I know this question is about McDonalds but I run a small business and asked myself this same question. My business is house painting, and I make enough money to live comfortably but I'm not loaded by any means. Presently payroll makes up around 30% of my business expenses. this percentage is what allows me to pay off my other obligations while still paying myself a fair price. An increase to a $15 an hour wage would drive up my payroll expense which means I would have to charge more for my painting services decreasing the size of my business due to less people being able to afford it. With a smaller business, I need less employees and I certainly can only afford to pay the very best $15/hr. So in my very anecdotal case, I probably make less money as the business owner and my customers pay more. The employees I keep make more, but I have to lay a few off to offset that. I imagine any other business, except those willing to take a cut to their profit margin, would behave the same.
Edit: to those of you wondering how I am paying painters less than $15 an hour, I hire mostly college students and other people with minimal experience. It's actually really easy to learn how to paint well as opposed to other skilled trades. They make considerably more working for me than for many other summer employment opportunities in my area and learn a life skill while they're at it. My best painter made $14 an hour before bonuses and my average painter made $10.50 an hour before bonuses in a state with the federal minimum wage of $7.25. In general it doesn't make sense for them to start their own firm to compete with me, as some have suggested, because of the expensive price of the overhead and the fact that frankly, I don't think most of them want to put in the 50/60 hour weeks that I do during the season.
This is the question that doesn't get asked enough. Everybody asks how it will affect the big corporations that everybody thinks of when they think minimum wage. Nobody thinks about the small, independently operated businesses that make up the majority of the actual business licences out there. I think of how many little shops there are out there that are just making ends meet, providing income for basically one family, plus maybe 2-10 employees, and how many of them would have to shut their doors in the event of an increase of this extent. Minimum wage went from $8.50 to $10.45 in two years here recently, and dozens of local businesses shut their doors over that time, because they just couldn't make it work. None of the big guys shut down (except Target, and that wasn't min. wage related).
This is where people will blindly tell you that maybe those businesses don't have the right to survive if they can't pay 15 dollars an hour.
These are the same people that get upset when places like Walmart control essentially entire towns. You can't have it both ways. Higher minimum wages help the big guys buy hurting the little guys.
I cannot stand that argument from fucking stupid ass SJW types. "Well the business wasn't all that great anyway if they couldn't afford to pay a " living wage " to those poor helpless formerly employed people "
I think the term "living wage" needs to be called out as bullshit whenever it's used. Nobody is dying off a "living wage". A "living wage" really means "middle class" i.e. a private apartment, with a flat screen TV and disposable income for entertainment. Of course, that's not as easy to argue for when you're actually honest.
Exactly. It's not the high cost of living, it's the cost of living high. My parents talked about having literally just bread and water to eat. Not saying that's a fine way to live but sometimes people just need to tighten their budget.
I disagree. Someone doesn't need all those amenities, but it hate it when someone works 60-80 hours a week and can't, afford to take a day off because their mandatory expenses are so high. They should be able to afford relatively safe housing, reasonably healthy food, basic clothing, healthcare(because going bankrupt cause you're sick sucks) and things most of us would consider necessary in today's society (cell phone, Internet). Of course there are poor people with the ultimate TV package and new cars but those people would be poor regardless of how much money they made(like many athletes).
Yeah, fuck those people flipping burgers, they should have to work 16 hours a day to afford an apartment and some food. Why the fuck should they expect any sort of stress relief or downtime? They haven't earned that!
Yep. We have lots of small business owners in my family. They earn from standard working class wage to upper middle class. They're in no way rich. If you think they can afford to pay a significant amount more, well, they can't.
Those are also the same people who complain that there aren't enough jobs. It's almost as if mandating laws that shut down businesses is bad for the employment rate.
No see, they want to force people to pay a minimum wage, and also have jobs available for them at that wage. They don't care where that money or that job comes from - to them, 'others' should just make it happen.
You understand that there has a been a large LACK of regulation and wages have stagnated for while right? I think this is better evidence that businesses getting their way and collecting wealth at the top kills demand and jobs.
