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Post by blueneck on Jan 10, 2007 7:58:20 GMT -6
I used to work at McDonald's ages ago. We had the capacity to product 240 hamburger per hour per grill. 4 grills.
Lets say the minimum wage goes up 2 bucks.
Taking half of McDonald's capacity at 120 per hour and divide into 2 dollars yields 1.6 cents raw cost increase. just for sake of argument, lets double that and add a 50% markup, we end up at 4.8 cents - so at the very most a minimum wage increase might mean your burger goes up 5 cents.
Grocery check out, in a past life I also used to do this. An average grocery order was 40 items. It took roughly ten minutes to ring it up figuring generously so each checker can do 6 orders per hour (really much more than that but for the sake of the excercise). So dividing 240 items into 2 dollars ends up at 0.8 cents raw cost. Grocery stores operate under much slimmer margins than fast food, so even if we double that we are talking 1.6 cents per item, the reality is lower.
So next time you hear a righty or other anti minimum wager trying to tell you costs will double and triple - its all BS. Help put it in perspective for them by doing the math. it means pennies, not dollars.
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Post by LibSlayer on Jan 16, 2007 16:36:46 GMT -6
The workers you use as examples are not paid for piece work, they are paid by the HOUR.
So here are the numbers for you:
Small business, 1 owner, 10 minimum wage employees.
The 10 employees cumulatively work 400 hours a week.
The owner presently pays $2020 a week in wages to the employees at $5.15 hour.
If minimum wage is raised to $7.15 hour then the 400 hours will cost the owner $2860. That is a definite increase in labor costs.
Where does that money come from?
1. From the owner's profits - not going to happen 2. Raised prices 3. Reduced hours 4. Some combination of 2 and 3.
If prices are raised that increases inflation, and those who pay the prices now have less money to buy other things.
If hours are reduced it increases unemployment.
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Post by liberalcapitalist on Jan 16, 2007 19:55:09 GMT -6
how can you collect unemployment if your working? you might have to re-think that comment.
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Post by LibSlayer on Jan 17, 2007 8:19:44 GMT -6
how can you collect unemployment if your working? you might have to re-think that comment. You misread my statement, the unemployment RATE goes up as the owner lets employees go to reduce labor costs.
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Post by judes on Jan 17, 2007 16:58:27 GMT -6
You forgot option five. By putting more money into a greater number of hands you eventually increase the capacity for demand in those industrys that employ minimum wage earners. With increased demand there is more opportunity for increased efficiency of labor and increased utilization of resources, which reduce costs.
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Post by unlawflcombatnt on Jan 17, 2007 17:04:16 GMT -6
The workers you use as examples are not paid for piece work, they are paid by the HOUR. So here are the numbers for you: Small business, 1 owner, 10 minimum wage employees. The 10 employees cumulatively work 400 hours a week. The owner presently pays $2020 a week in wages to the employees at $5.15 hour. If minimum wage is raised to $7.15 hour then the 400 hours will cost the owner $2860. That is a definite increase in labor costs. That's right. And it also increases spendable consumer income by $840, which increases consumer spending by that amount, increases production demand accordingly, and increases demand for labor to provide that production demand. If applied to only one business, this would be a negative for that business. But this increase will be applied to all minimum wage workers, thus increasing the aggregate wages of all workers, increasing the amount of money available to purchase this particular business's goods. Thus, in return for his own increase in labor costs, there is increased money available to purchase his products, and a larger market size available measured in dollars. In fact, it will come from some combination of 1, 2 and 3, but mainly from #1 (profits). Prices are mainly determined by consumer demand for products, not by producer costs. Consumer demand is completely unaffected by increased cost of production. (The price consumers are willing to pay for a product has nothing to do with how much it costs the producer to make it.) Consumer demand is limited by spendable consumer wealth. If the manufacturer raises prices, he'll sell less product. The optimum price for profits has little to do with costs. The price is largely determined by the level at which the seller maximizes his sales income. That level is completely unaffected by costs. The seller receives his maximum sales revenue from a certain price, regardless of how much his labor costs are. In most cases, his maximum profits are also achieved at the same price, regardless of cost increases. For example, if profits are maximum when the price level is $100/unit, it makes no difference whether labor costs are $2/unit, or $40/unit. If max profits are achieved while selling for $100/unit, there will be no price change to recoup costs, because such a price increase will reduce profits