Leaving for Las Vegas: California's minimum wage law leaves businesses no choice(latimes.com)
latimes.com
Leaving for Las Vegas: California's minimum wage law leaves businesses no choice
http://www.latimes.com/opinion/op-ed/la-oe-salem-minimum-wage-20170102-story.html
103 comments
TLDR: One single business owner wrote his opinion about the minimum wage law.
I'm supposed to feel bad for an employer who claims to care about his employees—but not so much that he's willing to pay them a living wage? And is willing to incur the cost of moving out of state to avoid paying a rate that won't go into effect until 2021? How much business has he lost? Well... none. But he would. Really. Just like VCRs were the "Boston strangler" of the film industry.
"but not so much that he's willing to pay them a living wage?"
The problem with word choices like that is the implication the human beings working for him are not living, and further, that's OK.
The reality is that "we" are paying the living wage to his employees via higher taxes in very expensive government services so he can pocket more profit than if he responsibly took care of his own employees.
If all the welfare queen small business owners left, tax rates could drop quite a bit. Life would, frankly, improve for everyone except the parasites future hosts in LV and other areas.
The problem with word choices like that is the implication the human beings working for him are not living, and further, that's OK.
The reality is that "we" are paying the living wage to his employees via higher taxes in very expensive government services so he can pocket more profit than if he responsibly took care of his own employees.
If all the welfare queen small business owners left, tax rates could drop quite a bit. Life would, frankly, improve for everyone except the parasites future hosts in LV and other areas.
>welfare queen small business owners left, tax rates could drop quite a bit. Life would, frankly, improve for everyone except the parasites
Inflammatory comments like these are anti-intellectual and don't belong here. It's the same thing as referring to people on unemployment as welfare queens.
Inflammatory comments like these are anti-intellectual and don't belong here. It's the same thing as referring to people on unemployment as welfare queens.
>The problem with word choices like that is the implication the human beings working for him are not living, and further, that's OK.
They are barely living hand-to-mouth or need to have 2 jobs to make even that.
They are barely living hand-to-mouth or need to have 2 jobs to make even that.
The "welfare queens" are operating in a competitive business environment where they have to compete to survive. Don't hate the player, hate the game.
Obviously, we want to remove as much corporate welfare as possible, to allow the market to operate smoothly while still allowing for subsidies in well thought out places like clean energy or investing in new business sectors.
Obviously, we want to remove as much corporate welfare as possible, to allow the market to operate smoothly while still allowing for subsidies in well thought out places like clean energy or investing in new business sectors.
By the time minimum wage hits $15, he will be operating at a $200k loss. Are you implying that he is lying about that? Or are you just suggesting that some of the employees would be better off unemployed while the remaining that he could afford pick up the slack? Or would you rather the business fold entirely and all of them become unemployed including the owner?
> By the time minimum wage hits $15, he will be operating at a $200k loss. Are you implying that he is lying about that?
Now, that's a good question. Are companies lying when they fight against every law enacted to protect their employees? Are they mistaken? I think most likely: they don't care if what they're saying is true or not. Is that the same as lying? Well, I'll leave that to you to decide.
> Or would you rather the business fold entirely and all of them become unemployed including the owner?
Well, if the company you work for paid you 33% less, would you rather they folded immediately, so you could look for work elsewhere? Or would you rather that they went on paying you less so they could stay in business—succeeding as a company merely because they're unwilling to pay people what they should?
Now, that's a good question. Are companies lying when they fight against every law enacted to protect their employees? Are they mistaken? I think most likely: they don't care if what they're saying is true or not. Is that the same as lying? Well, I'll leave that to you to decide.
> Or would you rather the business fold entirely and all of them become unemployed including the owner?
Well, if the company you work for paid you 33% less, would you rather they folded immediately, so you could look for work elsewhere? Or would you rather that they went on paying you less so they could stay in business—succeeding as a company merely because they're unwilling to pay people what they should?
These situations are not solvable by doing basic math, you miss the complexities of the situation. To pay employees better, he'd shift the cost of the salaries to the goods in question, and possibly provide new/different products to address market conditions. Additionally everywhere I've worked, and this is anecdotal but still, when you pay your employees better they don't loathe their jobs quite so much, which leads to better customer service. Some people do still shop for service.
If his response to rising operating costs is to not respond at all and continue charging the same prices for the same goods and not move at all in terms of addressing the problem, then he shouldn't be in business in the first place, he clearly has no idea how to run one.
If his response to rising operating costs is to not respond at all and continue charging the same prices for the same goods and not move at all in terms of addressing the problem, then he shouldn't be in business in the first place, he clearly has no idea how to run one.
That would only be the case if this one business were the entire economy of California. The added demand caused by employees with more money to spend will generate more production.
If you're sure about this, what's the point at which raising the minimum wage would be a net loss for aggregate demand?
