Seattle sees fallout from $15 minimum wage, as other cities follow suit

[ChrisDuke]

Chains will be able to cover the difference easier. They have a huge advantage over small time places in terms of buying and discount power. Competition in the same segment probably won't change much. It's going to boil down to being nothing but chains ( in every sector)and a lack of locally owned businesses.

 

[Fogdog]

Chains will be able to cover the difference easier. They have a huge advantage over small time places in terms of buying and discount power. Competition in the same segment probably won't change much. It's going to boil down to being nothing but chains ( in every sector)and a lack of locally owned businesses.

It also depends on the willingness of customers to go to them.

 

[ChrisDuke]

Maybe I misinterpreted what you said. Could you explain what you mean by "That's why we should push down from the top versus raising the bottom." Is this the old rising tide floats all boats argument?

Not necessarily communism, or socialism, even though most markets are a blend of all types of economic markets, and those aren't bad words unless you want then to be. Our free market has become perverted. If we don't somehow limit salaries in a way that we can all agree on, shouldn't we at least be transparent in the.... Nevermind... How about we just even the playing field a bit? We're a civilised nation. How about free ( built in tax) utilities? What if corporations paid what individuals paid in taxes? Maybe get rid of loopholes only the rich can afford to take advantage of? More privately funded programs versus government programs? Everyone trying to help each other out versus fighting over media bs?

 

[heckler73]

If minimum wage was raised, wouldn't it just be minimum wage again?

Yes, but what would then be the median wage?

That's true heckler, although even if demand doesn't fall off that doesn't mean that the amount being sold is going to off set the labor cost. Small businesses that have a small margin, like restaurants and bars in general, would need a pretty major increase in volume related to everyone having more money; just to stay afloat.

One thing I learned about economics, several years ago, was to not get too far into the nitty-gritty theory without applying numbers, at some point, just to check how well the hypothesis is credibly reflecting reality.

Here are some points from a 2011 Forbes piece:
2) There are almost 28 million small businesses in the US and over 22 million are self employed with no additional payroll or employees (these are called nonemployers)

That means there were about 6 Million "employing" businesses, or ~21%, with any remote concern about the minimum wage issue. But it gets more interesting if one looks more carefully at your particular example of "food services".

Spoiler: Only Large Penises should click here, YOU LIAR

http://www.census.gov/epcd/susb/2008/us/US72.HTM

If we're discussing tight margins in restaurants and bars, we're looking at~380k establishments with ~2.2Mn employees (rough 2008 figs) working in businesses with less than 20 people each, for a total payroll of ~$29.5Bn.
So, what is going to happen to those 2.2Mn people? (NB: these figures include the "Accommodation" sector, which makes up ~11% of the aggregate)

I was out at a Mexican restaurant the other night with a relative. Two beers cost the same as a 6 pack (of quality micro brew), two stuffed jalapeno appetizers garnished with pickled carrots and onions cost the same as a beer, with Enchiladas Verdes and Chiles Relleno Poblanos plates costing approximately 6 more beers.
After paying for the equivalent of 27 Liquor store beers to the one waitress on duty (with a 3 beer tip), do you think I'd care if the bill went up by 1 or 2 more? And what about substitution effects? Maybe one will just knock off a restaurant beer to keep the total bill equalized? Maybe I won't tip as much?
I could use the same metric at the bar (if I were still a Metal-Punk Boozer).

I fail to see how these bleeding-edge businesses you speak of constitute a problem in the overall fabric of economic health. You seem to acknowledge a positive externality of increased patronage but argue as if they are facing an elastic demand at the individual level. My example suggests otherwise, as do my anecdotal recollections of studies on minimum-wage, labour markets.

Do you think that company should be worried about minimum wage regs?

 

[mollymcgrammar]

$16 more per worker per day will cripple you?

That adds up. Especially when all of workers will now want raises because they now make minimum wage.

I have 9 employees, 5 are full-time. They work roughly 50 hours a week. All of my fulltime guys get 15 an hour except one, he makes 12.

Our average work day is about 10 hours. Sometimes more sometimes less. Thats about 50$ a day extra for his work, plus my more experienced guys now need raises too.

It would probably in the end cost me an extra 250-300$ a day in labor. I run a small outfit and keep my prices low even to the point of almost always making less than my workers. Fortunately i dont mind. They work hard and well, and i can leave them at a site and do handle other shit, the jobs get done right even when im not there.

That pay raise would effect my prices drastically, making me less competitive with prices.