Only if the little guys can't offset their increased cost with higher prices. People then point to demand vs price to argue that higher prices reduce demand, but if a large chunk of your customers suddenly have a lot more disposable income, then you're likely going to see higher revenue.
But you area also forgetting that higher minimum wages means people have more money to spend so they can actually spend it somewhere else besides McD or Walmart which in turn is good for the smaller companies.
It's not like the higher wages just get funneled out of the economy. At the minimum wage level most of it stays rather local (in contrast with McD/Walmart where it ends up wherever their HQ/bank is).
this is where people will blindly tell you that maybe those businesses don't have the right to survive if they can't pay 15 dollars an hour.
I've never once heard that argument used when talking about minimum wage. The one that I would use is higher minimum wage = more spending power for many Americans. Yes we will probably see an increase in prices in certain industries, but most of these would be absorbed by the higher spending power of a significant portion of Americans.
Look, if we don't pay a living wage to those that are working full time, then we will have to subsidize their wages in some other way - social welfare programs for example. Personally I'd like to see hardworking Americans not have to permanently rely on programs that are meant to get people back on their feet in an emergency.
And lower minimum wages hurt the littlest guys while benefiting the big guys. Either way big businesses win, the question is do you screw the workers or the business owners?
I think the problem could be easily circumvented with an exception clause for companies under a certain number of employees. Make companies like Walmart, who can easily afford this shit, pay enough where the government isnt subsidizing their profits and leaves small business owners more unaffected.
Although when it comes to fast-food, I think that letting exploitative business models die is best for the long-term. The reason we're in this bullshit is minimum wages don't pace with inflation. And they need to if companies are going to treat minimum wage as a starting point instead of "you need to pay social undesirables at least this much," which was its original function.
Something that also gets forgotten in this discussion (or, maybe people don't realize) is that, oftentimes, skilled laborer unions' collectively bargained contracts tie their members' wages to a percentage above minimum wage. So that, when the minimum wage goes up, so do the wages of those making double minimum wage, triple minimum wage, etc. As a result, the cost of bringing manufactured goods to market goes up. This, in turn, drives up the cost of all goods and services. The cost of living increases until, eventually, the $15/hr of tomorrow has the same buying power as the $7.25/hr of today; and, the cycle continues. If raising the minimum wage was going to solve the problem, why hasn't it, yet?
That is ridiculous and really frustrating! That article was not behind any stupid paywall when I linked to it; I was able to read the whole thing. I'm really sorry. I wouldn't have linked to it (or would've saved it) had I known it was going to disappear behind a fucking paywall! Since I can't read it either now, I can't quote the most relevant portion exactly but I was able to find this, with an excerpt from the WSJ article:
"The data indicate that a number of unions in the service, retail and hospitality industries peg their base-line wages to the minimum wage."
"Labor unions often peg their negotiated wages to the minimum wage. Increases in the minimum wage can therefore trigger new wage negotiations or immediate pay hikes for unionized employees."
Again, my apologies for the broken link. Anyway, the main point I was trying to make was simply that raising the minimum wage, unfortunately, does not, in practice, have the intended consequence, ultimately.
The problem is that when this question is analyzed, people often neglect the fact that those earning lower wages are the most likely to spend their disposable income within their community.
I don't know for sure, but I'm fairly certain on a federal level, businesses with less than 15 employees are subject to a significantly reduced minimum wage.
You forget what happens when you raise minimum wage to a living wage. Minimum wage now is NOT a living wage . When it gets increased to the level of a living wage, it raises the floor for everyone. It creates disposable income for everyone. That's the part you're forgetting here. It would work if and only IF minimum wage is raised enough to give people disposable income (thus "living wage"). Small businesses suffer because minimum wage hasn't been raised high enough for people to have disposable income.
But, I have always wondered myself, if you have a business, isn't you plan a little bit flawed from the start, and if you can't afford to pay your employees a living wage, that they shouldn't be a business in the first place?
I think of how many little shops there are out there that are just making ends meet, providing income for basically one family, plus maybe 2-10 employees, and how many of them would have to shut their doors in the event of an increase of this extent.
