Help with an arguement.

[Massacure]

Me:

And if they pay people higher wages, they buy more which is good for the economy.

Capitalism is dependant on the movement of money. When people start hording it, things get ugly real fast.



Him:

But if people get paid higher wages companies are forced to raise prices to keep a profit, so people can't buy as much. In other words, inflation. Its a cycle, thats why you can't raise minimum-wage willy nilly.


Me:

No you don't because they will end up getting the money back anyways when the person buys stuff with it.

Raising the wage of 50,000 of Bill Gates janitors by $1 cost him about $100 million dollars a year. Compare that to the $80 billion he has. That is about 0.001% of his net worth. Compare that to raising the janitors wage from $5 a hour to $6. That is a 20% increase.

Companies tend to sit on a whole bunch of money. They won't miss what they don't spend.


Him:

You're not thinking about it logically, try this: A factory employs its workers at minimum wage, we will say that is $5. We'll say there are 1000 workers in one 8 hour shift, and the factory produces 10000 widgets a day, that $4 in labor costs for 1 widget, so we'll say they sell them at $4.50 (well assume there is no cost for material, to keep it simple). Now if minimum wage were raised to $6, it now costs $4.80 to make a widget. To preserve their profit they must increase the cost of their widgets to $5.30, if they want to keep the same profit RATE it would be $5.40. So now lets say one of the employees buys a widget everyday, before it cost them $4.50, they made $40 in a day, so that was 11.25% of his daily earnnings. Now it costs $5.40 to buy a widget, but he makes $48 in a day, that is 11.25% of their income. So has the raise helped them any? No.

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I'm stumped. I was thinking of mentioning his lack of materials, and the fact that the profit margins are low. Can I win this arguement, and if I can what do I need to bring up?

This would directly effect every company that employs people at minimum wage, other companies would be effected indirectly (the price of products goes up, employees demand a cost-of-living increase, company raises the price of its products, etc.). Minimum wage should ONLY be raised if there is a very large gap in income, otherwise all it causes is inflation.

[Joylaughter]

1. The CEOs ARE GREEDY

Check this out.

http://www.conceptualguerilla.com/beattherightinthree.htm

[eaprez]

2. Because paying a living wage is the MORAL thing to do!

[bemildred]

3. Fuck them and their profits.

It is not correct that the profiteer can and will raise his price
to offset higher wages, he may just have to eat it. So it can be
a simple matter of the troops get more and the profiteer gets less.
It is also true he can go out of business, but then he gets no profit
and somebody less greedy will pick up the slack.

[xray s]

4. The cost of labor has NOTHING to do with selling price!

Companies charge whatever the market will bear for their products. Labor affects profits, not prices. Of course, if your labor costs combined with all your other costs exceed your selling price you lose money. And eventually go bankrupt.

But companies don't go bankrupt due to their labor rates. They usually go bankrupt because their top management makes stupid decisions (think Enron). Stupid short sighted greedy decisions. Of course, the same top management is unaffected by those decisions because they give themselves golden parachutes to float over the destruction they wrought over all the poor saps that work below them.

That's not to say that companies will try to squeeze their workers for every wage concession they possibly can, not to lower prices to their customers, but to increase their profits.

Hence, things like large screen liquid crystal TV's selling for $3,500, are made in countries paying $5 a day wages, even though those manufacturing jobs could be here in the US paying decent wages that would still return a high profit to the companies that make the TV's.

We really have to start challenging these things more agressively. Another one is "corporations don't pay taxes, they just pass it on to the consumer in higher prices" BULLSHIT!

[Massacure]

5. Thanks for the help, but I thought up of a good post to get him.

Here is how it goes:

Let's say someone makes $10 an hour. An average work week is 40 hours, or 2,080 a year. That is $20,800. Well the government automatically takes $2,770 of that in the bracketed income tax. Then there is the six percent medicare tax, and six percent social security tax. That is another $2,496. So you are left with $15,434.

If your lucky you may find an appartment to rent for $6,000 a year. I'll use the rent figure. That leaves you with $9,434.