If i dont raise prices i will not make a dime, and possibly lose money.

Today my 3 guys are putting in a fire pit, and another 3 are hanging some drywall. My cost of labor today will be just shy of $1000 today. The material cost me about 700 for both project's. I'll make roughly 400$ at the end of the day, and it is actually the most ive made in a day in a while. 200 of that will go to pay part of my insurance, and the rest in the bank.

If the pay raise was in effect today, id be walking away at the end of the day with NOTHING.

 

[Fogdog]

Not necessarily communism, or socialism, even though most markets are a blend of all types of economic markets, and those aren't bad words unless you want then to be. Our free market has become perverted. If we don't somehow limit salaries in a way that we can all agree on, shouldn't we at least be transparent in the.... Nevermind... How about we just even the playing field a bit? We're a civilised nation. How about free ( built in tax) utilities? What if corporations paid what individuals paid in taxes? Maybe get rid of loopholes only the rich can afford to take advantage of? More privately funded programs versus government programs? Everyone trying to help each other out versus fighting over media bs?

There are some good ideas in there. The wages bit seems a strained when we consider the size of executive bonuses that they didn't really produce enough value to earn.

I would favor running things from the bottom up -- those that do the work should make the decisions regarding it and get rewarded for their effort is better than top down management where one person control/constrains everybody else. Empowering workers to make decisions and get rewarded is a mainstay of the best companies. The idea of the all knowing and hard working executive or great leader is mostly false. But we aren't talking about minimum wage in this case.

 

[bearkat42]

If the pay raise was in effect today, id be walking away at the end of the day with NOTHING.

Then maybe you can't afford to be in business.

 

[Fogdog]

Then maybe you can't afford to be in business.

Agreed, those that can't make a profit will be replaced by those that can. The small contractor market is full of hard working and smart people. I think he's overstating his lack of control of the situation.

 

[mollymcgrammar]

Then maybe you can't afford to be in business.

I can afford it now, but this proposed wage increase will hurt me. Also, 9 people lose employment.

As of now i make a profit but a small one. I could easily hire people at 8-9$ an hour and make more but id rather pay a decent wage, but i would feel guilty.

How many others will have the same issue as me? Im a good employer who pays fairly. I might not profit much, but i also hardly work. My company is almost self sufficient, and my guys handle everything aside from giving estimates and bids, and paying the bills.

My total profit after all costs last year was just shy of 20,000. But i probably only actually worked for about 150 hours.

This year has been rough, i had to buy some new equipment and it wasnt cheap. My skid loader needed work and that was expensive too, but my wife makes good money and i care more about my crew than i do myself sometimes.

I look at it like this, since they do almost all of the work, they deserve fair pay. I provide equipment and training and i find jobs for them to do.... Thats what i get paid for.

If more employers had that attitude, min wage wouldn't be an issue. Im far from rich, but i have a roof over my head and i could probably sell my company with equipment and all for 75,000 or so.... So im worth something. Every year i try to grow a little bit, even if its just by adding a new tool to the arsenal. This year i got a new shotcrete sprayer. Haven't used it yet, but that is property of my company and makes me worth a tiny bit more than i was. It also opens up a door for me to take on new jobs. When i bought it it was cuz i had a job lined up but the contract got cancelled and i decided to keep it.

I guess for being 23 im doing fairly well.

 

[Fogdog]

I can afford it now, but this proposed wage increase will hurt me. Also, 9 people lose employment.

As of now i make a profit but a small one. I could easily hire people at 8-9$ an hour and make more but id rather pay a decent wage, but i would feel guilty.

How many others will have the same issue as me? Im a good employer who pays fairly. I might not profit much, but i also hardly work. My company is almost self sufficient, and my guys handle everything aside from giving estimates and bids, and paying the bills.

My total profit after all costs last year was just shy of 20,000. But i probably only actually worked for about 150 hours.

This year has been rough, i had to buy some new equipment and it wasnt cheap. My skid loader needed work and that was expensive too, but my wife makes good money and i care more about my crew than i do myself sometimes.

I look at it like this, since they do almost all of the work, they deserve fair pay. I provide equipment and training and i find jobs for them to do.... Thats what i get paid for.

If more employers had that attitude, min wage wouldn't be an issue. Im far from rich, but i have a roof over my head and i could probably sell my company with equipment and all for 75,000 or so.... So im worth something. Every year i try to grow a little bit, even if its just by adding a new tool to the arsenal. This year i got a new shotcrete sprayer. Haven't used it yet, but that is property of my company and makes me worth a tiny bit more than i was. It also opens up a door for me to take on new jobs. When i bought it it was cuz i had a job lined up but the contract got cancelled and i decided to keep it.

