primitive has novel approach to losing money

[USA4ME]

Dreamer Tatum

Minimum wage hikes as good corporate strategy
 
If I'm on the board of a fast food enterprise, or a finance company, or a cell phone provider, I would support a coordinated effort to increase the wages of hourly employees to at least $15/hr, minimum. Releasing that purchasing power into the hands of consumers should increase quantities demanded of my product, so while I'm paying a lot more out, I can compete for revenue instead of cost. It's simply the smart thing to do.

http://www.democraticunderground.com/10023466299

Artificially increasing your overhead cost isn't going to work out the way you believe it will, primitive. I assure you either your customers will eventually vote with their feet or your stockholders will vote with their money.

Choose.

.

[thundley4]

Releasing that purchasing power into the hands of consumers should increase quantities demanded of my product, so while I'm paying a lot more out, I can compete for revenue instead of cost. It's simply the smart thing to do.

No people that work at fast food joints rarely eat there. they go somewhere else to eat.  So paying your employees more will only enrich your competitors.

[DumbAss Tanker]

Minimum wage hikes that affect everyone working at minimum wage are kind of wash from the corporate finance point of view, it just means that all the variable inputs cost more due its effect on suppliers, but the customers have a proportionately higher amount to spend for the price rise you're going to have to crank into your own goods.  The people they kill are really small businesses in local markets, or when the raise is not applied to everyone (Like in the DC 'Living wage' fiasco).

[Skul]

No people that work at fast food joints rarely eat there. they go somewhere else to eat.  So paying your employees more will only enrich your competitors.

They certainly wouldn't when the price of a single pattie burger goes to $4.
Cheetos, $8 a bag.
Weed price triples.
They have no idea how the economy works.  

Just found this. Related, so put in here.
http://www.democraticunderground.com/10023463340

Wed Aug 14, 2013, 04:33 PM

Star Member cal04 (37,356 posts)

Fast food joint pays workers $12 an hour, and lives to tell the tale
               
(snip) (OP's)
In Dearborn Heights, Mich., a city just outside of Detroit, a new burger joint is trying to give workers a reason to clock-in to work each day.

Moo Cluck Moo is paying its workers a minimum wage of $12 per hour, over four dollars more than Michigan’s $7.40 per hour minimum wage. The reason? Simple: “It’s just the right thing to do,” said Allen Fisher, the restaurant’s managing partner, on MSNBC Tuesday.

“We manage our costs effectively, we use the best product that we can afford, and we pass that along to our employees,” said Fisher. “It’s not an easy job to do. We demand a lot out of our people, but we pay them for that.”

In addition to higher wages, said Fisher, Moo Cluck Moo has an exclusive training program that qualifies each of its employees for a better job and a higher pay rate. The restaurant also provides uniforms, meals, and (coming soon) medical benefits, he said.

http://tv.msnbc.com/2013/08/06/fast-food-joint-pays-workers-12-an-hour-and-lives-to-tell-the-tale/
video at link

Progressive Caucus ‏
https://twitter.com/USProgressives
Think fast food joints can't afford to pay workers a living wage? One Michigan restaurant is already doing it. 

Not a one asked the obvious.
Cost of a plain burger is....... $3. 

[67 Rover]

“We manage our costs effectively, we use the best product that we can afford, and we pass that along to our employees,” said Fisher. “It’s not an easy job to do. We demand a lot out of our people, but we pay them for that.”

That right there is the money shot.  I bet the burgers are full of gristle and tasteless, less money spent on quality food = more money for the workers.  Let's see how that business model shakes out in a year or so.
Spamburgler.

[Skul]

That right there is the money shot.  I bet the burgers are full of gristle and tasteless, less money spent on quality food = more money for the workers.  Let's see how that business model shakes out in a year or so.
Spamburgler.

It can be yours for three bucks. 

[USA4ME]

taught_me_patience

7. And all those making $15/hr now have to be raised to $20/hr
 
I hope you don't mind paying $5/cup of coffee and $7 Lattes.

Dreamer Tatum

8. Why are you so sure that would happen?
 
I don't see it. I think if prices go up at all it would be a small fraction of the factor cost increase, with the rest eating into margin.

"... with the rest eating into margin."

Hi. I'm a stockholder. Oh, your margins have dropped, you say? Hmmmmmm, looks like I can make more money over here with this company. Get back with me when you learn to run your business.

Bunnahabhain

15. You only seem to see one side of an equation and it's always the side you feel will support your predetermined position.