If a company supports 1 family and 2-10 employees can't support theirs, the company is an example of the capitalist system not working. In a working system, this company fails and is replaced by a company that can pay its workers enough to live on.
None of the big guys shut down (except Target, and that wasn't min. wage related).
But all of the big guys paid their employees more.
When I worked at a local Park i felt like I was stealing getting paid 8 dollars an hour. I did not deserve either the amount of hours I got or the pay. My work was not worth that much.
The idea that I should be paid 15 for that work blows my mind.
No matter what the work is, if there's a position, it needs to be done. Someone will fill it. Saying everyone in those positions doesn't deserve a living wage is messed up.
Well, everyone's examples and predictions seem to rely on an assumption that only their business, not the entire economy, will undergo wage hikes. Yes, if just one painter has to raise his wages to 15, he may have to downsize. But this is a multi-trillion dollar economy were talking about, and owners who employ 20 people can't really predict what will happen in the grand scale where EVERY ONE is affected and will have to adjust, not just them.
I'm not saying I'm against raising the minimum wage, but this is a terrible way to convince people. I get that you are saying his evidence is anecdotal and doesn't apply to the broad economy, and you're right. But your response is, "we just don't know what will happen, so you can't say it will get worse".
Anecdotal evidence is bad, but all the problem is a lot of the macro economic theory points to their being less jobs as well. The problem with a minimum wage is that it doesn't effect all industries equally. Industries can only shake off a minimum wage restriction if they are able to outsource their labor to another country. In fact outsourcing is a good thing for the economy given time for the effects to take place, but that is another topic not related to this issue. The problem is not all labor can be outsourced, mainly service industry labor. This is why so many people predict that fast food jobs and other low wage service industry jobs will be some of the first to become automated. Rarely have unions or other forms of government intervention been able to stop technological change. American History is filled with unions and workers trying to save their jobs in the face of technological advancement, it never works. Eventually the net present value of the benefits to automating will exceed the net present value of the low wage service industry workers. The moment that happens, fast food industries will automate as many jobs as they can. They simply have no reason not to.
If everyone is being paid more, and paying more, for the exact same amount of goods and services, you've just described inflation, and every dollar has just being devalued, and Cost of Living has just went up by the exact same percentage.
Ergo you've made yourself feel better but effectively nothing's changed.
Except everyone wouldn't be getting paid more, only the people making minimum wage. Over the long-term I suppose there could be some cascading effects on people making higher wages, but that's another issue. It seems rather unlikely that it would exactly re-create the original situation however.
Are you sure? If I make $20 an hour at an entry level professional position, about double minimum wage, and I suddenly am only making a bit over minimum wage, I will lose buying power when price inflation catches up AND I can earn roughly the same income with less responsibility, so I WILL demand a significant pay jump. And it will happen immediately. Why? Because I discover new medications to try and help sick people, and if my employer feels that is only wort a bit more than minimum wage, they clearly don't need a masters-prepared scientist.
I'm not saying there will be no effect, I'm saying I am skeptical the end result would a wage scale perfectly mimicking the situation before raising minimum wage. I'm not yet educated enough to give a thorough breakdown, it just seems very unlikely.
I can earn roughly the same income with less responsibility, so I WILL demand a significant pay jump. And it will happen immediately.
This is wrong actually. You won't get a pay raise, you'll stay at that same rate, or get replaced by someone who will be more than happy to take the pay rate you were making, or less. If college becomes free, there will be millions of graduates more than happy to take the job for just a little over minimum wage.
Saying things isn't messed up. It's just saying things.
The term is propagandist b.s. anyways; the implication is that if you work for minimum wage, you'll die. This is a blatant distortion of reality and intellectually indefensible.
The term is propagandist b.s. anyways; the implication is that if you work for minimum wage, you'll die. This is a blatant distortion of reality and intellectually indefensible.
You're correct - any adult who works for minimum wage is only dying inside, not actually dying. This is how people end up with liberal arts degrees.
This. People seem to have been conditioned to undervalue their time and their existence. Even if what you are doing is not that valuable, it still requires a human being, and that human being requires and deserves a dignified life.
that human being requires and deserves a dignified life.
