
Leaked documents show strong business support for raising the minimum wage - Jerry2
https://www.washingtonpost.com/news/wonk/wp/2016/04/04/leaked-documents-show-strong-business-support-for-raising-the-minimum-wage/
======
joshuaheard
That actually makes sense in a perverse way. From the poll, one can see that
most business owners would like to pay more wages. Well, they own the
business, so they could just raise wages if they wanted to, without a legal
minimum wage. Then why don't they? Competition. A business owner won't raise
wages because his neighboring business will have lower costs and be more
competitive. However, by forcing all business owners to give raises,
competitive pressure is lost. Raising the minimum wage still defies economic
sense, however, in that it distorts the marketplace and causes job loss.

~~~
smsm42
If everybody raises wages, and consequently prices (that is assumed since
that's the only way you could have lost competitive edge after raising wages)
- then what's the point of it? Of course, employees would be paid more
numerically, but they could not buy more with this. Unless, of course, some
production would be moved overseas, where prices are not affected by wage
raise. So in essence, these people are betting on more goods manufactured out
of the country - no doubt decrying "job loss to foreign countries" at the same
time.

~~~
chongli
People who make minimum wage aren't the only ones who buy stuff. When prices
go up to cover the wage increase the cost will be spread out over all
consumers, not just minimum wage earners.

You can argue that those at the very top spend far, far less of a percent of
their income on consumer goods and services provided by minimum wage earners
and that's totally fair. But it's not credible to claim that a minimum wage
increase will do nothing at all for people after a price increase.

~~~
bsbechtel
Keep in mind that a wage increase affects not only one business's profit
margins and pricing, but also the prices of all of their goods from suppliers
too. Consider that fast food needs to pay 30% to labor, mostly at minimum
wage. Another 30% or so usually goes to food costs. Those food supplies are
the product of farm labor and food processing plant labor, both of which pay
close to minimum wage as well. If minimum wage doubles, that means the fast
food business now has a labor cost of 60% of his original pricing, plus the
increases in food costs he is going to see as well. Those food cost increases
could be 30-40%, meaning he will likely need to raise prices significantly to
keep the lights on. For a company like McDonald's, who do you think is their
target market when they try to keep prices as low as possible? The rich?
They're trying to make food affordable for everyone, including minimum wage
earners. When McDonald's costs nearly double, what do you think is going to
happen to their prices?

~~~
crdoconnor
If you're curious to see what American McDonalds' would look like where
workers have higher spending power and McDonalds has higher costs, take a look
at an Australian McDonalds where they already reacted to exactly that.

This is pretty much what the future of fast food restaurants is like when you
raise the minimum wage:

[http://www.businessinsider.com.au/mcdonalds-australias-
upsca...](http://www.businessinsider.com.au/mcdonalds-australias-upscale-
burgers-2014-10)

McDonalds is usually able to adapt better to changing market conditions than
other restaurants.

Many restaurants do go out of business when their prices rise, which is why
they hate the idea of raising the minimum wage so much. However, those
restaurants are quickly replaced by other restaurants, which is why employment
is never affected.

~~~
bsbechtel
Right, so you can now buy a burger off of the dollar menu, which costs
approximately 1/7.25 hrs of your labor. When you earn $15/hr, you now have to
work 19.5/15 hrs to earn a burger. Yes, it's a higher quality burger, but you
can get a higher quality burger for the same amount of labor at minimum wage
in the US, and still have the $1 option for those who want it.

~~~
crdoconnor
>Right, so you can now buy a burger off of the dollar menu, which costs
approximately 1/7.25 hrs of your labor.

Yeah, I've tried those they're pretty gross. You can also buy a Big Mac for
the same price as in the US.

>When you earn $15/hr, you now have to work 19.5/15 hrs to earn a burger.

A much, much better burger.