In your OP you state raising wages will increase consumer demand. Then in this post you say prices will not rise. Please share with the class how you feel demand will increase but prices will not. Unless you reject the empirical observations of centuries you have to admit that moving the aggregate demand right will raise prices. Margins will not be impacted as you seem to feel as a higher quantity of goods will be demanded at each price point once the demand curve shifts right. You might also find places like McDs do less business as inferior goods will get pushed out for superior goods as consumers have higher disposable income. This will of course lead to a contraction in the market for McD products and possible loss of jobs at McDs.

Dreamer Tatum

17. The key is WHY prices will increase.
 
You are describing, correctly, demand-pull inflation, which is at least consistent with an expanding economy. Cost-push inflation needn't be associated in any increase in demand, however, which is not as desirable (in my opinion).

You correctly note that product differentiation complicates everything.

Actually, the key would be why your stockholders are leaving for greener pastures.

.

[JohnnyReb]

Supply and demand......send all the illegal aliens back where they came from and the supply of labor plummets and with the new demand for labor, wages will go up.....but that means  democrats can't take credit for wage increases......so it's a no go.

[GOBUCKS]

Don't get excited.

This isn't a serious thread.

It's just DUmmy Dreamer Tatum working on a little DUmp cred.

He skates on thin ice a lot, and needs a loony OP like this every now and then to save his skin.

[Skul]

Supply and demand......send all the illegal aliens back where they came from and the supply of labor plummets and with the new demand for labor, wages will go up.....but that means  democrats can't take credit for wage increases......so it's a no go.

DUmprats wouldn't apply for them. It would bruise there tender self-esteem.

[JohnnyReb]

DUmprats wouldn't apply for them. It would bruise there tender self-esteem.

Yeah but honest folks would be getting the DUmmie dream of "A Living Wage" while the dUmmies just got farther behind.

[vesta111]

One thing that drove me nuts was to start out at minimum wage and even with promises of a wage hike every year find out the workers that had hung in with the company for 15+ years were making only a few cents more an hour then I  a new hire was.

How it worked.     The old timers had started work at the minimum wage 15-20 years ago.   They received a wage hike every year but as the minimum wage went up, new workers were coming to work making almost same wages they were getting after 15 years.

Start at $4.00 an hour 15 years later be making $14.00  an hour and new hire starts at $12.00 ph. Who in their right mind will want to be a loyal employee for all those years to be making $16 pr. week over a new hire ?  One you have to train AND do your own job at the same time.  

Never know when a company can demote you, seen this done when some 12 year workers were demoted to Temps. lost their medical and vacations.    A non American company, I was amazed they could do this.    Here I was a 2 year hire but my job took special skills that people in other departments could not jump into.  

Got to be a weird thing, no old timer would properly train a new hire, would either deliberately mislead them or   do something to insure the new hire could not do the job so the old timers had no fear of them taking their place.     Cost the company a fortune as the people that knew their jobs inside and out would retire, go out on sick leave or head out on 3 weeks vacation.   Machinery would fall apart and the only one that knew how to fix it was gone for a few weeks.

Those of us that began work in our 30-40's and had worked in factory's before knew the value of multitasking , soon as we  knew our job we were begging to learn something else.   We needed to know how to run or fix 3-4 different machines and fill in in case of an emergency.

Young kids just out of school had no idea of how this works and would be the first to be let go in a hard time. Sad we lost some very good workers willing to work their ass off for minimum wage, due to the economy and this was in the Clinton era.  

I found a company will bust a gut to keep a valuable worker, seen a couple that will falsify a piss test due to an accident to keep a good worker.    

Darn I hate retirement, I would love to go back to all the problems with employment, but retirement was not my idea, it was age and health.  Were I still able to work 10 hours a day 6-7 days a week standing on cement floors and getting the chance to meet people from all over the world, I would not have the time to be on CC.    I would not complain about minimum wage, heck I would for a few days do this for free.  

[Gina]

They certainly wouldn't when the price of a single pattie burger goes to $4.
Cheetos, $8 a bag.
Weed price triples.
They have no idea how the economy works.  

It's so frustrating that they think money just is being kept from them.  That's it's just in a bag somewhere and it won't mess up businesses or the economy with their fruity ideas.   

[Dori]

It's so frustrating that they think money just is being kept from them.  That's it's just in a bag somewhere and it won't mess up businesses or the economy with their fruity ideas.   

Exactly.  They are clueless about how much labor impacts profit margins and cost of goods sold.

Some people are even clueless about their own paychecks and what they pay into.

I worked in payroll, and if someone picked up their last check, they could never understand why they didn't get paid for the "first week" they ever worked for the company.  Another one I hear is about unemployment.  A lot of people feel entitled because they think they are the one's who paid into it, like social security.