from their maximum level. If the labor cost increase is so high as to eliminate profits, then the price will increase, as there would otherwise be 0 profits. Again, however, if an item brings in maximum sales revenue and profit at $100/unit, and labor costs increase from $2/unit to $40/unit, there will be absolutely no long-term change in the price caused by labor cost increases, because increasing the price above $100/unit reduces total sales revenue and total profits. The "cost" of production has absolutely 0 effect on the stable price level unless the labor costs increase to a near profit-eliminating level. Some items will increase in price. Many will not. But aggregate consumer spending power will definitely increase with a minimum wage increase. And this increase will be largely at the expense of reducing profits, not mainly from price increases. Given that Corporate profits are at record level, and investment capital available from these profits is abundant, a reduction in Corporate profits will reduce investment very little, if any. In fact, it will increase consumer income, increase consumer spending, increase consumer production demand, and increase investment demand to meet this increased consumer production demand. Increasing the minimum wage will increase investment opportunities as a result, increasing the investment of the already over-abundant quantity of capital available.
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Post by judes on Jan 17, 2007 17:27:15 GMT -6
Well you said it much better than I could! I am certainly not an economics major, but have done a fair share of cost estimating in my profession. What I was trying to say is that the increased volume that results from the increased demand almost always leads to lower costs. As almost all businesses have a certain amount of fixed costs that are lowered by the increase in volume, since those fixed costs are spread over more units of production.
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Post by unlawflcombatnt on Jan 18, 2007 16:50:26 GMT -6
What I was trying to say is that the increased volume that results from the increased demand almost always leads to lower costs. As almost all businesses have a certain amount of fixed costs that are lowered by the increase in volume, since those fixed costs are spread over more units of production. Those are good points about increased volume leading to decreased per-unit costs. That's similar to (if not identical) to the "economies of scale" principle in economics, which states that it is less costly (per unit) to produce something on a larger scale. However, I think some Corporatists have extended this concept to its most illogical extreme, claiming that one giant Corporation will produce (and sell) goods cheaper than several smaller competing firms. Though there may be savings in administration costs, this is only a part of the cost savings attributable to "economies of scale." This savings, however, is largely negated if a giant Corporation exerts market control on prices, and charges more since there are no competitors to undercut their prices. "Economies of scale" was meant to apply mainly to the size of 1 single production facility. (A giant factory can produce goods cheaper than a small shop.) It has far less application to multiple small production facilities owned by 1 giant Corporation. There's less cost-saving benefit to this arrangement, and lack of market competitors allows them to charge higher prices. In addition, lack of market competition reduces the incentive to become more efficient. It's certainly true that a singular large production facility can produce goods at a lower cost. It certainly is not true, however, that a large Corporation composed of multiple small production facilities will produce goods for a lower price to consumers. There may be some reductions in administrative costs, but they are offset by the lack of downward price pressure exerted by market competition.
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Post by judes on Jan 18, 2007 17:47:17 GMT -6
Good point. Actually I believe at a certain point the larger the "corporation" gets the increase in bureaucracy costs actually erodes any economy of scales gained in higher production volumes.
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Post by blueneck on Jan 19, 2007 6:09:46 GMT -6
So the increase demand creeated by greater spending power increases volumes thus offsetting the miniscule piece cost increases. The scare tactic debunk stands No evidence from past minimum wage hikes to support the other scare tactic - massive job loss. Someone still has to cook the hamburgers, ring up the groceries and sweep the floors. These entry level jobs simply just do not vanish. In fact there is some evidence to suggest that increaing the wage helps minimum wage employers fill previously unfillable jobs because the pay was not attractive enough to get and retain workers. This is a great example of how demand side economics works. It certainly passes the common sense test much easier than supply side or "voodoo" economics does . Give more money to poor and middle class and they spend it, give more to the rich and they squirrel it away. 60-70% of the public depending on which polls, are in favor of a wage hike, and it has bi partisan support. It is those against that are in the fringe. the mainstreem supports this.