And you've got more disposable income too.

~~~
smsm42
You are essentially arguing that there should be no cheap burgers, since there
are much, much better expensive burgers. What you seem to be forgetting is
that some people won't be able (or not want) to afford much, much better
burgers and that's the reason cheap burgers exist.

------
boona
Had liberals (or north-american libertarians) been able to win the battle for
words, we would be discussing "making it illegal for low skill workers to get
jobs", not "minimum wage".

~~~
js8
They did win battle for words! Libertarians call any exchange of work for
money, no matter how small, a "job". But normal people, when they want "a
job", don't seek to have an economic exchange for miniscule amount of money
that cannot pay their bills. That can be called either a "gig" or "slavery",
depending on circumstances, but hardly a "job". A "job", in normal speech, is
something that can actually economically support you.

So what is being outlawed by minimum wage are "jobs" that cannot feed people,
which, I am sure you will agree, are simply not worth existing.

And in fact I think popularity of libertarianism is half of the cause why
minimum wage is still being discussed, because people and businesses who
actually know economic stuff support minimum wage, as they understand that
flow of money in economic systems starts from the demand. The other half of
the cause are possibly some rich people, who are a different type of political
actor than businesses.

~~~
partiallypro
That's a silly argument, Denmark for instance, doesn't even have a minimum
wage, nor Iceland, Italy, Liechtenstein, Norway, or Singapore..and technically
neither does Switzerland. I'd hardly call those "libertarian" societies. Then
again, I have a hard time taking someone seriously when they equate general
labor with literal slavery. If you have mobility of labor through your own
free will, you are not a slave. It's disgracefully offensive to those that
actually do, to this day, work as slaves. Working for $8.50/hr at McDonald's
is not slavery.

As was debated in prior threads, minimum wages are nonsensical from an
economic (and welfare) standpoint. Negative income taxes or living wages make
a lot more economic sense.

~~~
audunw
FYI, the Nordic countries do not have national minimum wage, but they have
strong government protected unions who negotiate a minimum wage per industry.
It's a much better solution, and frankly the loss of industry unions is a
tragedy for the US and the only reason people think they need a national
minimum wage - which is really a dumb solution.

The conspiracist in me likes to think that corporations there push for minimum
wage as one of many ways of stripping unions of power, and to argue that
they're not necessary

~~~
clarkmoody
Minimum wages proposed by unions are designed to destroy the job prospects of
non-union workers. It is pure self-interest on the part of the union.

~~~
imtringued
That doesn't make sense. A business wants to have as few union workers as
possible. If they only give raises to union members then everyone will want to
join a union further putting the business during negotiations in a even worse
position than just raising the wages for everyone.

------
somberi
Just to widen the context. From New Yorker (1)

Walmart and Target earn between three and four cents on the dollar; a typical
McDonald’s franchise restaurant earns around six cents on the dollar before
taxes, according to an analysis from Janney Capital Markets.

In fact, the combined profits of all the major retailers, restaurant chains,
and supermarkets in the Fortune 500 are smaller than the profits of Apple
alone.

Yet Apple employs just seventy-six thousand people, while the retailers,
supermarkets, and restaurant chains employ 5.6 million.

The grim truth of those numbers is that low wages are a big part of why these
companies are able to stay profitable while offering low prices.

(1) [http://www.newyorker.com/magazine/2013/08/12/the-pay-is-
too-...](http://www.newyorker.com/magazine/2013/08/12/the-pay-is-too-damn-low)

~~~
cowsandmilk
> Walmart and Target earn between three and four cents on the dollar; a
> typical McDonald’s franchise restaurant earns around six cents on the dollar
> before taxes, according to an analysis from Janney Capital Markets.

Those numbers say nothing about how many cents on the dollar their retail
employees currently cost. A cashier can easily check out thousands of dollars
of merchandise an hour.

I can virtually guarantee retailers pay more in credit card processing fees
than they do for their retail employees. Of course, Target reflects this with
their 5% Red Card. And many smaller retailers reflect this by either (a) not
taking credit cards or (b) only taking certain cards.

------
mikaeluman
Economic 101. Minimum wage does nothing except hinder the disadvantaged. But
yes, may also be good to get rid of your competition. Useless debate, because
people, even engineers, don't think about it economically but only
politically. If you believe it works, let's just make it $50 an hour.