Probably around the natural wage floor that is artificially low due to government subsidies (food stamps, housing assistance, welfare, Medicaid, etc). The unsubsidised wage floor is likely around the cost of living (In California that number is or will be above 15 an hour by the time the law is in place). A minimum wage increase isn't a gift to workers as much as it is a demand that the taxpayer no longer subsidize these businesses.
That argument still doesn't seem coherent me. What "subsidy" is Walmart receiving that the Costco across the street is not? Walmart, after all, is paying workers who otherwise would receive even more government benefits. Costco is paying those same workers $0.
I'm not sure what your question is. Costco runs smaller margins than Walmart due to the founders religious ideology that prohibits him from operating like Walmart. Walmart is by far a more profitable model (121 billion gross for Walmart compared to 15 for Costco). The wages paid by Walmart are below the cost of living, if they simply paid them without subsidy their employees would be often unfed and homeless.
>Costco is paying those same workers $0.
Why would Costco pay its competitors employees? (Beyond what is does already via taxes)
>Costco is paying those same workers $0.
Why would Costco pay its competitors employees? (Beyond what is does already via taxes)
I'm not an economist, so consider me soundly put in my place.
Agreed x100.
Another way to think of this would be that if this business can only afford to operate while the state subsidizes its employees dietary, medical, and transportation costs then maybe it is a bad business. Walmart apparently has the same problem.
Another way to think of this would be that if this business can only afford to operate while the state subsidizes its employees dietary, medical, and transportation costs then maybe it is a bad business. Walmart apparently has the same problem.
I see so few people who understand this. Years ago I applied for a job at Walmart, during the interview I explained that 30 hours a week wasn't enough for me. They printed out a sheet on all the "benefits they offered". It was simply a list of all the programs available for low income individuals, they weren't offering anything. Walmart alone costs the taxpayers 6.2 billion[0] in grants. Increasing the minimum wage only puts those costs on them as opposed to the taxpayer.
[0]http://www.forbes.com/sites/clareoconnor/2014/04/15/report-w...
[0]http://www.forbes.com/sites/clareoconnor/2014/04/15/report-w...
I agree. It's crazy. Walmart more than makes enough money to shoulder that cost themselves. The business in the article does the same thing, but to a smaller degree.
Raising minimum wage will do nothing to fix that. The state will still be subsidizing the same things it was before.
Does it even have value as a symbolic act to show support for labor against the complete control by capital?
The state isn't subsidizing a penny. The taxpayers are paying directly into the parasites profits. What a crook!
Agreed. By the state, I meant the public. Tax money supports his paying people low wages and everyone is supposed to act like he's a captain of industry.
Notice that he didn't talk about his profit margins either. He'll be losing 200K out of what exactly?
Notice that he didn't talk about his profit margins either. He'll be losing 200K out of what exactly?
When someone says a business is operating at a 200k loss, that means it's not making any profits and it's losing money. It's a standard way to talk about a business.
That often doesn't show the whole picture. Let's say Viacom operated at a 1 billion dollar loss, does that mean the CEO doesn't get paid?
We would have to know how this business is structured to know if that figure means anything. 200k loss after the owners 500k salary could be the case here.
We would have to know how this business is structured to know if that figure means anything. 200k loss after the owners 500k salary could be the case here.
Of course the salaries are part of a business's expenses. That still means the company is going to run out of money though. Basic math...
If you don't realize that the "state subsidizing" == "taxpayers paying" isn't the same thing at the state level in the US, I have some bad news for you...
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Sometimes I wonder how quickly things could collapse in California if a place like Las Vegas gained enough critical mass in non gaming/convention businesses.
I would take the oppressive heat over the oppressive fog and piss smell of SF if it had the same job opportunities. I know the reason me and the majority of my friends pack into this peninsula like sardines to pay massive taxes, rents, and general COL expenses is purely because of the industry.
Definitely a chicken and egg problem but maybe if the state continues with anti-business and high tax policies, they may accidentally go over board and cause an exodus.
I would take the oppressive heat over the oppressive fog and piss smell of SF if it had the same job opportunities. I know the reason me and the majority of my friends pack into this peninsula like sardines to pay massive taxes, rents, and general COL expenses is purely because of the industry.
Definitely a chicken and egg problem but maybe if the state continues with anti-business and high tax policies, they may accidentally go over board and cause an exodus.
I work in tech in SF, but the reason I stay is because of all of the other features of living in a first-tier city with all of the natural features of the Bay area: world-class museums, galleries, and performing arts; the quick drive to wine country; walking almost everywhere; fascinating people; friends & family who always want to visit.
Part of the problem with Las Vegas is there is nothing else out there for hours. You have Reno (which has a nice little startup scene and a Tesla gigafactory), but there is just nothing out there. No other cities nearby, no Pacific ocean...
