This should be simple math... If you significantly raise the cost of labor, the price of EVERYTHING will go up. Using a restaurant as an example.... Not only does the cost of labor go up, but does the cost of printing menus - because the company that prints menus just saw a huge increase in labor costs, and has to pass them on. All of the products the restaurant buys - spoons and forks and plates - are bought from a local restaurant supply store in town, and those products have just now shot up because they too have added labor costs. And so on and so on.

But that is just the start of the problem. The people who charge $20 an hour for their services will say will have to raise their prices because all of the products they use to run their business just got more expensive.

In the end this doesn't help the people making minimum wage because all of their prices just went up - not only does the cost of the fast food they buy go up, but so does their auto repairs (the chick that answers the phone there just got a fat raise) and so does their rent (because landscapers and pool service cost a lot more") and so on. Everyone will be charging more because everything will cost more.

And that's great for one city - they are all making more, but everything costs more. Sounds great, but... What about the tourists? Tourists doesn't want to visit a town where hamburgers / hotel rooms / car rentals / parking costs 30% more on average than other cities.

This just doesn't sound like a good idea to me.

38 posts from people who do not own a restaurant (or likely any other business for that matter) and are clearly talking out of their asses.

There is actually a theory that prices will only go up small amounts and profits will actually shrink because many products have a critical price point and people won't be willing to pay beyond that much for it.

Take for example McDonald's. If they tripled wages they would have to raise the cost of their food. However, there is only so much a person would be willing to pay for a Big Mac so there is actually a limit to how much they could raise the prices.

As for tourists. . . honestly, when you have thought about going on vacation somewhere has the price of parking and hamburgers ever really affected your decision to go there?

This wage hike could cause prices to rise, but I think a lot of people assume it will be more than it likely will be.

Funny that the OP posted a title that claims it's the fault of min wage, but you must of missed it. Odd that you find it necessary to complain when someone posts the obvious correction for the OP.

Then again Conservatives are always crying about something..

you forgot the punchline...

when there is no (or very little) profit to be made, there is no point in starting/running a business... hence the point of the initial post... so result = businesses shutting down...

You have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation, you have inflation, you have pressure to increase minimum wage, you have increased minimum wage you get more inflation...

20 employees

$15x40 = $600 per week x 4 = $2400 per month x 20 employees = $48,000 a month.

Rent for the restaurant space = $48,000 per month.

Maybe we should have limits on rent for business space since that's just a fat ass land lord who produces nothing for America except inflation.

See but then people will default on their property, so we would also need to limit the amount they needed to pay banks per month and decrease amount of interest that could be charged. BUT WAIT! If we decrease the amount of interest and payments banks could collect, since there is tons of outstanding debt, they would need a bailout. BUT WAIT! If they continue to get more bailouts our taxes will increase and inflation will increase... and back to the next minimum wage increase to $25. :1orglaugh

I was thinking along the same lines:2 cents:

Totally different demographics - that's why what works - and works well - in the Scandinavian countries would NEVER work in other locations, like the US.

As if any of us actually know what will happen.

:1orglaugh

The idea in the article was that if a company makes a 22% profit margin they may only make a 19-20% profit margin after paying higher wages.

There would still be profit, just not as much as before.

Says the vending machine.

no one makes 22% profit margin in the "real world", especially not in the restaurant business:

"Full-service restaurants at all levels spent about 32 percent of each dollar on the cost of food and beverages, 33 percent on salaries and wages, and from 5 percent to 6 percent on restaurant occupancy costs. Profit margins, however, varied according to the cost of the average check per person. Those with checks under $15 showed a profit of 3 percent. Those with checks from $15 to $24.99 boasted the highest profit margin at 3.5 percent. Finally, those with checks of $25 and over had the lowest profits, at 1.8 percent."

source: The Average Profit Margin for a Restaurant | Chron.com


no matter how anyone tries to spin it, if you are making few percent profit margin (typical in many industries), and one of your costs, which happens to account for 33% of your expenses skyrockets, then you are completely fucked....

I guess we will find out. A year or two from now if all of these businesses have gone under or prices have skyrocketed then it will be clear that it is/was a bad idea. If they are still alive and thriving then we know it didn't affect them as feared.

I cannot believe the amount of communist and socialist fucking losers on GFY. Suck a dick! Do any of you actually run your own businesses?

most of you are a fucking joke.

So what do you think businesses are in business to do? make less profit?

you socialist piece of shit.

I've been in situations where labor costs got out of control and tried to fight it out, get in front of it, make it work, trust me it's not worth it. And I'm not even talking about a change of 7-15 dollars an hour, even a smaller increase like 10-20% is drastic. If I was faced with that situation I would certainly close without hesitation.

One of the first things you learn in business is that payroll and employee compensation is the most controllable expense. It's the first place you look when you need to save money. I have always paid people as much as I could afford to. If someone came along and told me I had to double it, I'd say, here - they're all fired. You try it! Not because I wanted to, just because I know it's not possible, and to even try means I am accepting work from people that there's a high chance I won't be able to compensate them for, and that's not acceptable to me.

I can't think of a single small to medium business anywhere where employee compensation isn't at least 3 times the profit margin, in many cases much more.

Personally, every 100 bucks I gross, I am putting only 1-5 dollars in my pocket and paying out anywhere from 35-60 to "employees" depending on what you call an employee and what you call a contractor. The rest goes to overhead and if I'm lucky I keep a dollar or two.

Say what you want, Ayn Rand was right that good help is hard to find, there is always a lot of competition for good workers, and compensation packages are set up to make sure you get the best help available for your budget. People making too little either haven't developed valuable skills or they haven't found the right place where their skills are needed and appreciated.

