[Bolthouse]

scorpion you're applying microecon 101 here, and although your theory is all sound it doesn't account for variables which throw it all off.

(08-30-2013 05:12 PM)scorpion Wrote:  

The idea that fast food restaurants would go out of business if the minimum wage was raised is pretty funny. It's very much small-picture thinking.
Is raising the minimum wage bad from the perspective of the individual restaurant's costs? Yes. The restaurant's costs will go up. But that's not looking at the entire picture.

Then let's look at the larger picture. The restaurant owner(s) save up 5-10 years to invest in an industry that is risky as it is. Despite the risk, they have a sound budget and reason to believe it can be successful and sustain a modest lifestyle. All of a sudden, their labor expenses double, something that could never have been accounted for. Six months later they're out of business. They now owe money to the banks, McDonalds corporation (who gave them loans at the outset), are completely penniless, and are forced to declare bankruptcy. In this scenario, poor Shaniqua suffers too, as she's now unemployed due to the restaurant's closure. She then walks across the street to Burger King and begins work there.

Quote:

But now you get into the another factor - demand. Fast food restaurants obviously make more money if more people eat there. Very simply, they are volume businesses. And who are the people who eat at fast food restaurants the most? The poor and working class. What do you think is going to happen to demand for fast food meals when suddenly everyone working for minimum wage in that community has more disposable income? They're going to eat more fast food. Demand increases. Fast food sales increase.

You're saying if their wage increases, they'll become hungrier? You're mixing up fast food and gourmet restaurants here. Disposable income is spent at gourmet restaurants, not fast food. Poor people typically buy fast food because it's cheaper than buying groceries.

Yes, they'll have more disposable income, but the fast food industry won't benefit from it. That money will go to iphones, a $150/mo iphone plan, $150/mo directv bill, netflix, etc. Perhaps 22" rims would make a comeback.

Quote:

A guy earning $20k a year HAS to spend most of that money to survive, while a guy earning $500k+ is going to be tossing a big chunk of his money into stocks or real estate investments that just sit there and do nothing to increase the velocity of money in the overall economy.

True. Except most restaurant owners aren't making 500k/yr or even 100k/yr. These "low IQ" minimum wage workers are protesting because they see sales receipts printed in, but they're clueless about the business's expenses.

[scorpion]

Bolthouse and Wadsworth, you both make some good points, but again I think you're focusing too much on the small picture here.

The key necessity in a complex modern economy is facilitating the purchasing power of consumers. Without strong consumer demand, our economy ceases to function. We have to promote a relatively high monetary velocity for this reason.

The best way to increase consumer demand and the velocity of money is to increase the purchasing power of the working and middle classes. People simply cannot spend money that they don't have. It is ultimately consumer demand that drives businesses. Business cannot exist in the absence of consumers who have sufficient purchasing power to buy its products. So favoring an economic system that creates a race to the bottom in terms of wages ends up destroying the entire system by robbing the vast majority of consumers of purchasing power, which in turn destroys demand and robs business of customers.

Also, when businesses are allowed to pay wages that are not enough for people to live off, the government is forced to pick up the slack. Why should my taxes subsidize the profits of McDonalds and the business franchise owners? Because that's exactly what is happening right now. Minimum wages businesses are NOT paying the true cost of labor - taxpayers are - by subsidizing those employees with government benefits.

And at the same time, those employees are unable to exercise truly free purchasing power in the private sector, because a large amount of their "income" comes in the form of government benefits like Medicaid, Section 8, etc... Instead of receiving the actual monetary value of their labor, they receive a percentage in cash from their employer, and a percentage in benefits from the government. But with the exception of food stamps, most of the government benefits are not directly spendable into the economy, and so have a much lower impact on raising velocity of money than would be the case if employees received the true value of their labor in cash from their employer, and could spend it all directly into the economy.