I'm pretty sure the writer himself isn't moving, his linkedin implies he mostly does consultancy: so probably he's just moving this factory and suffering some extra travel.
chicago has done all that. california has a unique asset that enables it to enact all kinds of offensive tax etc legislation: climate.
Climate does very little for well being on a broad scale. Almost nobody I know who lives in the bay area moved here because of the nice weather.
I would have gone to Chicago if the job offers there meant 200k+ at big companies and 100-150 at startups (+options).
I would have gone to Chicago if the job offers there meant 200k+ at big companies and 100-150 at startups (+options).
> Climate does very little for well being on a broad scale. Almost nobody I know who lives in the bay area moved here because of the nice weather.
People stay in the Bay Area because of climate since you realise you can be outside nearly year-round. And in terms of well-being, if you spend more time outside, there's a good chance of being healthier and happier.
People stay in the Bay Area because of climate since you realise you can be outside nearly year-round. And in terms of well-being, if you spend more time outside, there's a good chance of being healthier and happier.
If moving from SF, someone can take a 50% pay cut and still maintain the same quality of life in Chicago [1].
As someone who works for a Chicago based startup I think if you adjust those salaries for the cost of living they are very reasonable.
[1] http://www.bestplaces.net/cost-of-living/chicago-il/san-fran...
As someone who works for a Chicago based startup I think if you adjust those salaries for the cost of living they are very reasonable.
[1] http://www.bestplaces.net/cost-of-living/chicago-il/san-fran...
You can get that pay with enough experience. Obviously nowhere near as common though. I think your pay:cost of life ratio will win in Chicago. One of the best setups in the country.
Climate matters a ton for me. I live by Chicago but am considering taking an effective pay cut to get the bay weather. Running is my hobby, and running in blizzards is getting old.
Climate matters a ton for me. I live by Chicago but am considering taking an effective pay cut to get the bay weather. Running is my hobby, and running in blizzards is getting old.
Author's sums don't seem to make sense.
How could an increase in $5 per hour for minimum wage translate into $40,000 per employee? Worst case scenario:
260 days * 8 hours * $5 increase = $10,400
How could an increase in $5 per hour for minimum wage translate into $40,000 per employee? Worst case scenario:
260 days * 8 hours * $5 increase = $10,400
The total cost per employee. 18.90 x 40hrs x 50weeks = 37,800.
Don't try to run the math, it will show that it's not that much for the business in the long run, especially since their labor cost are probably a small fraction of their costs.
Labor is almost certainly the largest controllable cost for a business like this one (hand-sewn garment assembly).
I've been informed repeatedly that the cost of real estate and prop tax and rent is so staggering that losing a large percentage of productivity via open offices is still cheaper than providing civilized working conditions for people getting $150K+. That seems to be implying that its better to lose say, $20/hr in productivity than to double rent costs, so rent in CA must be more than $40/hr for a couple sq feet, lets say rent is $4/sq ft in CA, or annually about $8K/sq ft. Some google real estate results for sand hill road indicates that $2000/sq ft per year is somewhat high but not unrealistic... For averaging purposes at a non-24x7 operation rent in CA is going to cost about $30/hr/employee no matter how much or how little you pay the employee.
Some garment tasks inherently taking a lot of space to lay out cloth for cutting or sewing imply garment companies are paying maybe twice as much for a garment worker's space than for a software dev's space, an extremely large multiple of employee income is paid in rent, and moving away from CA would result in enormous savings in rent.
Clearly moving production anywhere other than CA would save an enormous about of money in rent. In rural nowhere you can get industrial zoned buildings for about $4/sq/yr or about 500 times less than CA office space, at which point you have to start looking in more detail at costs of utilities and other expenses that were noise at higher rents but are now significant relative to the cheaper rent.
Some garment tasks inherently taking a lot of space to lay out cloth for cutting or sewing imply garment companies are paying maybe twice as much for a garment worker's space than for a software dev's space, an extremely large multiple of employee income is paid in rent, and moving away from CA would result in enormous savings in rent.
Clearly moving production anywhere other than CA would save an enormous about of money in rent. In rural nowhere you can get industrial zoned buildings for about $4/sq/yr or about 500 times less than CA office space, at which point you have to start looking in more detail at costs of utilities and other expenses that were noise at higher rents but are now significant relative to the cheaper rent.
Then labor should also receive most of the profits from said business.
The wealthy elite will need to get this through their heads. They must start paying people more. There isn't a choice. Businesses are sitting on trillions of dollars that haven't been used to "create jobs".
EDIT: Jesus. I apologize for making an economic sounding argument for this. I've taken it out. How's this...the wealthy elites need to pay people more for the sake of the stability of the social fabric. Find some economic rational for that if you like. (That's what economists really do anyway...Provide the theoretical underpinnings for the operation of their class.) They need to understand that having slightly smaller profit margins will be good for them as well, in the long run, due to a more stable republic. I understand that, as libertarians, you guys don't think that government can play a part in that. I do. We have a fundamental disagreement about that.