Food is about $40 a week, or $2,000 a year. That leaves with about $7,400.

Now you need to find a car to get to work with. You may find a cheap one for $3,000, but it will probably have 150,000-200,000 miles on it. Who knows how beat down it is. You can find a decent used car for $8,000 and it may only have 20k - 30k miles on it. That would be about $200 a month, or about $2,400 a year. Add another $80 a month for gas, and you spend about $1,000 a year. Of course it is illegal to drive without auto insurance. I'm not sure how much auto insurance cost, I haven't paid attention to mine lately. Lets pull $100 a month, and say $1,200 a year. This leaves you with $2,800.

That $2,800 that is left gives you about $53 of spending money a week. However, I never mentioned health insurance or medicine in hear. You better hope to hell you are healthy as an ox, because health insurance and medicine can easily add up to more than $3,000 a year. If it does, then you get screwed over.

Then you probably won't have enough money for home insurance or life insurance. So if your house gets hit in a hurricane, or floods, or is hit by an earthquake, burns to the ground, your basically screwed over.

If your refridgerator, stove, or car breaks down, your basically screwed over with a couple hundred dollar repair bill.

After all of these you don't have any spending money for clothes or luxaries such as cable or telephone unless your apartment comes with it.

So tell me, how is someone supposed to survive on minimum wage of $5.15 an hour, if they can't even survive on $10?

[lizzieforkerry]

6. Except that we are at a stage that there is a large

income gap. Eventually it will not pay to work, especially women. If I made 5.25 an hour and I worked 50 hours (No more overtime pay!) a week I would make $262.50 a week, take away 10% (it could be higher or lower, I don't know) for payroll taxes and you are down to 236.50. Now if you have a baby, a can of formula costs $22 and will last you a week so now you are down to 216.50. You also need diapers and wipes which is another $20- now we are at $196.50.You still need to pay for daycare which the cheapest you can get is $100 since you are working 50 hours. Now you have 96.50. I think you can get subsidized housing for about $200 a month, so you are now down to 46.00, but the government is already paying some of your living expenses. With 46 dollars you still have to buy food for you and your baby for 7 days, pay for heat and electricity, pay for water and sewage, phone, gas, car insurance. It can't be done because the minimum wage has not kept up with inflation. If this mother were to go on welfare she could get the formula paid for, and wouldn't have the expense of child care. So the money we would save as a nation with less people on welfare would offset inflation. And we wonder why people have abortions... IMHO
Also, Walmart has the highest percentage of employees on food stamps than any other company in the country. We are subsidizing Walmarts profits with our taxes right now.

[jdj]

7. say, you dumbass, anybody working there will steal their widgets outright.

hasn't he ever listened to johnny cash?

[The Straight Story]

8. About companies sitting on money

They don't really. It is all somewhere - a bank, new acquisitions, invested (which if it is in a bank it is being spread around as well). The company I work for has a ton of money, but it is all over. They could pay people more (and we make a decent living there) but other areas get bumped up like travel and credit card levels. I spent about $800 on a trip this week which the company pays for. The money went to the hotel, tips, several food places, trains, car rental and gas.

As we make more money we, the employees, are able to spend more on other things like nicer office furniture, higher card balances, newer computers, and so on.

So while it would be nice to have a bigger raise, which I would save/spend/invest, the end result is that the money is still spent.

Now the key thing to track here is where that money goes - if it goes overseas for widgets (ours dosen't) then you can make the case that perhaps higher taxes will work because that money is spent by the government mostly within the US which keeps the flow going. If a big company like the one I work for is seeing a big increase in income versus outflow they will apply that to job creation (and we look to add 4000 at minumum next year), buying and building new centers (we are doing that a lot in the US), and so forth.

As a side note, what I don't like to see in some reports is a bias - example, company X lays off 2000 people - end of story? No. Example of why - a merger we were involved in resulted in a side company laying off a large amount of people. What was not covered was that the side company lost our business but we were insourcing so we picked them up and then some. A net gain.

[leftyandproud]

9. he wins the debate

you can't argue on their turf...they have the economic arguments...you have the right moral position though