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Post by unlawflcombatnt on Jan 19, 2007 14:52:42 GMT -6
Economist Ravi Batra, in his book Greenspan's Fraud, has documented the effect of the economy of minimum wage increases. In every case, it lead to an increase in GDP and an increase in employment. The effect of increasing aggregate consumer spending power and demand has always been greater than the slight negative effect of increased labor costs. In the bigger picture, increasing the minimum wage will reduce the "wage-productivity" gap that Ravi Batra has described. (The gap between workers' output and their ability to purchase production through wages.) In fact, minimum wage increases have always helped business in aggregate, because it increases consumer purchasing power, and the increase is income-financed, not debt financed. With more capital available than capital investment opportunities, there is no justification for keeping wages down to increase profits. In fact, forcing wages higher increases capital investment, because it increases consumer demand for the goods production facilitated by that investment. Clamping down wages is of short-term benefit only for business and Corporate America. In the long-run it reduces the very production demand that is necessary to drive production.
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Post by LibSlayer on Jan 22, 2007 12:55:58 GMT -6
You forgot option five. By putting more money into a greater number of hands you eventually increase the capacity for demand in those industrys that employ minimum wage earners. With increased demand there is more opportunity for increased efficiency of labor and increased utilization of resources, which reduce costs. It doesn't put ANY more money into anybody's hands, it only changes the hands who spends it.
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Post by LibSlayer on Jan 22, 2007 12:58:12 GMT -6
"That's right. And it also increases spendable consumer income by $840, which increases consumer spending by that amount, increases production demand accordingly, and increases demand for labor to provide that production demand. "
It doesn't increase consumper spending by even 1 cent. It only changes the hand of who spends it. The $840 in increased spending by the minimum wage earner is offset by $840 in reduced spending by whoever paid the minimum wage earner.
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Post by LibSlayer on Jan 22, 2007 13:00:22 GMT -6
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Post by LibSlayer on Jan 22, 2007 13:02:46 GMT -6
No evidence from past minimum wage hikes to support the other scare tactic - massive job loss. Just 50 years of economics studies that prove it These studies were exhaustively surveyed by the Minimum Wage Study Commission, which concluded that a 10% increase in the minimum wage reduced teenage employment by 1% to 3%. www.house.gov/jec/cost-gov/regs/minimum/50years.htm
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Post by unlawflcombatnt on Jan 22, 2007 21:23:57 GMT -6
Just 50 years of economics studies that prove it These studies were exhaustively surveyed by the Minimum Wage Study Commission, which concluded that a 10% increase in the minimum wage reduced teenage employment by 1% to 3%. www.house.gov/jec/cost-gov/regs/minimum/50years.htmIn the word's of a late President, "there you go again." Citing another completely biased, acknowledgedly partisan source. And another completely "fact-free" source as well. Did you happen to notice the title of your "source" the words in blue at the very top of the 1st page: " TALKING POINTS " ? Did you happen to notice that it listed only "House Republican Members" and no Democrats? Never mind the fact that it was conclusively proven after the last minimum wage increase that the increase didn't decrease employment any whatsoever. From 1996 to 1997, private employment increased 3.1 million, from 101.432 million to 104.595 million. From 1997 to 1998, private employment increased 2.7 million, from 104.595 million to 107.285 million. From 1998 to 1999, private employment increased another 2.7 million, from 107.285 million to 109.996 million. Let's see now. That's an 8.5 million increase in employment over the 3 years following the last minimum wage increase. Sounds to me like increasing the minimum wage increased employment. That's what the actual facts suggest, the ones published by the U.S. Bureau of Labor Statistics. Below is a copy of BLS's chart on Private Employment, from 1992 through December 2006. Despite any claims made to the contrary, the data clearly disproves the idea that a minimum wage increase will reduce employment. In fact, the statistics show exactly the opposite. Employment continued to increase following the last minimum wage increase.