Propitiation follows: I know that all of you guys are very economically literate libertarians. I should never have fronted like I was anywhere in your league. I could tell you were not only attractive but powerful and noble as soon as you came in the room. Your ability to recite the economics that you picked up at Uni is not only impressive but frightening. Surely, your might and prowess will be known through the ages.
EDIT: Jesus. I apologize for making an economic sounding argument for this. I've taken it out. How's this...the wealthy elites need to pay people more for the sake of the stability of the social fabric. Find some economic rational for that if you like. (That's what economists really do anyway...Provide the theoretical underpinnings for the operation of their class.) They need to understand that having slightly smaller profit margins will be good for them as well, in the long run, due to a more stable republic. I understand that, as libertarians, you guys don't think that government can play a part in that. I do. We have a fundamental disagreement about that.
Propitiation follows: I know that all of you guys are very economically literate libertarians. I should never have fronted like I was anywhere in your league. I could tell you were not only attractive but powerful and noble as soon as you came in the room. Your ability to recite the economics that you picked up at Uni is not only impressive but frightening. Surely, your might and prowess will be known through the ages.
>The added demand from paying higher wages to people at the bottom
The business that will pick up the slack in this example is one overseas. These employees would lose their job and would be unemployed, not increasing demand with higher wages.
Unless you are hoping trump enacts some seriously strict trade tariffs, it's pretty stupid to believe that every business hit with this raise will survive with the same number of employees due to increased demand.
The business that will pick up the slack in this example is one overseas. These employees would lose their job and would be unemployed, not increasing demand with higher wages.
Unless you are hoping trump enacts some seriously strict trade tariffs, it's pretty stupid to believe that every business hit with this raise will survive with the same number of employees due to increased demand.
Except that overseas labor isn't going to be dirt-cheap forever. We can keep shifting manufacturing around to different developing countries but it's just kicking the can down the road and saying we'll deal with it later. Eventually Chinese workers and Malaysian workers and all the rest are going to start demanding real wages, and I don't think it's too far away now either. Maybe 20 more years we can keep playing this game but it's going to get harder and harder.
Add to it we're running out of busywork to have people doing, costs of automation are plummeting, jobs that were initially thought by the majority of people to be safe from the robots are turning out to be not-so-safe, and the elite continue to live under the delusion that they can continue stockpiling wealth while the rest of us scrape by.
There are a lot more poor people than rich people, and your money isn't going to help much when they're breaking down your door with torches and pitchforks.
Add to it we're running out of busywork to have people doing, costs of automation are plummeting, jobs that were initially thought by the majority of people to be safe from the robots are turning out to be not-so-safe, and the elite continue to live under the delusion that they can continue stockpiling wealth while the rest of us scrape by.
There are a lot more poor people than rich people, and your money isn't going to help much when they're breaking down your door with torches and pitchforks.
Existence of cheap labor negatively impacts the investments into robotics. Disappearance of cheap labor makes some numbers (total addressable market, costs per unit produced) look very attractive.
They already are, for example there's been several stories over the years of China losing jobs to Vietnam.
Its always a race to the bottom for costs. What no one talks about is the trail of bodies that are left behind.
A little hyperbolic, but more true than not. The main thing is we're going to reach a critical mass point where the costs of continuing to cut costs are going to become more expensive than what the cost cutting does to the end products.
Downvoting just because you disagree with something isn't how this site is supposed to work.
My point is that this business is a bad business if it can only exist because the state subsidizes its employees with social programs. Eventually demand will pickup because of the wealth transferred to the lower economic class.
My point is that this business is a bad business if it can only exist because the state subsidizes its employees with social programs. Eventually demand will pickup because of the wealth transferred to the lower economic class.
[deleted]
>Downvoting
Don't discuss downvoting in a response to someone. It doesn't make for good discussions. Especially since you're likely not replying to the person who downvoted.
>My point is that this business is a bad business if it can only exist because the state subsidizes its employees with social programs.
Then why couldn't you articulate that in the first comment? It was just a tirade against the wealthy elite mixed in with unsubstantiated claims of increased demand that fail to take into account that the wage increase isn't global.
Don't discuss downvoting in a response to someone. It doesn't make for good discussions. Especially since you're likely not replying to the person who downvoted.
>My point is that this business is a bad business if it can only exist because the state subsidizes its employees with social programs.
Then why couldn't you articulate that in the first comment? It was just a tirade against the wealthy elite mixed in with unsubstantiated claims of increased demand that fail to take into account that the wage increase isn't global.
you can't downvote something you've responded to
I don't believe this is the case. However, you can't downvote a response to your own comment.
Edit to add: To confirm, I still have a downvote arrow available to me on your comment.
I don't believe this is the case. However, you can't downvote a response to your own comment.
