SoylentNews is people
SoylentNews
Jennifer Medina reports at the NYT that the the city council of nation’s second-largest city voted by a 14-1 margin to increase its minimum wage to $15 an hour by 2020, in what is perhaps the most significant victory so far in the national push to raise the minimum wage. Several other cities, including San Francisco, Seattle and Oakland, Calif., have already approved increases, and dozens more are considering doing the same.
In 2014, a number of Republican-leaning states like Alaska and South Dakota also raised their state-level minimum wage by referendum. The impact is likely to be particularly strong in Los Angeles, where, according to some estimates, more than 40 percent of the city’s work force earns less than $15 an hour. “The proposal will bring wages up in a way we haven’t seen since the 1960s," says Michael Reich. "There’s a sense spreading that this is the new norm, especially in areas that have high costs of housing.”
It's important to remember that the minimum wage hike comes at a significant direct cost to business — well over a $1 billion a year, according to the mayor's analysis — and it would be foolish to pretend that it won't lead to some job losses and business closures. Critics say the increase will turn the city into a “wage island,” pushing businesses away into nearby places where they can pay employees less. “They are asking businesses to foot the bill on a social experiment that they would never do on their own employees,” says Stuart Waldman, president of the Valley Industry and Commerce Association, a trade group that represents companies and other organizations in Southern California. “A lot of businesses aren’t going to make it. It’s great that this is an increase for some employees, but the sad truth is that a lot of employees are going to lose their jobs.”
(Score: 0, Informative) by Anonymous Coward on Wednesday May 20 2015, @08:02PM
If I need 3 people on a shift to keep my business open, then I need 3 people on a shift regardless of whether those 3 people cost me $175 or $350.
In some cases yes. But you can just make your customers wait say an extra 5 mins? Shift the cost to time and onto your customer.
You have a misunderstanding of MR=MC then. You are saying the supply of labor is totally flat. Which it may be. However, you can wiggle it around a bit. You even said so yourself. By turning off part of the business. You start with the 'slow days'.
For example 'Oh my prices went up'. I cut my workers back from 3 to 2 on slow days. Instead of 3 that I could swing before. Maybe instead of being open on Sunday I close earlier at 6 instead of 9 that I did before. I loose a bit of rev but gain back the extra cost I had for an employee.
Dont think so? I talk to the managers in these restaurants all the time. They all say the same thing. They adjust the schedules to match what they need (that includes the workers AND the time the restaurants are open). In some cases less workers and they just come in themselves and fill the gap.
and instead I'm going to accept the lower profit margin.
This is the more likely outcome. This is not the only one. I bet there are hundreds of cases like this one.
http://q13fox.com/2015/04/28/owner-of-pizza-shop-says-new-minimum-wage-law-is-forcing-her-to-close/ [q13fox.com]
They try to make it work and see if they can handle it. But not so much (as you pointed out). Now instead of 1-2 people getting cut (which is what they sold us on) ALL go. Remember MR=MC has changed. Meaning I can only afford to keep 9 workers not 11. But I need 11. So what is the likely outcome of that? If I run a restaurant and have 2 guys doing everything. I have 4 customers per hour. What does my margin have to be to keep those 2 guys employees at 10 an hour. Do not forget the rent/electric/gas/taxes/fica/insurance. Now you have raised my cost per hour 8 dollars. That means my meals need to go up a minimum of 2-3 dollars per meal just to cover it. Also remember I am basically competing with mcds and its ilk who can keep costs low and prices fairly fixed. What if I had 10 employees? That means an extra 80 per hour must be taken in. Oh and remember my vendors have the same problem so the costs of my input materials went up too.
There is no increase in demand so therefore there must be less productivity. It does not magically work that way because someone says so. But you are saying the need to make due with less. But they cant do less. So they close. Without an increase in demand you can not create work.
McDs or Wally world can swing it. The mom and pop pizza place? Not so much. In fact if you noticed the big companies pushed for it. Why would they do that? They saw it as a competitive advantage.
Try asking the people who work these jobs if they like having to have 2 shifts at different businesses on the other ends of town just to get 40 hours.
This helping the poor will do exactly the opposite. It will punish them even more in the long term. Short term they gain a little. But long term they find they can not make up the new 'normal'.
The only proven way to raise wages is to make job seekers more scarce. You do that by creating more demand. Demand is what drives growth. You can not legislate your way into growth.
Case in point (low unemployment example)
http://www.cnbc.com/id/101767406 [cnbc.com]
They could not find people to work these crap jobs. They had to raise the hourly wage to attract them. It also shows how businesses react when labor costs go up.
(Score: 0) by Anonymous Coward on Thursday May 21 2015, @12:37AM
Frankly, these kinds of stories always strike me as blatant fear mongering. Do you honestly think that people are going to suddenly stop eating pizza if this lady closes up shop? Seriously?!? Can you honestly not see that the most likely outcome is that some other pizza shop is going to open up to replace this one that decided that they were going to petulantly close down, take their ball, and go home? Seriously?!? I guess supply and demand just doesn't work in Fox Noise Land.
(Score: 0) by Anonymous Coward on Thursday May 21 2015, @05:16AM
Any business making so little in profit that they can't afford to pay a living wage is already an unsustainable business, ready to crash at any moment. The Invisible Hand has already dictated its going out of business, so its no real surprise when they do exactly that. You don't have abysmal profit margins because you're paying too much in wages; if anything, your lack of profit is specifically because nobody is paying their employees enough, and thus nobody has anything to spend; no disposable income means no demand, which means supply is forced to reduce to match (layoffs and bankruptcies). Its already a proven fact that increasing the minimum wage improves the economy [forwardprogressives.com] and creates jobs, because disposable income (which requires making at least a living wage) means demand, which means more jobs as supply must increase to match the demand.