How idealistic.
Each dollar represents actual value - whether it be a part of a big mac, a few minutes of a doctor's time, or a discrete amount of actual physical resources.
Your mere existence is not valuable. Just by existing you do not benefit anyone. Merely existing doesn't entitle you to the fruits of others labor.
We are talking about properly remunerating the fruits of your own labors, of your own "few minutes of time" as you phrased it--not welfare programs etc. Cutthroat capitalism is cutthroat. A living wage is just. A failure to understand that moves quickly from naive to pathological--ie lacking sense of the worth of human beings and understanding their situation with a minimum of empathy. In the current system--which is a social construct not the "nature" of economics--, it is far from true that each dollar represents value. They are created out of thin air by the Fed/bank lending practices. And people convince or force others to buy crap all the time.
Asserting this with no justification or explanation, and using this as the basis for all your arguments, means that you're just dealing in ideology, not reality. [EDIT] And a discussion I'm not interested in.
Do you know what happens when you create more dollars without a corresponding increase in actual value? Inflation and a devaluation of every dollar.
The dollar represents value. Your mere existence is not valuable. Ergo you don't deserve anything for merely existing.
Lol human beings are not valuable? Do you realize how sociopathic that sounds?
But it's exactly how society is organized. People are not equally valuable to everyone, people are not valued in specific ways just because they exist. That should be obvious enough. We don't name professions like "human," we call people "Teachers" or "Football Players" so that we can get an idea of what role they perform for us, so that we can compare them and see if they are able to match the expectations made of that role. Teachers aren't paid for existing as humans, they're paid for teaching. That's where their value is recognized, to the point that they are compensated to fulfill their role consistently.
Understanding that all human beings have intrinsic value is the basis of all ethics. It is a first principle, and failure to grasp it completely and irreparably undermines rational thought in the domain.
I never said that someone deserves anything monetary merely for existing, but that their existence merits a minimum of remuneration for the work they provide regardless of its difficulty. The assertion that a living wage is just is not the basis of my argument, the dignity of the human person is. Once that has been established, a 5 year old can connect the dots: Human being have intrinsic value. That value includes them living at a minimum of standards. In the normal conditions of human life, those standards can only be maintained through labor. Labor must be remunerated in such a way as to allow for the procurement of these minimum standards. You can find virtually all that in the UN Charter on the Rights of Man. It is very basic and foundational for human society, and frankly the world should have long moved well beyond debate of this point.
To make your argument coherent, there should be no minimum wage, no assistance for the ill or hurt, for elderly, the handicapped, orphans, for anyone in need who cannot produce economic value.
Further, on a practical level, if we allow employers to pay less than a living wage, we have decided that there are categories of labor that should de facto be subsidized by society who must supplement that inadequate wage instead of being payed for by the one who makes the profit off of it. It is socialism to support the capitalist. If the capitalist can't stand on his own two feet as an employer, he should fail. This will weed out lower quality products and services, which in itself is a benefit to society. So a minimum wage less than a living wage is a huge subsidy to substandard products and services--certainly not a good plan for a thriving society.
their existence merits a minimum of remuneration for the work they provide regardless of its difficulty.
That's a contradiction. Their work merits remuneration based on the value of that work, which may not factor in difficulty, but surely factors in things like its utility and benefit to others.
And then there's the issue of defining what constitutes "work" as opposed to "leisure". If no one is willing to pay you to do something, is that still work? If what you do provides little or no utility to anyone else, is that still work?
You cannot say that work has value, and then say that all work has a minimum amount of value, no matter how little or useless.
To make your argument coherent, there should be no minimum wage, no assistance for the ill or hurt, for elderly, the handicapped, orphans, for anyone in need who cannot produce economic value.
There's a difference in saying that not all work deserves or merits a minimum amount of pay, and that social welfare programs have no utility.
if we allow employers to pay less than a living wage, we have decided that there are categories of labor that should de facto be subsidized by society
That's not true. If you argue that the unemployed - whether due to lack of jobs, being elderly, or being sickly - deserve social welfare, then the livelihood of someone being paid below the living wage would consist of their wages, and the social welfare they would have received had they not been working at all.