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Post by blueneck on Jan 23, 2007 7:15:12 GMT -6
Thats all they have, at best one sided, at worst intellectually dishonest talking points. No facts, evidence, nonpartisan sources etc to back them up whatsoever.
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Post by blueneck on Jan 23, 2007 7:20:38 GMT -6
Isn't this one of the points of the so called service economy? By increasing spending power it fuels the consumer spending, the unsustainable economic model the supply siders try to promote?
Isn't this a contradiction?
Unlike an economy based on production of goods that generates wealth by creating value added, the service based economy only shifts money around - from low to high. No credible non partisan economist subscribes to the failed supply side laffer curve economic theory - there should be checks and balances and regulation of capiutalism to keep it fair. Keynes, Smith and others never intended for completed free and unfettered markets.
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Post by LibSlayer on Jan 23, 2007 8:00:50 GMT -6
"Did you happen to notice the title of your "source" the words in blue at the very top of the 1st page"
Did you happen to notice all the STUDIES listed that proves raising minimum wage increases unemployment.
And you are welcome to show me where all those scientists/economicsts are all Republican.
Why don't you just keep arguing that raising prices doesn't cause people to buy less of something, I will keep arguing common sense.
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Post by LibSlayer on Jan 23, 2007 8:02:24 GMT -6
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Post by LibSlayer on Jan 23, 2007 8:03:38 GMT -6
" By increasing spending power it fuels the consumer spending"
Raising minimum wage doesn't increase consumer spending one penny.
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Post by LibSlayer on Jan 23, 2007 8:08:46 GMT -6
"the data clearly disproves the idea that a minimum wage increase will reduce employment. In fact, the statistics show exactly the opposite. Employment continued to increase following the last minimum wage increase. " That shows the TOTAL, it does not show whether the number of minimum wage earners increased or decreased. "Historically, the main impact of the minimum wage has been on black teenage males, and this continues to be the case. In September 1996, the unemployment rate for this group was 36.6%. After the minimum wage rose from $4.25 to $4.75 on October 1, their unemployment rate jumped to 38.6% and to 41.1% in November 1996." www.findarticles.com/p/articles/mi_qa3827/is_199802/ai_n8803128
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Post by KK on Jan 23, 2007 12:04:34 GMT -6
any statistics on how many chose to participate in the under economy?
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Post by unlawflcombatnt on Jan 23, 2007 23:00:52 GMT -6
"the data clearly disproves the idea that a minimum wage increase will reduce employment. In fact, the statistics show exactly the opposite. Employment continued to increase following the last minimum wage increase. " That shows the TOTAL, it does not show whether the number of minimum wage earners increased or decreased. Whether it increases only the number of workers receiving the minimum wage is not the issue. The issue is whether an increased minimum wage reduces total employment or not. And it most certainly does not. The main argument always given against raising the minimum wage is that it reduces total employment. Those arguments are disproven by the statistics. Again, increasing the minimum wage clearly did not decrease overall employment, as it increased 3.1 million/year and 2.7 million/year for 2 years following the last increase. Increasing the minimum wage increases aggregate (total) worker income. As a result, it increases aggregate worker/consumer spending power, leading to increased consumer spending, increased consumer production demand, and increased demand for workers to provide that production.
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Post by blueneck on Jan 24, 2007 5:18:45 GMT -6
Minimum wage jobs like fast food, hotel, janitorial, retail clerks, lawn care etc simply do not go away - there is always demand. These jobs are not easily automated, however they can be filled illegally.
Someone still needs to cook the hamburgers, sweep the floors, bus the tables etc. Thes jobs do not go away when wages go up. If McDonalds has to raise a Big mac a nickel, it will hardly put a dent in their need for someone to make it, in fact it may help them fill jobs they have a hard time filling at low wages. This idea that it causes massive job loss is a canard and fallacy. At most a temporary slow down, but even thats not likely. We've heard these scare stories before when the mininum wage was raised, and they never came to pass.