I guess for being 23 im doing fairly well.

I think you get the reason for paying people well. You put people in place that can manage for themselves. This gives you more time to manage the business rather than train and retrain a revolving and barely competent group of workers. Two people at $8 under today's wage structure don't match the same quality and hassle free work of one $16/hr worker.

 

[mollymcgrammar]

I think you get the reason for paying people well. You put people in place that can manage for themselves. This gives you more time to manage the business rather than train and retrain a revolving and barely competant group of workers. Two people at $8 under today's wage structure don't match the same quality and hassle free work that one $16/hr worker.

Exactly, but if 15 is minimum wage, i have to give all 9 employees raises. The guys making 15 now deserve more than the guy making 10. That means my payroll will go up alot more than just a few bucks a day.

I

Some of my guys are more experienced than myself, and i already wish i could pay them more, but the only way i can is if i bid higher. That means im less likely to land a contract and less work = less hours = less money. If i dropped a few of my guys i could make it work, but that means someone has to lose a job.

Also, i dont buy the sob stories about how the folks working at McDonald's need a raise. They CAN get better jobs. Even with felonies on a record.

I have never landed any "career worthy" jobs, but ive landed some 12$ an hour gigs after i got out of prison. I have a nasty criminal record and my name rings bells everywhere i go from being on the news alot.

Warehouses, factories, construction crew, road flagger, restaurants ect.

Alot of them start above minimum wage even with no experience. If you do start at 7.25, work for a year and now you got experience. Yes its hard, but i did it. I got out of prison and struggled until my business took off... Sweat blood and tears is what it takes

 

[spandy]

The best thing that could happen for McDonalds and Walmart is for a 15 dollar minimum.

Easiest way to shut down all the other competition.

 

[mollymcgrammar]

The best thing that could happen for McDonalds and Walmart is for a 15 dollar minimum.

Easiest way to shut down all the other competition.

Yup, it will hurt there pockets for a few weeks while the little guys are getting crippled. Then it will bring them tons of money

 

[Fogdog]

Exactly, but if 15 is minimum wage, i have to give all 9 employees raises. The guys making 15 now deserve more than the guy making 10. That means my payroll will go up alot more than just a few bucks a day.

I

Some of my guys are more experienced than myself, and i already wish i could pay them more, but the only way i can is if i bid higher. That means im less likely to land a contract and less work = less hours = less money. If i dropped a few of my guys i could make it work, but that means someone has to lose a job.

Also, i dont buy the sob stories about how the folks working at McDonald's need a raise. They CAN get better jobs. Even with felonies on a record.

I have never landed any "career worthy" jobs, but ive landed some 12$ an hour gigs after i got out of prison. I have a nasty criminal record and my name rings bells everywhere i go from being on the news alot.

Warehouses, factories, construction crew, road flagger, restaurants ect.

Alot of them start above minimum wage even with no experience. If you do start at 7.25, work for a year and now you got experience. Yes its hard, but i did it. I got out of prison and struggled until my business took off... Sweat blood and tears is what it takes

I'm on the other end of your business. I'm in the process of getting an accessory building put up. I interviewed contractors and obtained quotes from several of them. I chose who I thought would provide the best service, not the least expensive. A competitive bid competes on price but also on the promise of service. Costs will go up for everybody. I don't get how this affects only you.

 

[Fogdog]

The best thing that could happen for McDonalds and Walmart is for a 15 dollar minimum.

Easiest way to shut down all the other competition.

Nonsense

 

[PsicloneX]

Why does this keep coming up again and again? Ok, so if a McD burger costs $4.62 in the US at today's wages ~$7-$8/hour. How much would one cost if wages were $15. The answer varies from no change to maybe a buck more, so no exact answer.

4.3 % increase or $4.16 according to forbes .

 

[mollymcgrammar]

I'm on the other end of your business. I'm in the process of getting an accessory building put up. I interviewed contractors and obtained quotes from several of them. I chose who I thought would provide the best service, not the least expensive. A competitive bid competes on price but also on the promise of service. Costs will go up for everybody. I don't get how this affects only you.