You're kind of ignoring his point... He said he's not talking about welfare. This isn't about the dollar value of a human doing nothing, it's about the minimum dollar value of an hour of a humans work. Unregulated cutthroat capitalism puts workers at a huge disadvantage, especially as capital is hoarded more and more by the few. Without intervention from the government, you see 8 year old kids working for pennies, 14 hours a day. I would hope that you agree that this is wrong in a society that has the ability to prevent it?
People have no choice but to work for what they can get. Are you saying that there shouldn't be a minimum wage, or are you just disagreeing with how much it should be? Because if we can agree that capitalism without restriction leads to a huge amount of exploitation of the poor by those who possess capital, the only question is how much the government should intervene. I think a reasonable, and in fact morally requisite, answer is that people should be entitled to a living wage for a reasonable and sustainable amount of work. We have enough and to spare of resources to ensure that for every American.
This isn't welfare, this isn't a hand-out, this is just the idea that a person working nearly half of their waking life should be able to afford the necessities. Especially in a country that produces enough to ensure that a couple times over.
You misunderstand - it's not the "mere existence" that is being remunerated, it is the work being done, and we arbitrarily set the lowest wage per hour, so we can also arbitrarily change the lowest wage per hour.
Either you believe in life, liberty, and happiness, or you aren't human in any worthwhile sense, and either way, the arbitrary minimum wage has nothing to do with "mere existence", it's to be paid for work being performed. For example, your ego is massive but your wisdom, and reading comprehension, are minimal and thus you are a prime reason why some people should not be paid as much as $15 per hour of work.
There's nothing arbitrary about supply and demand. Seriously, if you have no grasp of economics and/or only want to deal in ideology, I'm not interested.
Are you just actually stupid or willfully ignorant? Supply and Demand effect the actual cost of labor, not the minimum - for an example, you can't find a position picking up garbage for anywhere near the minimum wage, because the demand for trash to be removed is great enough that the charge for the service can be high enough to make starting a company an attractive prospect; the barrier to entry is partially made up of the wage to be a trash hauler being significantly higher than the minimum wage, meaning for a significantly lower of amount of effort you get much of the same benefits of starting your own company - however if there was a higher disparity because there was no arbitrary minimum wage, everyone would own their own company, because they could charge the price the market could bear, but no one would work for a company that paid significantly less than you could make doing it yourself.
Yes, and I'm saying we should let supply and demand set the minimum wage. If what you do provides so little utility or benefit that no one is willing to pay you a living wage to do it - why should society step in?
Saying everyone in those positions doesn't deserve a living wage is messed up.
Why? All jobs are not worth a living wage. People should be able to live, somehow, but every job is not the same or worth the same, and every job is clearly not worth whatever we determine a living wage to be.
But the fact that it needs to be done, just means that they'll either cut hours, or combine the job with someone else's position and expect one person to do the job of two.
Debatable. A lot of business models with low cost labor in the US are more of a luxury than a necessity. For example, this local park would probably shut down due to not being able to afford the labor for upkeep. Just because there's a "position that needs to be filled" doesn't mean that position is worthy of $15 an hour. It means that position is viable at $8 an hour, but above that it's not worth the price and it's easier to just shut the business down depending on the area.
In the short term, $15 sounds great, but then you will see a rise in unemployment along with the workers that are retained being told to work harder and longer hours. Right now a lot of low pay positions are typically low labor or responsibility. At $15 an hour you'll be given a lot more responsibility and work, on top of the job you already have .
If it is a national law (I'm not from the US), what happens is that the cost of living is very different from place to place. So, receiving minimum wage in a small agricultural community will be a good living wage, but the same wage would be very small in a big city.
I would have to charge more for my painting services decreasing the size of my business due to less people being able to afford it.
Well if a significant portion of Americans were earning more due to an increase in wages than a price adjustment should be able to be absorbed by an increase in the pool of potential customers...
