Minimum Wage: Running from the Facts

[icanhelp1]

In a free society if two people enter into an economic agreement that satisfies both, how is it the business of the federal government, possibly thousands of miles distant, to step in and nullify the agreement?

A blanket minimum wage is not a fairly distributed edict. Just like the government has wage scales based on location due to cost of living, to have a blanket minimum wage would economically advance some disproportionately. $15 in NY is not the same value as $15 in MS.

 

[Fuzzy1975]

What if an employee skills/production are only worth 6.50 an hr and not the 7.25 the government forces people to pay? That's a loss....so no job for 6.50/hr.

I work in sales now after being bought out of retirement. The corporation I work for is rather large. I have had a discussion about "absorption" with many managers from the manufacturing side.

They claim by reducing cost, they are making money.

I say, you can reduce all the cost's you want, but you are not making any money.

The proof, if I don't sell widgets, and no one buys any widgets from the corporation, does the corporation still make money by your cost reductions?

How does this play into your skills/verses hours paid argument?

Well the financial profitability of a company is not defined by how much anyone is paid. It is defined by the year end profit, or loss.

Wages are a cost, which need to be offset by profit. There are many ways a company can do this, I am not listing them here, that is what business courses teach. However skills/hr is not a course.

 

[Fuzzy1975]

A blanket minimum wage is not a fairly distributed edict. Just like the government has wage scales based on location due to cost of living, to have a blanket minimum wage would economically advance some disproportionately. $15 in NY is not the same value as $15 in MS.

You bring up a very valid point. I agree 100%.

 

[BotanyBoy]

I work in sales now after being bought out of retirement. The corporation I work for is rather large. I have had a discussion about "absorption" with many managers from the manufacturing side.

They claim by reducing cost, they are making money.

I say, you can reduce all the cost's you want, but you are not making any money.

The proof, if I don't sell widgets, and no one buys any widgets from the corporation, does the corporation still make money by your cost reductions?

Ahh the old a dollar saved is a dollar earned bit....to some extent, but they aren't making money, they are saving it.

How does this play into your skills/verses hours paid argument?

Anyone who isn't pulling their weight (gov. forcing company to pay 7/hr for 5.50/hr value) is getting canned.

Otherwise it really doesn't have much to do with it.

Well the financial profitability of a company is not defined by how much anyone is paid.

But it is...because as you said wages are a cost which need to be offset by profit.

If you can reduce your cost without losing profit, you've increased the companies profitability.

Employees are one of the biggest costs there are and less productive ones are the easies expenses to cut.

 

[icanhelp1]

I work in sales now after being bought out of retirement. The corporation I work for is rather large. I have had a discussion about "absorption" with many managers from the manufacturing side.

They claim by reducing cost, they are making money.

Everything remaining equal, cutting cost will increase the bottom line.

I say, you can reduce all the cost's you want, but you are not making any money.

Profit will increase if; any variation of overhead cost of goods sold go down and price remains the same.

The proof, if I don't sell widgets, and no one buys any widgets from the corporation, does the corporation still make money by your cost reductions?

I think you had one too many!

How does this play into your skills/verses hours paid argument?

Skills = value.... value = what the market will bear = wages based on skill.
Elevated wages-skills =/= what the market will bear = socialist governmental imposition on free trade.

Well the financial profitability of a company is not defined by how much anyone is paid. It is defined by the year end profit, or loss.

Payroll for most companies is their highest cost. P&L statements are based on all of company activities.

Wages are a cost, which need to be offset by profit. There are many ways a company can do this, I am not listing them here, that is what business courses teach. However skills/hr is not a course.

Just the other way around, profits are affected by wages whether its good or bad.


profit = price-overhead 1. If price remains constant/ overhead goes up/ profit
goes down

2. If overhead goes up/ price goes up/ profit stays the
same.

3. If overhead goes down/ price remains constant/ profit
goes up.

Overhead in this case= payroll cost/ overhead cost ( facility, utilities, expenses ) cost of raw material and capital cost + depreciation.

Gross profit = price of goods sold ( 100% sold )-overhead cost

Net profit = gross profit-taxes

 

[Rightguide]

Who's loyalty is to the share holder, no one else, not the employees not the country of incorporation, government,environment, nothing....(when it is a for profit type corporation).



Where do you come up with this type of logic? I can't even figure out how to wrap my head around it? Define what $10.00/hr skill set or ability is?

Lets try it this way. Every person lives time identically.

My hour is as long as your hour. My day is as long as your day.

So If I agree to give someone an hour of my time in exchange for my service, or you give that same person an hour of you time in exchange for your service. That person gets the same time of service from both of us.

Minimum wage simply stipulates what the hour of time is worth, nothing more or less.

It has nothing to do with production rates, abilities, skill sets, education etc etc.

It is the absolute minimum amount of money an employer can pay another person for one hour of their time.

That's where your argument falls apart. In a free market the market is pricing what you can do in an hour, how efficient you are, and your overall skill level, which is going to be different from one person to another. Some workers are more valuable to employers than others who have less skills and abilities. When we try and turn the "minimum wage" into a "living wage" by continuously raising the minimum we actually price less skillful workers out of the market. That is why every time we raise the minimum wage many workers are laid off or fired, because doing so raises the employers overhead to unacceptable levels, thus destroying his profit incentive and forcing him to cut his overhead, ie his labor costs.

 

[Rightguide]

A blanket minimum wage is not a fairly distributed edict. Just like the government has wage scales based on location due to cost of living, to have a blanket minimum wage would economically advance some disproportionately. $15 in NY is not the same value as $15 in MS.