Edit to add: To confirm, I still have a downvote arrow available to me on your comment.
I did want to express the part that you call a tirade. Wealthy people need to understand that the parts of their revenue that correspond to taxes that subsidize their employment practices are going to need to be paid as wages. Its at the root of the unfair practices that have created inequality, and it's corrosive to democracy.
I think that the idea that paying people more, who spend more of their income proportionally, increases demand isn't really unsubstantiated. Maybe I didn't substantiate it, but only because I thought it was well known. Apologies for that.
I think that the idea that paying people more, who spend more of their income proportionally, increases demand isn't really unsubstantiated. Maybe I didn't substantiate it, but only because I thought it was well known. Apologies for that.
>Wealthy people need to understand that the parts of their revenue that correspond to taxes that subsidize their employment practices
The mistake you are making here is in thinking that the majority of people are employed by wealthy people. Tirades like yours make people believe this is just forcing billionaires to open up their wallets, but 99% of businesses are small businesses and they account for something like 49% of employment.
https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf
So minimum wage increases tend to be more of an attack directly on the middle/lower class small business owners who are operating on thin margins.
>Maybe I didn't substantiate it, but only because I thought it was well known.
Don't pretend like you misunderstood the problem and use a faulty assumption to appeal to incredulity (still without providing evidence nonetheless!). The faulty assumption you built this demand argument on was that all of these businesses will easily absorb the wage increase and there will be no jobs lost. There will be no increase in demand and there may be a loss in demand if a huge chunk of small businesses layoff parts of their workforce or relocate.
The mistake you are making here is in thinking that the majority of people are employed by wealthy people. Tirades like yours make people believe this is just forcing billionaires to open up their wallets, but 99% of businesses are small businesses and they account for something like 49% of employment.
https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf
So minimum wage increases tend to be more of an attack directly on the middle/lower class small business owners who are operating on thin margins.
>Maybe I didn't substantiate it, but only because I thought it was well known.
Don't pretend like you misunderstood the problem and use a faulty assumption to appeal to incredulity (still without providing evidence nonetheless!). The faulty assumption you built this demand argument on was that all of these businesses will easily absorb the wage increase and there will be no jobs lost. There will be no increase in demand and there may be a loss in demand if a huge chunk of small businesses layoff parts of their workforce or relocate.
Touche, debate captain.
I wonder if the majority of small businesses are able to employ all those people because they force tax payers to subsidize their low wage payments. I guess the question then is whether it is best to have the lower classes struggling to survive on little wages while accruing more and more wealth to the top. Does this arrangement produce enough of a benefit to all involved to obviate the need to redistribute that accumulated wealth.
I think that the accumulated wealth of the 1% needs to be redistributed. I think it's not only better for society, but its also more moral...and I get that I'm using slippery language unlike the "hard science" of economics. (I detest economics because it poses as a science while mainly serving to provide intellectual cover to the purveyors of the status quo.)
So, yeah, I was being a dick. You caught me.
I wonder if the majority of small businesses are able to employ all those people because they force tax payers to subsidize their low wage payments. I guess the question then is whether it is best to have the lower classes struggling to survive on little wages while accruing more and more wealth to the top. Does this arrangement produce enough of a benefit to all involved to obviate the need to redistribute that accumulated wealth.
I think that the accumulated wealth of the 1% needs to be redistributed. I think it's not only better for society, but its also more moral...and I get that I'm using slippery language unlike the "hard science" of economics. (I detest economics because it poses as a science while mainly serving to provide intellectual cover to the purveyors of the status quo.)
So, yeah, I was being a dick. You caught me.
How can a business fail if by definition its sitting on piles of cash? We live in a centrally controlled command economy and all the politicians in charge of selecting winners and losers (except one widely hated guy at the top) were purchased by those very same businesses, so why are you proposing that mutually beneficial system break down?
What would work would be a nice infusion of inflation. You can spend $X today on Y of labor or Z of capex, or hoard it until next year when the same $X will only buy (0.95)Y of labor or (0.95)Y of capex "stuff", your choice how much "stuff" you want to get for your $X
What would work would be a nice infusion of inflation. You can spend $X today on Y of labor or Z of capex, or hoard it until next year when the same $X will only buy (0.95)Y of labor or (0.95)Y of capex "stuff", your choice how much "stuff" you want to get for your $X
Businesses may be sitting on trillions of dollars of assets, but they also have trillions of dollars of liabilities. Outside of tech, at least in the US, most industries have fairly ugly balance sheets.
Inflation is another debate. Traditionally wages rise later rather than sooner in that environment.
Inflation is another debate. Traditionally wages rise later rather than sooner in that environment.
[deleted]
No, they don't have to, if cheaper labor is available. And it is available.
And no, other businesses won't replace them in CA, because their production costs are higher the moment they start the production. It's basic economics.
And then there are robots.