The supply of money itself is less important than its velocity. If this were not the case, then society would be just as well off if one man had $100 billion as if a million men had $100,000. And that is simply and demonstrably not the case, because those million men can create infinitely more monetary velocity through their purchases than could any single man, especially since most of the billionaire's money would be tied up it investment vehicles and not circulating through the economy.

I tend to think that going back and forth in internet debates like this is rather fruitless, so respond to this post if you'd like to get in the last word, but I've said all I have to say on this for now.

[Veloce]

Also I should clarify my stance: I'm all for McDonald's raising prices and passing that cost off to the consumer. I don't believe we should have burgers for $.99. People should pay the real cost of what they consume. There is a HUGE difference between fast food outlets and independently owned restaurants. That budgeting scheme I mentioned earlier applies to independently owned, small-medium volume food outlets. Not comparable to corporate fast food.

There are hotels that start at $15 per hour, because they can afford lower profit margins from the food outlet since they have revenue from rooms sales to offset.

I am NOT for raising the minimum wage by much. I think $9 is appropriate based on current burdens that business owners face. I AM for fast food workers starting a union. There should have been a fast food worker union a long time ago.

If it were up to me, there would be no fast food period. All the people that fast food employs should be working in real food outlets, even if it's just an independently owned burger shack that uses real bread and real meat and charges 5.99 per burger. The corn growers would flop, big Agra-business would flounder, people would have to revert back to a real food production system, our national obesity and related health disorders would plummet, it would be solid wins all around.

[Aliblahba]

(08-30-2013 06:55 PM)thedude3737 Wrote:  

I AM for fast food workers starting a union. There should have been a fast food worker union a long time ago.

Well that would be the quickest way to sink the industry.

[Wadsworth]

Scorpion,

I agree with you on many things, including:

-A healthy economy is built upon a robust consumer base
-Consumer demand drives businesses
-The poor are being exploited in a race to the bottom
-Government subsidy that enables business to avoid paying labor at market price needs to be done away with

I don't really even disagree with you about increasing minimum wage, it's just that I don't see the lack of reasonable minimum wage as the actual problem. To me the problem is so intractable that there is no way to fix it without a widespread social collapse.

I'll add one thing to what you said makes a strong economy. It may seem trivial, but it's something our society has overlooked. A viable society. A viable society is necessary for a strong economy. Our society is simply no longer viable purely in terms of demographics. The list of reasons is long, and it includes feminism, but suffice to say Western civilization is now dependent on an influx of immigrants to hold up our economy and our financial commitments to the retiring boomers and our debts to other nations.

In my opinion, the resulting influx of unskilled labor is what is creating the race to the bottom, not the lack of a minimum wage. The influx of unskilled labor drives down demand for this kind of labor, consequently drives down the price for this kind of labor, and the market evolves around an artificially devalued labor supply. Supply and demand don't equilibrate, and there's no way to judge what kind of products are viable and what kind of products aren't.

How do you know McDonalds is even offering a viable product? As far as I can tell, there's no way one can conclusively make that judgement. If we closed the borders to immigrants (not saying we necessarily should, but let's assume we did), the influx of cheap labor would grind to a halt. The supply of unskilled labor would dwindle, and the market price for it would spike. McDonalds would have to pay their employees the actual market price for that kind of labor, and the price of their product would necessarily increase. The market would decide if it was a viable product or not (it probably wouldn't be, it's low quality garbage, it's only saving grace is an artificially low price).

In my opinion, the increasing divide between rich and poor is due in large part to an influx of low-skilled labor preventing market forces from coming to an equilibrium. The market price for labor is held artificially low, allowing a huge mark up for the products of that labor. Companies make a killing and CEOs walk away with millions, while employees can barely pay the rent. The consumer base dwindles in response. Governments respond by attempting to stimulate the economy by infusing taxes collected from an ever-weakening economy.

Let me give you another example. When U.S. companies go to Mexico and build refrigerators, they do so to avoid U.S. market conditions for labor, but they cash in on U.S. market conditions for refrigerators. They are using market forces in Mexico in terms of labor, but market forces in the U.S. in terms of profit. It's the same kind of problem.