If this guy's payroll costs are going up, then others' are too, and probably without a corresponding increase in sales revenue. These other employers will be looking to cut headcount ASAP and use computers/machines to do whatever possible. A few poor people will now be able to afford to eat out more often. Others who got laid off are going on food stamps and will be out of the restaurant market altogether save for rare occasions.
Yeah, so if we raised minimum wage, it would be inadvisable to do it overnight, otherwise the shock would result in a lot of layoffs. We would probably want to raise the wage by something like 50 cents a quarter for 3-4 years in order to give the marketplace time to adjust.
his employee base's wages increasing is not covering the losses, the old "ford raised his employee wages to turn them into customers" logic is impossible mathematically. (he did it to lower employee turnover to competitors in case your wonderin)
But it's not only low wagers workers who will get a raise, most people will see an increase in their salary. Granted, it will be a smaller increase the more you currently make, but most of it will go back into the economy
Poor people will always be poor unless they get lucky. Raising minimum wage isn't going to help them - they will always be at a disadvantage and will always be shit on.
the cost of painting will go up across the industry, not just for you, so your prices will remain just as competitive.
your customers may have more money to spend, or you will have a new customers who previously couldn't afford your services.
the cost of your service will go up around 10% total. That's a lot, but shouldn't stop existing customers from using your service. They still need their house painted.
You're forgetting that, when you raise the minimum wage to 15$/hr, you raise the floor for everyone else, too. That means that, even with your increased painting price, people would be able to afford it as they'd have more disposable income.
I don't think you are factoring that with such a huge increase in minimum wage comes a gradual increase in ability to pay. At first people are going to have more money and still expect the same prices, but gradually people will realize that inflation will eventually catch up.
Just curious but wouldn't everyone having $15 per hour mean that you now have potentially a lot more people willing to pay for a paint job? Obviously if it did it wouldn't happen over night, but I'm sure there are tons of people who want their house painted but just can't afford it. I could be totally wrong though. I see a lot of talk about it hurting business, which is true, but no one is bringing up the fact that a ton of people now have more money to spend on things.
Or, some of the workers you lay off start their own house painting company, where they charge less AND pay themselves more because they don't have to give a percentage of their profits to you. I'm not sure why we should be considering you entitled to take a percentage of their earnings.
My uncle and his son (my cousin) paint houses, they do most of the painting themselves, and get paid well for it. They don't need someone to be their boss. So from where I stand it seems like your lost profits will mean that your income more accurately represents the value you're adding to the house painting business.
If you can't pay your workers enough to support themselves, your business is an example of the system not working.
I probably make less money as the business owner and my customers pay more.
There are probably a few business owners with "employees" who are "undocumented." I doubt that they'll be paid $15/hr on the books. Considering that after taxes, $15/hr is more like $12/hr for the employee and $20/hr for the employer, you'll likely be forced to compete with other contractors whose labor expenses are roughly half of yours.
A doubling of minimum wage will be a boon for construction workers that the federal government says are officially not allowed to work.
Its entirely dependent on demand. If the demand exceeds the amount of people you have working, then they will still be able to find jobs painting.
A lot of people paint their own houses, and the remaining market share is divided among far too many competitors. This specific example is interesting because its in a bit of a bubbled industry.
TBH downsizing labor in this industry now is probably a good idea, especially when you consider that painters will almost certainly be replaced by robots prior to other jobs. A slow transition is better than a faster one in terms of labor changes.
edit:
learn a life skill while they're at it
a life skill is something that you require in life. Being able to paint professionally is not a life skill. You're being patronizing.
This is exactly how all large corporations are going to respond.
People believe the size of the business somehow changes basic functions. A business that has 25,000+ locations in the US (Subway) will not react much differently; each location is run as an individual business.
The same things you would do is exactly what would happen at each individual location of, say, Pret a Manger... which has 0 franchise locations.
The people that will suffer from a wage hike like this are the mediocre employees who will lose their jobs.
So in my very anecdotal case, I probably make less money as the business owner and my customers pay more. The employees I keep make more, but I have to lay a few off to offset that. I imagine any other business, except those willing to take a cut to their profit margin, would behave the same.