And no, other businesses won't replace them in CA, because their production costs are higher the moment they start the production. It's basic economics.
And then there are robots.
That's one way to look at it. There are examples, though, of states with higher minimum wages out performing neighboring states with lower wages.
Businesses like this can only operate because taxes are used to subsidize their employee's lack of a living wage.
Businesses like this can only operate because taxes are used to subsidize their employee's lack of a living wage.
It doesn't make sense to demand businesses give money away any more than it makes sense to demand that random people do. Do you want me to give away most of my income too because some people are poorer than me? Are you setting an example of that yourself?
If you aren't proposing that businesses give away free money, are you instead saying that the government should reduce what it gives away in social welfare for low-wage workers? That could make low wage jobs unworkable if workers can't afford to actually commute to work or live nearby. That would in turn force wages up.
If you aren't proposing that businesses give away free money, are you instead saying that the government should reduce what it gives away in social welfare for low-wage workers? That could make low wage jobs unworkable if workers can't afford to actually commute to work or live nearby. That would in turn force wages up.
Actually, yes. Yes I do. And yes, I actually do. I don't take income tax deductions for charity payments, even if they are available, and I don't look for creative ways of lowering my tax bills.
I think that I, and people like me, should pay more --proportionally -- to lower levels of inequality before it rips the republic apart. The wealthy actually have the best of all worlds currently. Lower taxes and high government expenditures mean that the government actually has to borrow the money from them to subsidize those low wages. Instead of just taxing them, the government now owes interest.
I think that the wealthy have begun to believe their own bullshit and it's dangerous. Democracy should be used to fix the situation before it becomes worse.
I think that I, and people like me, should pay more --proportionally -- to lower levels of inequality before it rips the republic apart. The wealthy actually have the best of all worlds currently. Lower taxes and high government expenditures mean that the government actually has to borrow the money from them to subsidize those low wages. Instead of just taxing them, the government now owes interest.
I think that the wealthy have begun to believe their own bullshit and it's dangerous. Democracy should be used to fix the situation before it becomes worse.
>There are examples, though, of states with higher minimum wages out performing neighboring states with lower wages.
What does "out performing" mean in this regard? Tax revenue, GDP, and employment could all be very high in a state where the majority of people are living worse off than people in other states because of a massive cost of living.
Maybe you could just provide some references to these examples?
What does "out performing" mean in this regard? Tax revenue, GDP, and employment could all be very high in a state where the majority of people are living worse off than people in other states because of a massive cost of living.
Maybe you could just provide some references to these examples?
I'm actually at work and can't really do that at the moment, but you should feel free to take that as some kind of lie that I'm using to make up for not having proof.
[deleted]
Not every business owner is an elite. This makes starting a business very difficult because now you have to pay minimum wage AND healthcare.
Why don't small businesses lobby for universal healthcare then? I understand the historical reasons, but the idea of healthcare being tied to employment as the best solution we can come up with is kind of baffling. It is a huge obstacle to small businesses.
You do understand that most countries with universal healthcare force employers to pay at least half the tax and in many cases more right?
There are considerable expenses on top of just salaries when you employ people; most countries have some sort of an "employee tax" levied on employers plus other requirements.
You can say well Europe but the minimum wage (and all other wages) in Europe is lower than California and on average than the US.
There are considerable expenses on top of just salaries when you employ people; most countries have some sort of an "employee tax" levied on employers plus other requirements.
You can say well Europe but the minimum wage (and all other wages) in Europe is lower than California and on average than the US.
This is mandated by law. The businesses have fought tooth and nail against ACA employer mandate.
And yet as of today in the United States an employer of 50 or more has to either separate business operations into two distinct units or buy employer-linked insurance.
https://www.uschamber.com/health-reform/employer-mandate
And yet as of today in the United States an employer of 50 or more has to either separate business operations into two distinct units or buy employer-linked insurance.
https://www.uschamber.com/health-reform/employer-mandate
That's not what the question that GP was asking. It was asking about universal health coverage, not employer mandate. GP was wondering why the employer is involved in health insurance in the first place.
There is very little difference in SPS since the employer will have to pay health tax for each employee, which is often more expensive than just insurance.
> why the employer is involved in health insurance in the first place
I am not sure how it was a different question. The government mandates they become involved.
I am not sure how it was a different question. The government mandates they become involved.
For most businesses this is not the case
It is not true that you have to offer healthcare when starting a business. Only when you reach 50 full-time employees does this even begin to be a concern.
"domestically manufactured clothing is more expensive, but retail and wholesale customers who care about quality and working conditions have historically been willing to pay for it"
.. so pass the price rise on to customers? After all, sewing industry is normally one of the first things that gets offshored. But here they're already willing to pay better prices for "ethically" manufactured goods.
.. so pass the price rise on to customers? After all, sewing industry is normally one of the first things that gets offshored. But here they're already willing to pay better prices for "ethically" manufactured goods.