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Post by LibSlayer on Jan 24, 2007 11:23:09 GMT -6
"That shows the TOTAL, it does not show whether the number of minimum wage earners increased or decreased."
That is EXACTLY the issue, it puts those at the bottome of the economic ladder out of work. But of course we know the leftwing doesn't care about them, they only care about making others pay.
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Post by LibSlayer on Jan 24, 2007 11:24:22 GMT -6
These jobs are not easily automated, however they can be filled illegally.. Yes, they do, small business owners just make do with fewer workers, which means worse service.
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Post by LibSlayer on Jan 24, 2007 11:26:19 GMT -6
" As a result, it increases aggregate worker/consumer spending power"
It does not increase consumer spending by even 1 cent.
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Post by unlawflcombatnt on Jan 24, 2007 14:32:30 GMT -6
"That shows the TOTAL, it does not show whether the number of minimum wage earners increased or decreased." That is EXACTLY the issue, it puts those at the bottome of the economic ladder out of work. But of course we know the leftwing doesn't care about them, they only care about making others pay. No, that is NOT the issue. It may put a small number at the bottom of the economic ladder out of work temporarily, but it increases the income of the overwhelming majority of those at the "bottom of the ladder." And in the longer run, it increases overall employment because those at the "bottom of the ladder" have more money to spend, and spend a much higher fraction than those at the top. That increases production demand and demand for labor to provide that production, putting upward pressure on wages and employment. The major driving force for employment is labor demand. Workers are hired because they are needed to provide services or produce goods. They are never hired simply because the employer can "afford" them. If hiring more workers increases profits, an employer will hire them regardless of the cost. Only when the cost of more labor actually reduces profits will an employer stop hiring workers. If a business is profitable, and maximum profit is achieved with 100 workers @ $5.15/hour, the employer will hire 100 workers. if the business is still profitable, and maximum profit is still achieved with 100 workers @ $7.25/hour, the employer will still employ 100 workers. All that changes is his profit margin. Some marginal businesses will not remain profitable, and those workers will lose their jobs. Most businesses, however, will remain profitable and will have to pay workers more. The overall effect is that a small number of workers will lose employment over the short-term, but the overwhelming majority of workers will benefit from the wage increase. In the long-run, employment increases because lower income workers have more money to spend. And those workers are guaranteed to spend that money, as lower-income workers have a higher marginal propensity to consume. Thus their increased spending causes increased production demand and demand for workers. As a result, those workers at "the bottom of the ladder" are more likely to be employed now than before the minimum wage increase. Increased wages, especially when going to the lowest wage earners, ALWAYS increases production demand and ALWAYS increases labor demand. And increased labor demand ALWAYS increases employment. A minimum wage increase causes total employment to increase. And the statistics verify this.
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Post by LibSlayer on Jan 24, 2007 15:53:03 GMT -6
"No, that is NOT the issue. " That is EXACTLY the issue, it puts out of work those who are most vulnerable, least employable, least skilled. "Historically, the main impact of the minimum wage has been on black teenage males, and this continues to be the case. In September 1996, the unemployment rate for this group was 36.6%. After the minimum wage rose from $4.25 to $4.75 on October 1, their unemployment rate jumped to 38.6% and to 41.1% in November 1996." www.findarticles.com/p/articles/mi_qa3827/is_199802/ai_n8803128Do you just not care that 10's of thousands who MOST need the work are put out of work, are you willing to sacrafice them in order to help those who refuse to do anything to help themselves? "And in the longer run, it increases overall employment because those at the "bottom of the ladder" have more money to spend, and spend a much higher fraction than those at the top. That increases production demand and demand for labor to provide that production, putting upward pressure on wages and employment. " AGAIN, raising the minimum wage does NOT increase consumer spending nor increase demand. the ONLY thing it does is put the MOST vulnerable out of work, increases inflation, and discourages minimum wage workers from making the effort to get training or education.
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