education (including trade schools) free to accepted students, and so much more.
But, I will gladly take a federal minimum wage increase. I do think it should be set based on cost of living in the cheapest/poorest states, and that some states should have an even higher minimum wage.
(I would not directly benefit, I’m currently unemployed, but generally paid significantly more than minimum wage [I’m a computer programmer by trade.].)
Same here. It wouldn’t help me now, but it’s what I needed when it would’ve mattered. Socialized healthcare would help everyone, myself included.
States do have their own minimum wage for exactly that reason. Federal minimum wage is $7.50/hr. NY state minimum wage is $16.50/hr. We also pay $12.99/dz for eggs and $1800/mo for a shitty studio apartment. A higher federal minimum wage would help New Yorkers more, but it would destroy lower cost of living states.
A higher federal minimum wage […] would destroy lower cost of living states.
No. It would probably be better for it to come in incrementally, but increasing wages would help, even if it might squeeze some small businesses. Having looked at the balance sheet for more than one small business, wages are rarely the most significant cost, and when they are the profit margins are larger.
Every time the minimum wage increased while I was a kid, my father (a small business owner) complained, but the county got better overall. Any business that closed was replaced with two that provided the same goods/services within 6 months.
If you look at the data from states raising their minimum wages, you won’t see either massive price increases (some, tho generally tracking inflation) or a large decrease in small businesses per capita.
You’re correct that payroll is not the most costly part of overhead in a business. Most of the time it’s rent. However, payroll is one of the larger controllable components of overhead. Keep in mind, the percent of increase that your dad experienced would not result in the large reduction in force of the current increase.
Federal minimum wage went from $5.15/hr to $7.50/hr, a 41% increase that could result in some layoffs coupled with a hit to profit margin. If we were to go up to a federal minimum wage of $25, that would be a 245% increase. No small businesses have markup that high, so that would result in a devastating blow to payroll.
Increases that substantial directly impact the cost of goods as well. Let’s say you own a pizza place. The cost of at least two of your primary ingredients go up immediately, flour and mozzarella. Those domestic products are now being harvested, refined, milked, cultured, and delivered by employees making 245% more. Farmers have to cover their overhead too, so that’s passed on to the customer. The imported canned tomatoes aren’t impacted at first, but as the domestic supply struggles to compete with imported tomatoes, tariffs are implemented on foreign supply to keep domestic farms competitive.
You need to make a choice. Either you can only afford to pay one employee during peak hours, and you essentially live at your pizza place to keep the doors open, effectively driving your own hourly rate far below minimum wage (since you’re not paid hourly, you’re not breaking the law). Or you keep a second employee and hope the locals are willing to pay well above the cost per slice as Domino’s down the road, who gets wholesale deals on all of their ingredients and can afford to operate at a loss in some areas while increasing markup in others. It’s a losing battle, that inevitably ends in closing your business and going to work for Domino’s.
I skipped the details and mathematics of the latter half of that example to save a lot of typing, but that’s the effective result of an increase that substantial on an area with a lower cost of living.
Here are a couple of examples. According to what I’ve learned in school, and as I’ve written, these are only factors if the rate is raised too high. Specifically Cons 1 & 3 are what I’ve been talking about.
I’m not surprised. DeSantis is trying the same thing in Florida, to offset the lost farm workforce due to mass deportations. We’re basically cattle to these people.
The McDonald’s argument is old and outdated. Back when a family could comfortably afford necessities and some luxuries, those were seen as after-school jobs. It’s a very different world now. Any full time position should be able to afford someone all necessities. If not, it’s the very definition of exploitation.
So Say We All
I got into a lot of debates as to how. Raising the federal minimum wage alone isn’t enough. Our nation’s cost of living varies far too widely for that to work without destroying small businesses. We need systemic reform with more smart subsidies and democratic socialism to keep necessities low. Possibly even regulatory pricing. Inequality will only worsen with AI replacement.
If your shitty business is too worthless to pay your employees a living wage, you should stop exploiting people.
but random economics person says that the only way to keep certain businesses going!
I agree it isn’t enough. I want UBI and Medicare4All and post-secondary education (including trade schools) free to accepted students, and so much more.
But, I will gladly take a federal minimum wage increase. I do think it should be set based on cost of living in the cheapest/poorest states, and that some states should have an even higher minimum wage.
(I would not directly benefit, I’m currently unemployed, but generally paid significantly more than minimum wage [I’m a computer programmer by trade.].)
Same here. It wouldn’t help me now, but it’s what I needed when it would’ve mattered. Socialized healthcare would help everyone, myself included.
States do have their own minimum wage for exactly that reason. Federal minimum wage is $7.50/hr. NY state minimum wage is $16.50/hr. We also pay $12.99/dz for eggs and $1800/mo for a shitty studio apartment. A higher federal minimum wage would help New Yorkers more, but it would destroy lower cost of living states.
No. It would probably be better for it to come in incrementally, but increasing wages would help, even if it might squeeze some small businesses. Having looked at the balance sheet for more than one small business, wages are rarely the most significant cost, and when they are the profit margins are larger.
Every time the minimum wage increased while I was a kid, my father (a small business owner) complained, but the county got better overall. Any business that closed was replaced with two that provided the same goods/services within 6 months.
If you look at the data from states raising their minimum wages, you won’t see either massive price increases (some, tho generally tracking inflation) or a large decrease in small businesses per capita.
You’re correct that payroll is not the most costly part of overhead in a business. Most of the time it’s rent. However, payroll is one of the larger controllable components of overhead. Keep in mind, the percent of increase that your dad experienced would not result in the large reduction in force of the current increase.
Federal minimum wage went from $5.15/hr to $7.50/hr, a 41% increase that could result in some layoffs coupled with a hit to profit margin. If we were to go up to a federal minimum wage of $25, that would be a 245% increase. No small businesses have markup that high, so that would result in a devastating blow to payroll.
Increases that substantial directly impact the cost of goods as well. Let’s say you own a pizza place. The cost of at least two of your primary ingredients go up immediately, flour and mozzarella. Those domestic products are now being harvested, refined, milked, cultured, and delivered by employees making 245% more. Farmers have to cover their overhead too, so that’s passed on to the customer. The imported canned tomatoes aren’t impacted at first, but as the domestic supply struggles to compete with imported tomatoes, tariffs are implemented on foreign supply to keep domestic farms competitive.
You need to make a choice. Either you can only afford to pay one employee during peak hours, and you essentially live at your pizza place to keep the doors open, effectively driving your own hourly rate far below minimum wage (since you’re not paid hourly, you’re not breaking the law). Or you keep a second employee and hope the locals are willing to pay well above the cost per slice as Domino’s down the road, who gets wholesale deals on all of their ingredients and can afford to operate at a loss in some areas while increasing markup in others. It’s a losing battle, that inevitably ends in closing your business and going to work for Domino’s.
I skipped the details and mathematics of the latter half of that example to save a lot of typing, but that’s the effective result of an increase that substantial on an area with a lower cost of living.
Do you have data to back up your assertions or are you idly speculating?
Here are a couple of examples. According to what I’ve learned in school, and as I’ve written, these are only factors if the rate is raised too high. Specifically Cons 1 & 3 are what I’ve been talking about.
https://www.britannica.com/procon/minimum-wage-debate/Pro-Quotes