TL;DR The system is fundamentally broken. We do not have a demographically viable society, and a huge influx of unskilled labor prevents the forces of supply and demand from equilibrating locally in terms of labor and product. There is no way to correct this, since allowing local market forces to equilibrate would necessarily imply signing our own death warrant as a civilization. Mandating a reasonable minimum wage may be the next best solution, but I have my doubts.

[Parlay44]

(08-30-2013 07:03 PM)Aliblahba Wrote:  

(08-30-2013 06:55 PM)thedude3737 Wrote:  

I AM for fast food workers starting a union. There should have been a fast food worker union a long time ago.

Well that would be the quickest way to sink the industry.

The same way Jimmy Hoffa and the Teamsters sunk the trucking industry?
The working man deserves a livable wage.

[Tex Pro]

What amazes me is that people talk as if there aren't countries that have relatively high wages for low skilled work: Scandinavian countries. Sure, you can't exactly compare America to Scandinavian countries, but let's not pretend that there aren't countries that do pay people living wages for their work. The idea that people must work for very low wages is an American idea, which is funny since the only reason workers can work for such low wages is because they are subsidized.

Sometimes I think we need to decide whether we want to live in a socialist society or a truly free-market society because right now we have a strange mix of free-market capitalism AND socialism, which is leading to some really fucked up policies.

[Aliblahba]

(08-30-2013 07:08 PM)Parlay44 Wrote:  

The working man deserves a livable wage.

Men deserve what they earn.

(08-30-2013 07:28 PM)The Texas Prophet Wrote:  

What amazes me is that people talk as if there aren't countries that have relatively high wages for low skilled work: Scandinavian countries. Sure, you can't exactly compare America to Scandinavian countries, but let's not pretend that there aren't countries that do pay people living wages for their work. The idea that people must work for very low wages is an American idea, which is funny since the only reason workers can work for such low wages is because they are subsidized.

That doesn't mean shit. Look at the cost of living there. It's relative.

[Tex Pro]

(08-30-2013 07:35 PM)Aliblahba Wrote:  

(08-30-2013 07:08 PM)Parlay44 Wrote:  

The working man deserves a livable wage.

Men deserve what they earn.

(08-30-2013 07:28 PM)The Texas Prophet Wrote:  

What amazes me is that people talk as if there aren't countries that have relatively high wages for low skilled work: Scandinavian countries. Sure, you can't exactly compare America to Scandinavian countries, but let's not pretend that there aren't countries that do pay people living wages for their work. The idea that people must work for very low wages is an American idea, which is funny since the only reason workers can work for such low wages is because they are subsidized.

That doesn't mean shit. Look at the cost of living there. It's relative.

And????

You talk as if the Scandi countries are third-world shitholes. They are not. They actually enjoy a higher average standard of living than the USA.

[Aliblahba]

When you make a higher wage but the cost of living is higher, what does it matter? Plus salaries cap, so the closer the floor is to the ceiling, the less those that strive to move up will benefit.

Plus, do you guys not know how many other jobs pay less than $15 hr? Tons. It won't just be fast food workers, but millions others. All those industries will raise prices on goods. 5 years from now you will still in the same boat. POOR. But the rest of us will just be paying higher prices for no reason.

[kerouac]

In N Out can afford to pay its workers a starting wage close to $15/hr. Their product is far superior to the likes of McDonalds and Burger King and their employees are far more satisfied (employee turnover is much lower than other fast food competitors).



If In N Out can do it, and provide a higher quality product (AND make the owners billions), there must be something they're doing right that others are doing wrong.

[Tex Pro]

(08-30-2013 07:47 PM)Aliblahba Wrote:  

When you make a higher wage but the cost of living is higher, what does it matter? Plus salaries cap, so the closer the floor is to the ceiling, the less those that strive to move up will benefit.

Plus, do you guys not know how many other jobs pay less than $15 hr? Tons. It won't just be fast food workers, but millions others. All those industries will raise prices on goods. 5 years from now you will still in the same boat. POOR. But the rest of us will just be paying higher prices for no reason.