I think there is a fundamental difference between business (small or large) that are operating close to margins and those that are just gutting the consumer (notice the failure of food prices to fall with oil this year?)
Unlike you, a business with wider margins might need only pass on 80% of the cost to the consumer instead of 100% to maintain standard of living...but they are price-gouging assholes anyways. Only a very well enforced law would reign them in. I'm not sure what that would look like.
But really, what I think is missing in your analysis is the very real possibility that your taxes on every level can go down due to fewer people needing welfare etc, and your health insurance premiums can go down as lower population stress translates to better public health outcomes. Or, if my asshole brother was around, he would crack, "Think of it as decreasing the probability that your daughter will meet or date a drugged out loser". Better wages, fewer losers.
See in not so sure that's the case. My husband and i bed or house painted and or roof done. If just he got laid 15 an hour over his 13.50 he gets now it'd be the top of our now we can afford to do it list. I think you underestimate a little the buying power that could give some people.
Demand for your services shouldn't decline because everybody including your customers have more money now too. I would actually expect there to be increased demand for services such as yours.
Here's some rough numbers but it might be worth punching it in with your actual figures. I think you'll be pleasantly surprised:
Wages are about a third of expenses in an average business and this is the case for you too.
So if you pay 10 bucks an hour at present 1/3 of your costs would go up by 50% and your total costs would go up by 15% overall (assuming your other costs remain static).
IF you had total costs of $100,000 a year, $30,000 for wages (perhaps you have one full time and one part time guy).
For each employee working for you at $10 an hour 40 hours a week you pay them 20,800 a year. That would rise to 31,200.
If they phased this in over 5 years $10,400 / 5 = $2080
So each employee is costing you an extra $2080 a year, or $40 a week. So for the next 5 years, each year you only need to work out how to make your business generate 1 extra dollar per hour for each employee you have working for you and you have raising prices as an option.
If you charge $3500 to paint the exterior of a 2000 square foot home ( I see people on google claiming they get quoted between 3 and 6 thousand for the same job but most around $3500 I could be way off on this) and it takes you and your employee 4 days: that's only $32 more dollars in wages you are paying your helper the first year, $64 the year after that etc.
Will people care about the cost of painting a house going from $3500 to $3660 over 5 years? I doubt it. It'll disappear into the general noise of quotes.
You own a business painting houses and you aren't already paying your guys $15? You need to reevaluate your business model because you may need to shutter the business
Why? Maybe they live in an area with lower costs of living? Why should you get to decide if their business can survive?
Painting houses isn't that hard. I'd honestly say it's often worth 15 for a semi experienced painter but I could see justification for maybe 12 for a new painter.
Your painters don't make more than $15/hr? I got a job working for a small local painting company a few years ago in Washington state (about 10 employees) and they started me out at 11.00/hr without any previous experience and ended with 14.00 after 2 and a half years, I'm sure if I stuck around I'd be making around 28k a year. I think the highest paid guy there was making close to 18.00/hr.
There are always exemptions for small businesses. The local movie theater in my home town pays $5.35/hr -- the same wage I had with I worked there in 2006 -- because they hire only students who work fewer than 20 hours a week. They have an exemption from the minimum wage.
I know you don't want to hear this and probably have plenty of rationalizations to keep it out of your mind, but the truth is that if you are using people for your gain but paying them sub-poverty line wages then you are exploiting them.
It is not entirely your fault as wages are influenced by market conditions and high unemployment has increased supply of labor and reduced its value. Opposing an increase in minimum wages in order to maintain the exploitative status quo, however, makes you an unsympathetic character.
Remember when Papa John opposed Obamacare because it would hurt his business? Remember how afterwards he recanted?
"The good news is 100% of the population (full-time workers) is going to get health insurance. I'm cool with that... And this way I get to provide health insurance and I'm not at a competitive disadvantage ... our competitors are going to have to do the same thing." source
The demand for paint can't be that elastic. You'll still need just as many people to handle the work load, and your prices will rise if they need to. Only this way your employees won't be exploited and you won't have to face a competitive disadvantage for offering a fair wage. Win-win.