~~~
cowardlydragon
And economics has EVERYTHING figured out? At least towards an oligarchical
fascist police state dystopia with monopoly or cartel control over most "free
markets" and can't predict basic things like the housing mortgage crash,
overexuberance in tech stocks, and the like.

It can't even fucking figure out how to fundamentally avert global disaster or
total ecological destruction. It basically can see three months into the
future.

So I hate to tell you, your supply/demand curves may look second-nature, and
the pirates dilemma may let you sleep at night with the current distribution
of wealth, but it doesn't represent chaotic, nonlinear, fly-off-the-rails
reality.

------
pdkl95
Of course. Demand is necessary for business. If lots of people are barely
scrapping by (which has been true for a _long_ time), only a tiny handful of
businesses will make any money.

The 80% supporting an increase are just stating the obvious: you need demand
if you want to sell anything.

------
matt_wulfeck
I'll vote on the minimum wage law increase provided we finally do away with
tipping.

~~~
tinalumfoil
Tipping is a cultural aspect, not a legal one. Tipping was written into the
law because people were already tipping, not the other way around.

~~~
xufi
I actually do wonder. How is tipping in Europe v.s the US where we always do
%10 or so

~~~
NamTaf
Sometimes it exists, other times it doesn't.

Tipping just about doesn't in Australia, where we pay a reasonable minimum
wage ($17.29 per hour for adults in full-time employment). You occasionally
find people will tip a taxi driver or bartender, but by and large it's just
not done.

~~~
xufi
Interesting. Some states in the U.S just raised the wage to $14 dollars but
nationally it's pretty low

------
kennethh
If one increase the minimum wage the business employing people have 3 choices:
1\. Have less profit, but this is not in the business owners interest 2\.
Increase the prices, this might be possible. This would normally lead to less
customers since the cost increased 3\. Become more effecient, reduce the
number of people employed

I would guess mostly and sometimes 2 would be the normal response. Nobody
wants to decrease their profit and the profit can not be lower than 0 over
time.

------
Mikeb85
Raising minimum wage will boost aggregate demand. What's not to like? It's a
consumer economy, not an export economy. You want consumers with money.

------
ThomPete
Minimum wage is fine but it does not solve the actual problem of technology
decreasing the value of each worker in most of those fields.

A better solution would be UBI since it actually deals with the issue that MW
is claiming to solve (but doesn't)

~~~
dredmorbius
Technology, by increasing per-worker productivity, should _increase_ labour
value.

(Mind: I said "labour _value_ ", not "labour _compensation_ ". There's a
difference.)

Technology that decreases value of workers isn't technology, at least in the
economic term (Solow) which sees it as an increase in productivity not
accounted for by capital or labour directly (the Solow Residual).

[https://en.m.wikipedia.org/wiki/Solow_residual](https://en.m.wikipedia.org/wiki/Solow_residual)

~~~
YokoZar
There is certainly technology that substitutes many cheap (low-skill) workers
for a few individually more expensive ones. The value to the business of the
labor would increase, and on average "labor value" would be higher, but it
would be different people's labor having more value.

At the same time, all else equal this would reduce the relative demand for the
low-skilled worker, leading to a fall in the competitive wage they could get.

So, yes, "technology" should increase productivity and thus mean "labor
value", but individuals can definitely lose out.

~~~
dredmorbius
Note what you just referenced. You're replacing _low cost_ labour for _high
cost_ labour, but _increasing_ the _value_ of that labour.

 _Cost_ is what you give up for something.

 _Value_ is what you get for it.

 _Price_ is what you _pay_ on the market.

They're three distinct concepts. Much economic confusion results from it.

(And yes, there are some who describe "value" as "market value", which I refer
to as _price_. See though "economic value.)

------
danieltillett
Never run a business that relies on paying minimium wage.