What are you smoking Ali?

The Scandi countries have a higher AVERAGE standard of living than the USA. The higher cost of living doesn't offset the fact that they pay high average wages since they set the wages to provide a decent standard of living.

Of course, this doesn't come without a price: Scandi countries are more egalitarian and there is a much smaller wealth gap. As such, there aren't as many truly rich people but there also aren't as many truly poor people as well. There is always a trade off.

[Aliblahba]

^^^ Well good luck to you. "AVERAGE" sums it up. Lolz.

[Tex Pro]

(08-30-2013 07:57 PM)Aliblahba Wrote:  

^^^ Well good luck to you. "AVERAGE" sums it up. Lolz.

Again, don't see the problem with wanting the average standard of living to go up. In this country, the working poor keep growing every year. If this keeps up, then there could be a day when they elect a Hugo Chavez style socialist as president and then shit will really hit the fan.

[Aliblahba]

We've already elected a Chavez style socialist president twice in a row.

Bypassing Congress for taxes.

http://townhall.com/tipsheet/guybenson/2...e-n1665654


Grants amnesty to illegals w/out Congress:

http://blog.heritage.org/2013/08/30/obam...-congress/


That damage is already done. Higher wages isn't going to stop those ignorant people from voting Socialist (Democrat), because even at the higher wage, they'll still be on the bottom rung and bitching about anyone with more money.

But yeah, we can raise the poor and drop the rich. All in the name for 1st place for the race to the bottom.

[Veloce]

(08-30-2013 07:03 PM)Aliblahba Wrote:  

(08-30-2013 06:55 PM)thedude3737 Wrote:  

I AM for fast food workers starting a union. There should have been a fast food worker union a long time ago.

Well that would be the quickest way to sink the industry.

Exactly. All for it.

[Merenguero]

(08-30-2013 10:40 PM)thedude3737 Wrote:  

(08-30-2013 07:03 PM)Aliblahba Wrote:  

(08-30-2013 06:55 PM)thedude3737 Wrote:  

I AM for fast food workers starting a union. There should have been a fast food worker union a long time ago.

Well that would be the quickest way to sink the industry.

Exactly. All for it.

Sinking the fast food industry is the first step toward ending the obesity epidemic which we so often discuss here.

[Aliblahba]

^^^ Yeah but that would deprive hundreds of thousands of people the opportunity to make $15 hr by assembling a piece of meat between two pieces of bread. They DESERVE this!

[Veloce]

(08-30-2013 10:52 PM)Aliblahba Wrote:  

^^^ Yeah but that would deprive hundreds of thousands of people the opportunity to make $15 hr by assembling a piece of meat between two pieces of bread. They DESERVE this!

Now now, don't disparage their work. They went through 16 hours of intensive brand training to become guest service ambassador agents of hospitality.

[Gopher]

Another angle of this argument that we have not touched upon is the question of what would be the effect of more than doubling the minimum wage on the larger economy.
I live in the midwest where a $15/hr job is a good paying job. In a rural area good paying Union jobs often have pay scales that peak in the $15/hr range. In the facility I work in now in the Twin Cities Metro our Union pay scale ranges from about $18/hr - $22/hr. If overnight kids flipping burgers at McDonalds are making comparable pay to them shit would hit the fan at the next contract negotiation. The Union would be demanding an extravagant pay increase that would never be agreed to by the company. At least without a significant decrease in headcount (which would probably be compensated for through further automation). This type of fight would take place all over the nation and would result in higher unemployment and more outsourcing of jobs GUARANTEED.

While I still believe that the minimum wage should not exist. I could possibly be able to come to a compromise where the minimum wage increases to keep pace with inflation. Much like how most corporate merit increases work.

[Aliblahba]

(08-30-2013 11:05 PM)thedude3737 Wrote:  

(08-30-2013 10:52 PM)Aliblahba Wrote:  

^^^ Yeah but that would deprive hundreds of thousands of people the opportunity to make $15 hr by assembling a piece of meat between two pieces of bread. They DESERVE this!