They're competing to provide the cheapest, legit "Made in America" label. There's a long way to the bottom of that.
Just not too ethically. Only the minimum level of ethics.
>California's minimum wage law leaves businesses no choice
Strange how all kinds of business have been able to prosper in places with the same or much higher minimum wage laws...
Strange how all kinds of business have been able to prosper in places with the same or much higher minimum wage laws...
That's because the non-prospering businesses are invisible.
Food deserts in poor neighborhoods in the US are an example - http://hub.jhu.edu/magazine/2014/spring/racial-food-deserts/ - the margins simply don't make sense, even if the rent is cheap.
Food deserts in poor neighborhoods in the US are an example - http://hub.jhu.edu/magazine/2014/spring/racial-food-deserts/ - the margins simply don't make sense, even if the rent is cheap.
What are the unemployment stats like in those locations? How high is the minimum compared to the median?
Note that this is basic supply and demand, some businesses sitting right at their maximum labor price point will be shut down.
Note that this is basic supply and demand, some businesses sitting right at their maximum labor price point will be shut down.
Yeah, but "Basic supply and demand" rarely applies cleanly in the real world -- as there are way more factors into play, and even interactions between such factors. In this case, however, businesses "sitting right at their maximum labor price point "should be worrying about that fact instead on surviving on subsistence wages and/or subsidies.
Its going to suck when virtually every single restaurant and grocery store shuts it's doors in California as the supply side economists have predicted.
>Its going to suck when virtually every single restaurant and grocery store shuts it's doors in California as the supply side economists have predicted.
Yeah, just like this Rapture thing sucked, as this Harold Camping guy predicted (to speak of another prediction of equal validity).
Plus, strange how businesses have not massively moved out of other places where the same or much stricter minimal wage laws were enforced (or minimal wages raised). I wonder what the supply side economists of those places think about it.
If somebody seriously believes that, given these laws, "virtually every single restaurant and grocery store [will shut] it's doors in California", I don't know what to say.
Let's check back in 5 years to see how this "prophecy" fared related to the Rapture...
Yeah, just like this Rapture thing sucked, as this Harold Camping guy predicted (to speak of another prediction of equal validity).
Plus, strange how businesses have not massively moved out of other places where the same or much stricter minimal wage laws were enforced (or minimal wages raised). I wonder what the supply side economists of those places think about it.
If somebody seriously believes that, given these laws, "virtually every single restaurant and grocery store [will shut] it's doors in California", I don't know what to say.
Let's check back in 5 years to see how this "prophecy" fared related to the Rapture...
"have predicted"
Certainly we live in an era of wide spread fake news, leading to all kinds of weirdness where President Hillary today watched the UK sink into the sea, Atlantis-style, as the promised inevitable result of the brexit win, etc.
Taking an extreme grain of salt, the linked article implies at least one company owner thought it would be worth the free publicity to announce in public that he talked to the mayor of another town.
Despite shrieking insistence from the fake news that the end of the world is at hand, the odds of California falling into the ocean any time soon are quite low.
Certainly we live in an era of wide spread fake news, leading to all kinds of weirdness where President Hillary today watched the UK sink into the sea, Atlantis-style, as the promised inevitable result of the brexit win, etc.
Taking an extreme grain of salt, the linked article implies at least one company owner thought it would be worth the free publicity to announce in public that he talked to the mayor of another town.
Despite shrieking insistence from the fake news that the end of the world is at hand, the odds of California falling into the ocean any time soon are quite low.
Then what is the option? The state of California bares the cost of not paying people enough to take care of themselves. Massive profits don't seem to be rolling downhill. How do you get the trillions of dollars in corporate profits circulating through the economy?
Not trolling, would like to know your opinion.
Not trolling, would like to know your opinion.
My opinion is meaningless. Economics calls itself a science, and it has made a prediction about the outcome of this law. How accurate that predicition is will tell us if we should listen to it in the future.
Economics has failed, time and again, to make any accurate predictions, except in the most trivial of matters.
It has been called "the dismal science" for this characteristic.
It has been called "the dismal science" for this characteristic.
No, you have seriously misunderstood economics if you think it predicts that all restaurants in California will close. Lookup supply and demand curves. The price to eat out will just increase, which will subsequently decrease demand and there will be fewer restaurants.
Or some restaurant owners will just absorb some lost profit margins (for which the difference in new minimal wages paid could have minimal effect anyway)...
The massive profits of those family owned diners or the business from this article that is employing <100 people...
Minimum wage is one of those ideas that is evaluated more for its intentions than for its results.
We are only employed as long as we can generate sufficient profit for the company, if salaries are artificially raised you only made some people unemployable.
At the same time though companies that can afford to pay more do and what's more that money is far more likely to wind up in the local economy as poor people spend far more of their income than rich people (or companies for that matter).