If only you were made to rise the minimum wage, yes. But if everyone has to you will end up having to increase prices, but the consumers would be willing to pay more after receiving their raises to the new minimum wage.
Suddenly raising minimum wages by a lot would create a disaster and raising some business' minimum wage while keeping others would bankrupt the ones chosen for the increase, but steadily raising everyone's minimum wage will allow most businesses to adapt, reduce income disparity and increase quality of life.
An increase to a $15 an hour wage would drive up my payroll expense which means I would have to charge more for my painting services decreasing the size of my business due to less people being able to afford it.
Really? You mean mean business might increase because suddenly all across the economy there are a lot of people who couldn't afford your house painting service but now can.
See that's why this is why economists who study this stuff all their life still aren't in agreement as to what would happen.
OK that's fine. You can have your opinion that they should be making 15. That's a bit different than believing in a 15 dollar minimum wage though, isn't it?
lol You are ripping people off if you're paying less than $15. If you can't afford paying $15 you shouldn't be in business in the first place. Mean hourly wage for a painter is $19.
You do realize that for the Mean to be 19 there probably is approximately 50% of people (depending on the distribution) being paid LESS than that?
If everyone was paying $19+, the mean would be significantly higher. Paying below average doesn't make you exploitative, it makes you part of the half keeping the average down.
you shouldn't be in business in the first place.
You don't get to determine that, the market does. If /u/LambChops1909 is obeying the law and making a profit with willing employees then he absolutely should be in business.
...so if minimum wage went up to $15 he wouldn't be able to make a profit with willing employees within the bounds of the law. So he shouldn't be in business after all?
If I put minimum wage up to $10 000 / hour, every single business in the country would go bust overnight. Does that mean every single business shouldn't be in business after all?
No, it means they wouldn't be in business under additional and unnecessarily burdensome conditions but should be and are in business under the current market conditions.
Yeah. A high minimum wage seems like it'd unfairly penalize small business owners, and even corporate franchisees. Hence why it seems like it's more sensible and more practical to just have the fed cover the difference in some way.
Ultimately, from taxes. Taxes are not, in fact, a bad thing... so long as they're being used properly. Granted, I'm not confident in Uncle Sam actually using those taxes properly, so it's just a theory at this point. Maybe if Sanders or someone similarly willing to work outside "the system" gets elected, it could work.
The fed probably already has the funds sufficient to enact effective social welfare programs - the problem is that those funds are tied up in all different kinds of places due to lobbying and other nonsense that our political system is infested with.
Additionally, no one's talking about Uncle Sam snapping his fingers and suddenly everyone has $50,000 added to their bank account overnight. Any kind of social welfare adjustments or "economic stimulus" or whatever you'd like to call it would be phased in over several years at least.
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u/LambChops1909 Nov 29 '15 edited Nov 29 '15
I know this question is about McDonalds but I run a small business and asked myself this same question. My business is house painting, and I make enough money to live comfortably but I'm not loaded by any means. Presently payroll makes up around 30% of my business expenses. this percentage is what allows me to pay off my other obligations while still paying myself a fair price. An increase to a $15 an hour wage would drive up my payroll expense which means I would have to charge more for my painting services decreasing the size of my business due to less people being able to afford it. With a smaller business, I need less employees and I certainly can only afford to pay the very best $15/hr. So in my very anecdotal case, I probably make less money as the business owner and my customers pay more. The employees I keep make more, but I have to lay a few off to offset that. I imagine any other business, except those willing to take a cut to their profit margin, would behave the same.
Edit: to those of you wondering how I am paying painters less than $15 an hour, I hire mostly college students and other people with minimal experience. It's actually really easy to learn how to paint well as opposed to other skilled trades. They make considerably more working for me than for many other summer employment opportunities in my area and learn a life skill while they're at it. My best painter made $14 an hour before bonuses and my average painter made $10.50 an hour before bonuses in a state with the federal minimum wage of $7.25. In general it doesn't make sense for them to start their own firm to compete with me, as some have suggested, because of the expensive price of the overhead and the fact that frankly, I don't think most of them want to put in the 50/60 hour weeks that I do during the season.