
Leaving for Las Vegas: California's minimum wage law leaves businesses no choice - SQL2219
http://www.latimes.com/opinion/op-ed/la-oe-salem-minimum-wage-20170102-story.html
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youdontknowtho
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.

~~~
hueving
>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.

~~~
FussyZeus
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.

~~~
mattmanser
They already are, for example there's been several stories over the years of
China losing jobs to Vietnam.

~~~
BatFastard
Its always a race to the bottom for costs. What no one talks about is the
trail of bodies that are left behind.

~~~
FussyZeus
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.

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Hondor
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.

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hueving
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.

~~~
lintiness
chicago has done all that. california has a unique asset that enables it to
enact all kinds of offensive tax etc legislation: climate.

~~~
hueving
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).

~~~
et-al
> 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.

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coldtea
> _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...

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cmdrfred
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.

~~~
youdontknowtho
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.

~~~
cmdrfred
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.

~~~
hueving
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.

~~~
coldtea
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)...

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amalrik_maia
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.

~~~
tankenmate
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.

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norlowski
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.

~~~
Trombone12
He certainly tries to get pity, however awkward the attempt.

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jbmorgado
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.

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ensiferum
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...

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pjc50
"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.

~~~
chillydawg
They're competing to provide the cheapest, legit "Made in America" label.
There's a long way to the bottom of that.

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chrisbennet
Seattle Food Jobs Soar After $11 Minimum Wage Starts

[http://www.forbes.com/sites/eriksherman/2016/01/08/seattle-f...](http://www.forbes.com/sites/eriksherman/2016/01/08/seattle-
food-jobs-soar-after-11-minimum-wage-starts/#2b56e71d4eb0)

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soufron
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.

~~~
hueving
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.

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muzz
TLDR: One single business owner wrote his opinion about the minimum wage law.

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mattmanser
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

~~~
thatfrenchguy
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.

~~~
ams6110
Labor is almost certainly the largest controllable cost for a business like
this one (hand-sewn garment assembly).

~~~
VLM
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.

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mcphage
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.

~~~
VLM
"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.

~~~
hueving
>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.

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grundprinzip
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...

