On raising the minimum wage.

[MGKrebs]

A sincere request: Can someone please try to explain to me how raising the minimum wage would be a burden to small businesses?

I hear this over and over, and I swear I cannot discern the logic to it. To me, if everybody has to comply with the increase, the playing field is just as level after the increase as it was before. If only your costs go up, yeah you would try to not raise prices in order to stay competitive. But if your competitors costs go up too- by the same amount even!- you can either make a smaller profit margin or raise your prices, but your competitor is facing the exact same question.

The only area where I can think this would be a problem is if your business is actually competing with foreign (read: Chinese) companies, but even so, any company in a market where an $84 per week per employee increase is going to make you non-competitive, I'd say you probably have bigger problems than a minimum wage increase.

[madokie]

1. when you hear someone say that ask them if they are a Democrat

bet the answer will be they are a republican lowlife mof'er

[MGKrebs]

4. I see it here sometimes though.

I have therefore assumed that there is some insight that I am missing. It kinda drives me crazy though, because I would love to have the discussion, I've just never been able to get anybody to engage on it. I have read where some well known economists even believe this, so one would think there is SOME sort of reasoning to it.

edited for speeling

[TahitiNut]

2. Simple. It wouldn't and never has been.

The federal minimum wage is part of Fair Labor Standards ... and the smallest of businesses are and have been exempt (unless state law says otherwise) from FLSA. It's an example of a "BIG LIE" ... repeated and repeated, it never gains veracity, only credibility among the ignorant and/or biased. When veracity and credibility are increasingly separated, tyranny gains.

In nearly 70 years of minimum wage legislation at both the state and federal levels, with literally dozens of increases, there has NEVER been a reputable study that confirmed the claim that increases resulted in either increased unemployment or small business failures. Never.

[Warren Stupidity]

3. Reasonable increases are not a burden to anyone. nt.

[Warpy]

5. It is a burden to small businesses, at least for the first few weeks

The business owner sees his own income decline as his employees get a better deal.

Over the long term, though, the higher pay at the bottom sparks one hell of a lot of increased demand. Businesses all over the spectrum of goods and services offered see demand go up far in excess of what they're shelling out in increased wages. Increased demand fuels increased employment.

That's why small businesses have never formed a serious organization dedicated to lobbying Congress to roll back a minimum wage increase, not ever.

[MGKrebs]

6. But if I am a small business that does $1M a year,

and I have 2 employees that make minimum wage, that means I am paying out an additional $8736 for the year (maybe a little more with increased payroll taxes). That is less than 1% of revenue. So if you are selling something for $100, you can raise the price by $1.00 to more than cover the added expense (and keep paying yourself the same), and you don't even have to worry about becoming less competitive because everyone else who sells a product like that is doing the same thing.

You seem to be assuming that everyones prices will stay the same and their labor costs will go up. I don't think it works that way. If you voluntarily give your employees a raise, then yes, you have to be careful about raising your prices because your competitors may not be matching your actions. But with a mandatory increase, everybody's cost goes up the same. In cases like that, you raise your prices. Similar to when raw material prices go up, or UPS charges more.

[Warpy]

7. I'm thinking of the average small business owner

not the real estate baron. The average small business owner nets somewhere in the region of $50K/year. Paying the help an extra two or three bucks an hour is going to hurt for a while. In order to stay competitive with the other similar small businesses in the area, the business can't simply raise all its prices immediately. No matter what they teach in GOPonomics 101, that simply isn't how it works.

However, there is always an increase in business to compensate over the long term. The owners just have to wait out the initial period of adjustment.

I didn't learn this out of some book. I learned it by running small businesses during several minimum wage increases.

[MGKrebs]

8. I'm sorry if I appear dense, but I still don't get it.

Why isn't that "how it works"? Are you saying that with a minimum wage increase, some businesses raise their prices and some don't? Or nobody does, they just take a profit hit?

What are we talking about here? The Pizza Hut franchise that pays it's drivers the minimum or somethng? The extra $2.00 makes them uncompetitive with the Papa John's down the street?

[Warren Stupidity]

12. Some do some don't

The aggregate effect of an increase (a reasonable increase) in the minimum wage cannot be measured as there is so much other noise. When somebody claims that reasonable increases hurt small businesses ask them to provide their sources for the data that demonstrates this supposed fact. That should shut them up.

[MGKrebs]

9. I have an idea.

If your costs increase, but you don't raise prices due to fears of competitiveness, you are lowering your profit margin. But if everybody does this at the same time, it all remains status quo. Now let's say we know there is a minimum wage increase coming next March. I think I would LOWER my prices NOW to match would my reduced profit margin would be after the wage increase. That way, you at least have lower prices than your competitor for a while, at a profit margin you are already destined to swallow anyway, then when the wage increase hits, I raise my prices back up to where they were originally, which is the same as my competitor, but I have gained some new customers in the process.

[Warpy]

10. When was the last time everybody did anything at the same time?

[MGKrebs]

11. Everybody NOT raising their prices in response

to a mandatory minimum wage increase? That is what I am reading you are saying is "the way it works" . That is everybody is lowering their profit margin at the same time.