 

[USA4ME]

Dreamer Tatum

25. I used to chuckle when people claimed DU was changing.
 
Yet here I am, one of the more pro-business DUers, supporting a doubling of the minimum wage,...

Investors buy stocks in corps in order to make money. Start reducing that corps margin of income (which you claim would take place) and investors pack up and leave. Now, try working your magic without any capital, dimwit.

If you're an example of "one of the more pro-business DUers," then heaven knows we don't need anyone who's even more stupid than you are making decisions.

.

[USA4ME]

Dreamer Tatum

34. I will defend myself just once more and then leave you to your non-profit, which, prior to your arrival, may well have been a for-profit:

RAISING WAGES PROBABLY INCREASE PRICES. STIPULATED.

That isn't NECESSARILY due to firms passing along labor costs, and in any case the DEGREE to which prices
increase depends on the effect on consumer incomes and a host of other things you can find in your econ
text.

In any event, I struggle to square record corporate profits with the claim that companies are too poor to do
anything but pass labor costs along in prices. That may be true of the coffee shop owner who replied below,
but you will have to explain to me why WalMart can't kick in a few more bucks to their workers.

He's having some spat with a primitive that's as dumb as he is. But this one's too easy.

"RAISING WAGES PROBABLY INCREASE PRICES. STIPULATED."

Now there's a change of tune from "I think if prices go up at all it would be a small fraction of the factor cost increase, with the rest eating into margin."  We've gone from "maybe prices will be raised" to "stipulated."

Why can't WalMart kick in a few more bucks?  Well, I suppose they could. But if they don't raise prices then they eat increased costs, which cuts into their bottom line, which causes their stock to be less desirable, which causes investors to look for greener pastures.  But hey, go for it.

Now if they increase prices (as a result of artificially increasing wages) all that does is pay people money in order charge them more money. So let's say someone makes $50K/yr and their living expenses are $45K/yr. Riddle me this DT: What good does it do to increase their income to $100K/yr if their living expenses in turn go to $95K/yr and they're still living the same way they are now (which they would be)? Answer the question the way I've worded it or you're automatically telling the rational world you're too stupid to understand economics and how things work.

.

[obumazombie]

For the vast majority of companies, wages are their biggest cost. Managing that single cost is usually the difference between profit or loss, success or bankruptcy. Bankruptcy, unless it's reorganization doesn't help anyone in the short run.

[NHSparky]

For the vast majority of companies, wages are their biggest cost. Managing that single cost is usually the difference between profit or loss, success or bankruptcy. Bankruptcy, unless it's reorganization doesn't help anyone in the short run.

And most small businesses don't file for bankruptcy to reorganize under Chapter 11.

[98ZJUSMC]

so while I'm paying a lot more out, I can compete for revenue instead of cost.

Do.  What?    

That isn't NECESSARILY due to firms passing along labor costs

Do.  What?    

[DumbAss Tanker]

For the vast majority of companies, wages are their biggest cost.

With an across-the-board minimum wage hike for everyone in the workforce, it equally affects their materials and supplies cost, since labor is also the principal cost element of all the suppliers.  The only thing that isn't directly affected are inputs like machine time for an operation, but even there, there are indirect effects like rising costs of parts, maintenance, and replacement machinery.  Assuming roughly equal inventories of finished goods when the raise takes effect, every business producing or supplying an item will have to raise its prices as will all its competitors, which is why it's a wash from the nationwide corporate point of view.  Not so much for the regional and local producers (Small businesses), though, because economies of scale generally cause a situation where those nationwide corporations eat their lunch and so the small business ends up priced out of the market.   

[obumazombie]

With an across-the-board minimum wage hike for everyone in the workforce, it equally affects their materials and supplies cost, since labor is also the principal cost element of all the suppliers.  The only thing that isn't directly affected are inputs like machine time for an operation, but even there, there are indirect effects like rising costs of parts, maintenance, and replacement machinery.  Assuming roughly equal inventories of finished goods when the raise takes effect, every business producing or supplying an item will have to raise its prices as will all its competitors, which is why it's a wash from the nationwide corporate point of view.  Not so much for the regional and local producers (Small businesses), though, because economies of scale generally cause a situation where those nationwide corporations eat their lunch and so the small business ends up priced out of the market.   

Economics often times are simple and easily predictable. It becomes frustrating that libs will assert economic postulates not in keeping with proven and time tested principles. It's like for a lib the way something worked consistently thousands of times, never happened.

[BlueStateSaint]

Economics often times are simple and easily predictable. It becomes frustrating that libs will assert economic postulates not in keeping with proven and time tested principles. It's like for a lib the way something worked consistently thousands of times, never happened.

And this is how they act when you point that out:

 

[obumazombie]

^Heh