~~~
JoBrad
This is the real answer. The minimum wage is only an issue because so many
companies rely on it to bolster their business model.

------
Aoyagi
I don't understand this. The federal minimum wage (7.25 USD) in US is higher
than Czech average wage (~6.78 USD), yet things generally aren't any cheaper
here. Taxing crippling. I thought the minimum wage at its current height is
unsustainable, and they want to raise it even more?

By the way, what are the "leaked documents" in the title? The public survey
and the public research?

------
lumberjack
If there is such widespread support why is it that comments on various social
media give a completely different perspective when the topic comes up?

~~~
dredmorbius
Several possibilities come to mind.

Ignorance. Poor education. Disinformation. Astroturfing.

~~~
JBReefer
Or people that have a different opinion.

------
ACStar
I haven't read all the comments but I think there is a large sector of the
workforce being ignored in the discussion. I live in a rural area and most
manufacturing jobs here start in the $10/hr range. All the companies starting
less than the new minimum will have to increase wages as well. This will
include all experienced people who will now want to be earning more because
the floor has now risen by x dollars.

------
JohnDoe365
It's a vicious circle. Increased wages will result in increased consumption
and contribute to making the rich richer while flooding the poor with goods
with built-in obsolescence. It would be much better to learn living with much
less than we do now and teach the one who try to deprive our workforce that
they are dependent form us.

~~~
mtgx
First off, most Americans are already in a borderline financial crisis, and
you're saying that it's better they stay this way than get more money to
"increase consumption"?

[http://www.cbsnews.com/news/most-americans-cant-
handle-a-500...](http://www.cbsnews.com/news/most-americans-cant-
handle-a-500-surprise-bill/)

Obviously if you have more money, you will increase consumption, but the more
money you make, there will be diminishing consumption. It's not like people
making $30 million a year spend 95% of it at Walmart. The more money you make
the more you either invest or save (as a percentage of your income), even if
the _total_ consumption increases as well. In other words, having more people
with more money is not a "bad thing" for the economy (or their personal
lives). Quite the opposite.

Second, if there's a stronger middle class, it means the money paid to
businesses will be much more distributed. When people have little money, then
they can only afford to spend on "necessities", which by _default_ shrinks the
market to a handful of business categories, which means only a few will be
able to get "richer".

It's also likely that only the biggest such businesses will survive thanks to
better economies of scale and people's price sensitivity due to the very low
incomes, which means there will be higher inequality and less competition in
the market.

When more people have more money, they buy all sorts of stuff, giving life to
all sorts of new businesses and because consumers aren't as price sensitive,
competition will be higher as well.

------
rebootthesystem
As always, lots of opinion from people who have never taken a risk, used their
own money, launched a non-trivial business, ran it for a decade and lived the
reality of a competitive imternational marketplace while trying to survive
govenrment fucking shit up all around you.

Nah, forcing a 50% hike in minimum wage will only have one effect. And anyone
who has operated a non-trivial business for a while knows what that will be.
What was Ross Perot's famous line about a huge sucking sound?

Do you non-business folks want me to spell it out? Well, I don't have the time
to describe all that will happen. I'll just pick one consequence. This one
highhlights the economic tsunami this will be:

You only need one, or a handful, of people at minimum wage to destroy jobs and
even the very viability of a business.

So, you have 50 people earning $15 to $20 per hour today. Maybe you have
another ten earning $25 to $50. And you have, say, five, earning minimum wage.

In five years your minimum wage folks go to $15 per hour. An incredible 50%
raise.

The folks making $15 to $20 know this. They don't want to be at minimum wage
or thereabouts. Their wages are likely to have to go up. What do we do? One
group just got a 50% raise. Do we give everyone a 50% raise? No, let's try $5
per hour.

We now go from $15 and $20 to $20 to $25. In other words, 25% to %33% hike in
wages for mid-range employees.

Of course, those making $25 to $50 now want their cut. Let's give them $5. So,
$30 and $55 it becomes.

On the aggregate, mid-range employees probably represent the bulk of your
labor expenses. Your real costs just went up somewhere around 33%.

Can we raise our prices? Probably not.

What we now have is a hit in profitability AND a cashflow squeeze. And we know
we can't survive them.

Well, fuck it! Let's fire the minimum wage earners and problem solved. We only
have five of them and they triggered this mess.

Will that solve the problem? No. Your employees know about this new scale out
there. They don't think it is fair that they earn anywhere close to what a 14
year old kid can get at Del Taco.

Well, shit! We didn't solve the problem.

Oh, wait a minute. A Chinese competitor who understands the math just lowered
their prices by 10%, forcing us to follow suit and causing a further squeeze
to our finances.

We need to take drastic measures.

We need to lay-off enough people to remain viable. We migt even have to shift
some of the remaining people to part-time work.

The trouble is that we were straining to keep up as it was. We really can't
produce enough goods with 25% less man-power.

Only one choice remains. We contract to have our goods and services made and
performed in China and India. We shrink dow to a management and marketing team
in the US, get out of the lease for our 50,000 square foor facilty and move
into a 1,500 square foot office space.

And there you go: The huge sucking sound you'll hear is that of millions of
jobs leaving the US.

Thanks everyone! Good job! We are really good at destroying ourselves from the
inside. They are laughing their asses off in China right now.

