Re: OT Minimum wage

On Mon, 10 Nov 2008 20:25:08 -0700, "Bob Hatch" <bobhatch@xxxxxx>
wrote:

"Don Bradner" <donb@xxxxxxxxxxxxx> wrote in message
news:9cqhh450tfu8eoogjbnjmttf8vnrs4bngq@xxxxxxx
On Mon, 10 Nov 2008 16:35:08 -0700, "Bob Hatch" <bobhatch@xxxxxx>
wrote:

There are only a limited number of things that can happen when a
business is "forced" to increase costs. They can raise prices, the
most likely thing to happen if their labor costs are balanced to
start with. They can cut staff if they can find the place to cut, a
negative impact to the economy. They can cut other costs, which will
in the long run will have a negative roll through the economy.

There is nothing positive that will happen with a forced increase in
labor cost, for the business, or the individual.

I've never made a price rise, nor ever seen a price rise from my
competitors or my suppliers, that could be directly attributable to
any specific increase in costs including minimum wage. Similarly I've
never seen a price decrease directly attributable to a specific cost
decrease (such as when California eliminated the inventory tax).

Of course you haven't. It's not that direct, like the day after the law is
passed, the prices go up and unemployment increases. It's time generated.
After a period of time the trucking company has to pop it's price up a tiny
bit to cover the cost of cleaning the warehouse and trucks. On back down the
line a price raises here or there by a penny or two, and eventually it will
impact you.

Pricing is much more subtle, and can run counter to costs. What I'm
seeing these days is that we've needed to do across-the-board cuts in
prices in order to maintain volume, even as our costs have risen. That
has been a necessary choice, because we are heavily dependent on
volume purchasing to maintain current discounts, and allowing volume
to fall by keeping prices where they were would have a greater impact
on the bottom line than reduced retail prices have.

Because, as you've said, you are heavily dependent on volume, you must
maintain volume purchases, but you cannot continue to cut price to maintain
volume forever. At some point you will have to cut someplace to maintain
your profits. Maybe, because you're a good guy, you've kept all your staff
on at full pay. Maybe you've not tried to find a cheaper packaging for your
mail outs, or cut back on electric or who knows what, but eventually you
will. You can't make up a loss by selling more. :-)

Competition and choices about what volume of business you want to
maintain are primary driving forces. All cost variations (including
loss-leaders) are at least somewhat secondary. You can still get
McDonald's Dollar Menu in California where the minimum wage is $8 per
hour.

Of course you can, because they plan on you buying something else. Bigger
fries, bigger drink, apple pie, ice cream. Maybe not everybody does, but
enough do that in the long run the dollar menu produces a heck of a lot more
than a dollar per customer who start with the dollar order.

Presumably a lot of the volume in those Dollar Meals come from minimum
wage earners who can afford to eat those burgers precisely because
their minimum wage isn't too minimal!

An that is where the argument fails, because according to:
http://www.heritage.org/Research/Economy/images/wm1320_table_lg.gif

The majority of minimum wager earners are suburban teenagers, not who you
think they are.

"Data from the Department of Labor show that most minimum wage-earners are
young, part-time workers and that relatively few live below the poverty
line. Their average family income is over $50,000 a year. A minimum wage
hike, then, is a raise for suburban teenagers, not the working poor."

The report goes on to say:

"Minimum-wage earners fall into two distinct categories: young workers,
usually in school, and older workers who have left school. Most minimum-wage
earners fall into the first category: 52 percent of those earning $5.15 or
less per hour are between the ages of 16 and 24.[4] The rest are 25 or
older.
Minimum-wage workers under 25 are typically not their family's sole
breadwinner. Rather, they tend to live in middle-class households that do
not rely on their earnings. Generally, they have not finished their
schooling and are working part-time jobs. These workers represent the
largest group that would directly benefit from a higher minimum wage."

The table on this page:
http://www.heritage.org/Research/Economy/images/wm1320_table_lg.gif

Shows that the majority of minimum wage earners live in households where the
household income is 200% above the poverty line, that most are part time,
and most are between the ages of 16 and 24.

So what you, Giddings, GB and Max are really hollering for is a raise for
teenagers, from above average income homes, who are working for spending
money and experience. Does that knowledge make you feel good?

Heritage Foundation - from their site.

A conservative think tank promoting public policy research and
analysis based on free enterprise, limited government, individual
freedom.

Hardly unbiased. The devil in statistics is that you can twist them
to show a lot of questionable results. Both sides do it all the time.
.

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