Which is why we should let the market (local economies) price labor and other goods and services consumed in those economies.

 

[Fuzzy1975]

That's where your argument falls apart. In a free market the market is pricing what you can do in an hour, how efficient you are, and your overall skill level, which is going to be different from one person to another.

Can you ever just for a second stop and think?

You cannot compare efficiency to hourly wage. Here is why. Two jobs, store greeter, and cashier.

Explain to me ( or anyone else) the efficiency of one who earns the minimum wage, and one who works at less efficient than minimum wage.

The greeter greats people, the cashier is soon to be replaced by self check outs.

Those are minimum wage jobs, how about the person who takes your order at a fast food chain? How does one give you 6.50/hr and the other 7.00/hr???

From an owners point, you "fire" the slacker, you don't absorb the cost.

Yes if you mandate everyone to pay those people the "extra", that "extra"cost will show up. Either as lower profit, or increased prices. Studies show that staffing stays about the same in viable business case's, and product cost rise.

 

[Fuzzy1975]

Which is why we should let the market (local economies) price labor and other goods and services consumed in those economies.

Which is why the minimum wage is difficult to implement, it does need to be tailored to area's ( better than state wide or province wide) . However being difficult, is not impossible.

You act like we should fear a minimum wage? Would you be one of those people who said we should fear the 40 hr work week too, when it was implemented?

How about employment standards? Worker health and safety?

 

[icanhelp1]

Can you ever just for a second stop and think?

You cannot compare efficiency to hourly wage. Here is why. Two jobs, store greeter, and cashier.

Explain to me ( or anyone else) the efficiency of one who earns the minimum wage, and one who works at less efficient than minimum wage.

Why not? Efficiency = productivity = increase profit ( value ) = raise ( increased compensation )

Employee at minimum wage meets the standard = keeps job.
Employee at minimum wage doesn't meet the standard = fired

The greeter greats people, the cashier is soon to be replaced by self check outs.

A greeter is not a productive part of a company, it's a courtesy provided, a greeter cannot increase sales, whereas a cashier is a productive part of the organization.

Automation = job conversions/ retraining/ some cases lost jobs


Those are minimum wage jobs, how about the person who takes your order at a fast food chain? How does one give you 6.50/hr and the other 7.00/hr???

You accept $6.50, its your agreement and contract with the company. If not satisfied go to the other company.

From an owners point, you "fire" the slacker, you don't absorb the cost.

If you fire someone overhead cost goes down, remaining employees absorb workload. Rehire when needed

Yes if you mandate everyone to pay those people the "extra", that "extra"cost will show up. Either as lower profit, or increased prices. Studies show that staffing stays about the same in viable business case's, and product cost rise.

Markets determine value of a product/ what the market will bear. Increase price possibly decrease sales, increase overhead ( payroll/ increased minimum wage ) cost trickle down to the consumer It's the reason why when government injects itself into a free economy by adding a synthetic value other variable change such as labor force ( less jobs ) increase pricing or take a loss. Many small companies operating with narrow margins can't absorb the cost, fold.

 

[colddiesel]

In a free society if two people enter into an economic agreement that satisfies both, how is it the business of the federal government, possibly thousands of miles distant, to step in and nullify the agreement?

Your argument is both attractive and nonsense because it assumes a reasonable equality of bargaining power and mutual satisfaction which hardly ever exists. I don't give a rats ass about wage theory dogma of either right or left, only solutions that work. That's why I suggest a minimum wage works but only if it is a bit ungenerous.

For examples excessive minimum wages helped kill car manufacturing in OZ but modest minimums in hotel/restaurant work have helped work security for both employees and employers.

 

[icanhelp1]

Your argument is both attractive and nonsense because it assumes a reasonable equality of bargaining power and mutual satisfaction which hardly ever exists. I don't give a rats ass about wage theory dogma of either right or left, only solutions that work. That's why I suggest a minimum wage works but only if it is a bit ungenerous.

For examples excessive minimum wages helped kill car manufacturing in OZ but modest minimums in hotel/restaurant work have helped work security for both employees and employers.

What do you mean "a bit ungenerous"? I think minimum wage employment is basically entry level. I believe this wage increase to $15/per/hr is a lefty ploy to increase wages for undocumented workers.

 

[Rightguide]

Which is why the minimum wage is difficult to implement, it does need to be tailored to area's ( better than state wide or province wide) . However being difficult, is not impossible.

You act like we should fear a minimum wage? Would you be one of those people who said we should fear the 40 hr work week too, when it was implemented?

How about employment standards? Worker health and safety?

I'm addressing the Minimum Wage "theory" and it's economic effects on theoretical free societies. The actual war over a Minimum Wage is over. We no longer have a free enterprise system, as no aspect of "private" business today is decided by the individual absent government control. We no longer have a free society as all aspects of life and movement are regulated in oppressive detail. Those without historical perspective and hampered by a belief that history began the day they were born, won't be persuaded by any free market philosophies they've never experienced or they can't believe are possible.

I will tell you this, free enterprise made us a great nation, our decline can be measured and attributed to how it's been smothered by big government and ignorant constituencies.

The United States used to be the freest country in the World. Today we have precious little freedom left, and what is left is constantly legislated, regulated, and adjudicated away by every level of government and the judiciary. Our future is Hong Kong's present reality. That war for a return to freedom will someday be coming to a neighborhood near you. Pay attention.