Low wages only leads to a race to the bottom, greater inequality, and finally lower growth because the people most likely to spend money don't have any. And based on how most OECD economies have been doing since 2008 it looks like the low growth of the last decade will probably hang around for longer. Unless the inequality shifts this will be low growth like it was during several hundred years of the feudal system.
Low wages only leads to a race to the bottom, greater inequality, and finally lower growth because the people most likely to spend money don't have any. And based on how most OECD economies have been doing since 2008 it looks like the low growth of the last decade will probably hang around for longer. Unless the inequality shifts this will be low growth like it was during several hundred years of the feudal system.
When you have 17 employees and your all business model still revolves around paying them the minimum wage, then you are not really making profit from selling a product/service, your all profit comes from exploring people (your employees) that are in dire need of food/proper shelter.
Your business is not adding anything positive to the economy so you should actually close the doors and go work for that minimum wage you think it's so great.
The only exception here is if you are just starting and you have very few employees (less than 5). In that case it is acceptable that you can only afford low wages, but that can be remedied with tax cuts for the first few years of a company with no need to still keep the minimum wage so low.
Your business is not adding anything positive to the economy so you should actually close the doors and go work for that minimum wage you think it's so great.
The only exception here is if you are just starting and you have very few employees (less than 5). In that case it is acceptable that you can only afford low wages, but that can be remedied with tax cuts for the first few years of a company with no need to still keep the minimum wage so low.
You don't have to pity him or judge him to understand this article.
He is just saying that this will be a common occurrence.
Discussions like this should always goes back to first principles - you can't force people to pay a certain wage, no matter how good your intentions.
He is just saying that this will be a common occurrence.
Discussions like this should always goes back to first principles - you can't force people to pay a certain wage, no matter how good your intentions.
He certainly tries to get pity, however awkward the attempt.
Goddamn employees. The business loses so much money when we have to pay those employees! :/
Soon those 8$ ph employees in Nevada will get squeezed by automation or cheaper employees in some other state/country. And they'll be given the ultimatum, "work more for less or get the boot".
This is a common downwards pointing death spiral in many of the western countries. There's going to be a huge economical squeeze starting with the blue collar workers in the next +10 years. Will be hard to compete with a robot...
Soon those 8$ ph employees in Nevada will get squeezed by automation or cheaper employees in some other state/country. And they'll be given the ultimatum, "work more for less or get the boot".
This is a common downwards pointing death spiral in many of the western countries. There's going to be a huge economical squeeze starting with the blue collar workers in the next +10 years. Will be hard to compete with a robot...
It's not fashionable to say, but what a beautiful example of the free market working. California has attracted high value businesses so it's worth more to operate there. They're pushing out the low value ones because they can afford to and their place can be taken by programmers or something. Nevada wants all it can get so it welcomes low value businesses like clothes manufacturing. If they move, everyone wins.
That applies to the workers too. If California is growing too rich around them, they might be under-skilled for the local job market and have to move to Nevada for work. Again, Nevada benefits from more labor.
The downside is that people whose skills lock them into insecure industries like this also sometimes put down roots where they live and suffer more when they have to move. But at least they can see it coming. Raising the minimum wage is bound to cost some people their jobs. If it didn't, that would mean employers can actually afford to pay even more and it should be raised further.
That applies to the workers too. If California is growing too rich around them, they might be under-skilled for the local job market and have to move to Nevada for work. Again, Nevada benefits from more labor.
The downside is that people whose skills lock them into insecure industries like this also sometimes put down roots where they live and suffer more when they have to move. But at least they can see it coming. Raising the minimum wage is bound to cost some people their jobs. If it didn't, that would mean employers can actually afford to pay even more and it should be raised further.
This is ridiculous. The guy should be happy. Thanks to higher wages, he will be able to raise his prices and offer better services. Instead, he wants to protect his benefits without evolving his business. No surprise California prefers to value high tech startups who try to pay their employees well.
Why in the world would you think he would be able to raise his prices? For him to sell, he needs to compete with clothing shops in other states (and countries) that don't have the same minimum wage.
Luckily, Trump is going to make America great again and will keep all those manufacturing jobs where owners don't like to pay minimum wage because they can't afford to pass on the raise because nobody wants to buy cheap apparel at this price point.
While I understand why the author is complaining, he should much rather complain to all his potential customers that make a purchase decision based on price instead of ethically supporting american workers.
I'm really waiting to see all those voters spend significantly more on "Made in Great America" apparel to make sure to keep all those jobs...
While I understand why the author is complaining, he should much rather complain to all his potential customers that make a purchase decision based on price instead of ethically supporting american workers.
I'm really waiting to see all those voters spend significantly more on "Made in Great America" apparel to make sure to keep all those jobs...
http://www.forbes.com/sites/eriksherman/2016/01/08/seattle-f...