I guess 15$ is ok for mac now

The conservatives gleefully associate this phenomenon with the coming increase in the city's minimum wage, which kicks in April 1 with a rise to $11 an hour from $9.32. (Employers whose workers earn tips get a break--they can pay $10 if the workers make up at least another dollar from their tips.) The wage hike builds over time; for employers with fewer than 500 workers, which would probably cover every full-service Seattle restaurant, the ultimate increase to $16.49--or $15 for tip earners--doesn't happen until 2021.

================================

So you all think that these businesses can't figure this shit out in the next 6 years by the time the $15 rate is actually instituted?

As for the bookstore closing in San Francisco... He can bitch all he wants. But this is what happens when you run a dying business model. Should Radio Shack complain about this too? Maybe he should cry foul about Amazon and Apple crushing his poor outdated business model?

Sometimes the savvy thing to do is quit while you are ahead and look into another venture. Especially if you are already on a downturn.

try and understand this fuckwad: I'm not calming ANYTHING,I read and article and posted the articular here at GFY, now I'm reading the opinion of others and following the threads they post...

instead of shouting out your ass like you always do try and form an open minded opinion. :2 cents:

I can tell you this from MY personal experience 'as a small business owner' though... after my medical cost more than doubled I spend less money in the community...

I'm sure you'll point to some other source telling me I'm lying and pushing a right wing agenda HOW THE FUCK EVER.. the statement is true.

between paying over 53% federal/state and city tax, a 12% self employed tax, then Obama care lifting about 10K from my after tax dollars... I don't spend much anymore...

closing a profitable business because of future wage challenges isn't savvy. that's giving up without trying. there's absolutely nothing to lose by trying ideas to deal with the wasge increase. putting out those sorts of fires is what being a business owner is all about. starting a profitable venture is exponentially more difficult and risky than trying to work with one that is already profitable and then if you can't figure it out, then close it. well, no, actually, then try and sell it, which is the weirdest part of the silly article in the OP, as if those restaurant owners aren't going to try to sell their profitable operations? they're just going to close up and walk away because of what might have not worked out on the accounting. right.

closing a business that is not profitable due to a downturn is another matter and not a part of the OP article.

you're off the beam about me :2 cents:

I'm extremely fiscally conservative. I was trying to provide solutions to your financial problems. Not sure what's "off beam" about that but I take it you just want to complain and not find remedy?

Nobody is going to fix our problems for us, it's up to us. Your tax issues are resolvable.

QFT :thumbsup

you guys make it sound like there is something to "figure out"... you will magically "figure out" how to increase your sales by lets say 30% next month to cover the additional expenses?

in many businesses if things are not quite working right, you are LOSING $$ each month... not making less, but actually have to pull money out of your saving account to piss away, with little hope of ever getting it back...

so imagine you worked out the numbers and unless sales increase by 30% next month you will be out of $20k...

What solution do you propose for a business owner in that position?

Go work for minimum wage?

I'm a content shooter, have been for 15 years and live just outside LA for one thing...I do have irons in the fire and will move when I can, not complaints just that many peeps here are not in the biz let alone business owners and do not understand budgets, gross, net and profit :2 cents:

thank you woj

Ok your profile says Montana I just assumed it was correct.

I've been shooting for 15 years too and live the OC. It's a fact that California is a bitch for taxes.

You're right about many people here not being in the biz. It's so fucking hard to keep track of. I need to goto a show finally, do face to face, and get all the jokers off my radar :thumbsup

Why would anyone be open minded about a blatant lie? That would just be stupid to go along and have an "open mind" as you claim, when the story has been proven bull shit at the very least a week ago.

Not to mention as Eric brought up, anyone whom knows anything in the slightest about this min wage hike, knows that it's not instantly hiking up to $15/hr. It will take several years to get to that level, meaning these restaurants wont feel much effect for several years.

Why don't you just do even the slightest bit of research before posting this shit if you don't want people showing you are posting BS.

ugh. could the so called business owners in this thread, which there are few, please understand the minimum wage is below poverty, has been that way since 1982, does not come close to tracking with the wage gains of the rich in the same timeframe, & that the rich work to minimize labor cost, & that the only thing protecting workers from 10 cents an hour is the minimum wage law?

sure there would be a tipping point that a minimum crushes business. just like there is a minimum (zero) that crushes the poor. somewhere in the middle, businesses profit & workers make a decent wage. at todays rate, we are not close to that, especially considering the wealth gap.

Where The Minimum Wage Would Be If The Top One Percent Didn't Leave Workers Behind

:upsidedow

Right and this isn't a bipartisan issue. Anyone who cares about our economy needs to realize that since 1988 Congress has raised it's pay 15 times to reflect changes in the economy, while only raising the minimum wage 3 times. Now we have wild swings in the economy trying to compensate and small businesses will suffer, but only those those haven't adapted in advance or are already on rocky ground as it is. :2 cents:

I didn't know it would be gradual, that changes things a lot. But even if it's gradual, most restaurants are opened on credit lines or through investors who are looking for long term profits and certainly didn't count on having to pay $15 per hour in 7 years. I guess if everybody's on the same page then it's just a matter of competing but if it's just within Seattle city limits, it would be a whole lot easier to start from scratch somewhere where labor costs are more in line with the national average.

not only that, but the federal income tax for warren buffetts secretary is higher than it is for buffett. absurd. for 30 years congress has been sucking rich cock with no concern for anyone else. Im sure the rich can afford only 2 yachts instead of 3 & millions can be lifted out of poverty at the same time. But no, the most important thing to congress is that the rich get as much as possible. fuck the poor.

between piracy and the condom issues my gross is off 60% last few years.... a 'webmaster' is not in porn to my thinking.... ...internet salesman isn't really like dealing with content people on a daily basis....