Now now, don't disparage their work. They went through 16 hours of intensive brand training to become guest service ambassador agents of hospitality.

Now now, not everyone is white privileged like you to work in a posh restaurant that don't sell chicken nuggets. You don't know what these "guest service ambassadors" do. They deserve a lot more than $15 hr.

[Gopher]

(08-30-2013 11:35 PM)Aliblahba Wrote:  

(08-30-2013 11:05 PM)thedude3737 Wrote:  

(08-30-2013 10:52 PM)Aliblahba Wrote:  

^^^ Yeah but that would deprive hundreds of thousands of people the opportunity to make $15 hr by assembling a piece of meat between two pieces of bread. They DESERVE this!

Now now, don't disparage their work. They went through 16 hours of intensive brand training to become guest service ambassador agents of hospitality.

Now now, not everyone is white privileged like you to work in a posh restaurant that don't sell chicken nuggets. You don't know what these "guest service ambassadors" do. They deserve a lot more than $15 hr.

[lskdfjldsf]

I had the chance to work for a very wealthy and powerful entrepreneur in Germany. In private discussions with him on politics and economics, I was a bit surprised - his rationale for expanding social welfare and benefits for low-income workers was that people who don't have to worry about the basics in life are complacent and quiet (like hamsters in a cage) allowing the wealthy to increase their power where it really counts. If someone can pay their rent and buy useless crap for their family, they are far less likely to care about the big picture policies that allow the wealthy to flourish, legal or not.

It was the first conversation where I realized how deeply entrenched class distinction is in Europe - the masses below him were literally viewed as peasants, no differently than they were 500+ years ago. Basically, "giving them what they want is long-term financial protection".

[It_is_my_time]

(08-31-2013 03:22 AM)Blick Mang Wrote:  

I had the chance to work for a very wealthy and powerful entrepreneur in Germany. In private discussions with him on politics and economics, I was a bit surprised - his rationale for expanding social welfare and benefits for low-income workers was that people who don't have to worry about the basics in life are complacent and quiet (like hamsters in a cage) allowing the wealthy to increase their power where it really counts. If someone can pay their rent and buy useless crap for their family, they are far less likely to care about the big picture policies that allow the wealthy to flourish, legal or not.

It was the first conversation where I realized how deeply entrenched class distinction is in Europe - the masses below him were literally viewed as peasants, no differently than they were 500+ years ago. Basically, "giving them what they want is long-term financial protection".

Smart man. He is correct. Obama-Marxist socialism in the end ensures that the rich get richer and are untouchable, and the middle class is destroyed, so everyone else is equally poor and have no chance to improve their station in life.

[Damedius]

(08-31-2013 04:05 AM)It_is_my_time Wrote:  

(08-31-2013 03:22 AM)Blick Mang Wrote:  

I had the chance to work for a very wealthy and powerful entrepreneur in Germany. In private discussions with him on politics and economics, I was a bit surprised - his rationale for expanding social welfare and benefits for low-income workers was that people who don't have to worry about the basics in life are complacent and quiet (like hamsters in a cage) allowing the wealthy to increase their power where it really counts. If someone can pay their rent and buy useless crap for their family, they are far less likely to care about the big picture policies that allow the wealthy to flourish, legal or not.

It was the first conversation where I realized how deeply entrenched class distinction is in Europe - the masses below him were literally viewed as peasants, no differently than they were 500+ years ago. Basically, "giving them what they want is long-term financial protection".

Smart man. He is correct. Obama-Marxist socialism in the end ensures that the rich get richer and are untouchable, and the middle class is destroyed, so everyone else is equally poor and have no chance to improve their station in life.

Which is why the middle class and those wishing to move up the totem pole want a free market.

Where as the poor want welfare to survive. The rich want it as well because:
A)They enjoy the benefits of corporate welfare.
B)They can easily manipulate the poor and uneducated.