~~~
worldadventurer
Except that numerous studies have shown that your scenario isn't what really
happens when the minimum wage is raised. Numerous states have raised the
minimum wage in the past while surrounding states haven't, giving us a lot of
actual comparison data (check out the Berkeley paper linked below). Quotes
from an article from NYTimes[1]:

" The weight of the evidence shows that increases in the minimum wage have
lifted pay without hurting employment, a point that was driven home in a
recent letter[2] to Mr. Obama and congressional leaders, signed by more than
600 economists, among them Nobel laureates and past presidents of the American
Economic Association.

That economic conclusion dovetails with a recent comprehensive study[3], which
found that minimum wage increases resulted in “strong earnings effects” — that
is, higher pay — “and no employment effects” — that is, zero job loss. "

[1] [http://www.nytimes.com/2014/02/09/opinion/sunday/the-case-
fo...](http://www.nytimes.com/2014/02/09/opinion/sunday/the-case-for-a-higher-
minimum-wage.html)

[2] [http://www.epi.org/minimum-wage-statement/](http://www.epi.org/minimum-
wage-statement/)

[3]
[http://www.irle.berkeley.edu/workingpapers/157-07.pdf](http://www.irle.berkeley.edu/workingpapers/157-07.pdf)

~~~
rebootthesystem
The links you provide are for articles that are totally biased and carry an
agenda.

Look, this isn't about politics or research papers. It's about math. As an
engineer who founded and ran multiple companies over the last 30 years I can
tell you math is a fucking bitch to face. It don't lie and it does not care if
you like Obama or Trump. And simple math, in this case, tells the cold hard
truth: These kinds of changes have consequences.

Even if you don't have a business you ought to be able to understand this. If
gasoline went up 50% you would be forced to make some spending changes. Some
won't care. Others would have to stop going out, buy a smaller car, sell their
SUV, etc. If we also raised your rent or mortgage by 25 to 50 percent via
mandate and your income did not increase at all. Well, extrapolate from there.

High minimum wage will screw the poor and middle class in more ways than one.

For example, if I have to pay someone $15 per hour rather than %10 (50% more
just because some politician pulled the number out of their ass) I am likely
to be far less tolerant of lack of experience or performance. There are whole
layers of people who might have a very difficult time finding work for these
reasons.

Nah, it's a bad idea. So sorry to see that populism and pandering is
destroying this country.