It doesn't just effect me, any employer in a situation like mine would agree. And yeah, costs will go up for everyone. I already pay my team higher than what they would make working for my competitors.

my competitors have a larger profit margin than me since they under pay workers (ive worked for a number of my competition and know from experience)

My point is that its unfair to employers that pay fair. This will hurt my buisness. No way around it.

Other companies will hurt to, but they will raise to the new minimum wage and raise prices as needed.

I refuse to pay my guys the same bullshit money they can make in fast food. They work too hard for that. I will have to pay more.

Therefore, as an employer that actually Cares about my employees, ill be forced to raise my wages higher than my competitors.

Prices are only one part of the competition YES.. But i pride myself on being affordable to everyone.

Example, i built a deck for an young couple (and removed the old one) for the cost of materials plus $700. They were poor and the old deck was a hazard. I spent 600$ on labor that day. 100$ in my pocket. My competition would have charged 2-3000 for the same deck in labor alone.

This was almost charity work, i like to be able to help those who can't afford it sometimes. Again it hurts my profit but karma is more important.

This wage goes up.... I cant do shit like that. No way.

I will no longer be able to accept payment plans in the same way, or offer discounts to some of my repeated customers.

Hopefully with my reputation, ill make it through okay. People will to a certain extent understand the changes in the way i do buisness are necessary to my companys survival.

Ive always been willing to take a hit on profits to do the right thing.


If they raised it to 11 or 12, i think that's okay.... 15? Thats not so great.

 

[Fogdog]

It doesn't just effect me, any employer in a situation like mine would agree. And yeah, costs will go up for everyone. I already pay my team higher than what they would make working for my competitors.

my competitors have a larger profit margin than me since they under pay workers (ive worked for a number of my competition and know from experience)

My point is that its unfair to employers that pay fair. This will hurt my buisness. No way around it.

Other companies will hurt to, but they will raise to the new minimum wage and raise prices as needed.

I refuse to pay my guys the same bullshit money they can make in fast food. They work too hard for that. I will have to pay more.

Therefore, as an employer that actually Cares about my employees, ill be forced to raise my wages higher than my competitors.

Prices are only one part of the competition YES.. But i pride myself on being affordable to everyone.

Example, i built a deck for an young couple (and removed the old one) for the cost of materials plus $700. They were poor and the old deck was a hazard. I spent 600$ on labor that day. 100$ in my pocket. My competition would have charged 2-3000 for the same deck in labor alone.

This was almost charity work, i like to be able to help those who can't afford it sometimes. Again it hurts my profit but karma is more important.

This wage goes up.... I cant do shit like that. No way.

I will no longer be able to accept payment plans in the same way, or offer discounts to some of my repeated customers.

Hopefully with my reputation, ill make it through okay. People will to a certain extent understand the changes in the way i do buisness are necessary to my companys survival.

Ive always been willing to take a hit on profits to do the right thing.


If they raised it to 11 or 12, i think that's okay.... 15? Thats not so great.

This is incredibly fuzzy logic. I just get the impression that you think that $15 is too much. Is that it?

 

[Flaming Pie]

This is incredibly fuzzy on logic. I just get the impression that you think that $15 is too much. Is that it?

It is what I was talking about. People are going to want to be making more than mcdonalds workers.

Fast food in general pisses me off. The workers generally don't care and will sneak food all the time. Even the managers do it sometimes. They keep employees that slack and groom their ego, vs the employees willing to get dirty and offer excellent customer service.

How hard is it to make a burger correctly? It's written down for you. The managers don't always let you get up to speed tho, they force you to speed. Causes mistakes when training takes a backseat to speed.

Keep pushing out burgers with pickles and mustard. Keep giving us those soggy buns and not giving us the correct order.

One thing that may happen with 12-15 minimum is that employers will have to learn quickly which employees are helping and which are hurting the business.

One thing that the dutch do is a reduced pay for teens I believe. That would be interesting.. but also problematic maybe.

 

[mollymcgrammar]

This is incredibly fuzzy on logic. I just get the impression that you think that $15 is too much. Is that it?

I think its too much for unskilled workers. I think if 15 is the new minimum than my workers deserve FAR more than what i can afford to pay them without raising prices to the point where my services are no longer affordable to the folks i serve.

I no longer do lawn care, but when i did i often charged 50$ per cut (obviously there are alot of factors involved but lets just run with that number for now)

50$ was reasonable given the quality of service. Now, if my guys who make nearly double the minimum wage as it stands all got a 7.75$ an hour raise, that puts the cost at about 65$ a cut... So an extra 60$ a month charged to my clients. That adds up quite fast.