Why Increasing Minimum Wage is Meaningless

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I've spent most of my professional life in restaurants, I'm very familiar with extreme workloads that didn't pay very well. It's still irrelevant to what I'm saying though, washing dishes in a commercial kitchen is a tough, unpleasant job with a lot of pressure, but if it doesn't add $15/hr to the bottom line and that's the minimum wage, the dishwasher is getting fired and the restaurant owner is buying an expensive commercial one that now makes economic sense and he's forcing his line cooks to run it in addition to their normal duties. In fast food, order takers can be replaced with apps and kiosks, there's a fry cooking robot on the market now, I'm sure someone is working on a commercial version of a Roomba for sweeping an mopping, all things that make economic sense when the price of labor is set above its actual value.

What part of "paying people more than their labor is worth is unsustainable as a business practice" is so difficult to understand? Further, just to use myself as an example as a chef, why is it that if I decide to open a restaurant because I want to serve people my delicious food and hopefully support myself, it suddenly becomes my personal responsibility to not only provide employment, but to pay an arbitrary wage set not by the value of the labor provided but instead by the state in an attempt to transfer responsibility for the welfare of the citizens from the state to private business? I could just cook for other people and collect a check, but if I want to do it on my own suddenly I'm responsible for making sure my fellow citizens have enough money to take care of themselves? Aside from the economic illiteracy, this is a terrible incentive structure if you want people to open businesses and create jobs, you're basically punishing them for entrepreneurship.

I'll give you the same challenge I've given everyone else in this thread that no one has been able to answer so far: how do you stay in business buying a product for $15 and selling it for $10?

How are small business owners affording their own cost of living? Simple, they give themselves a living wage but yet the fact they can't do it for their employers tells me they don't respect people working in that position. But yet other companies even decide to pay their employers a much higher wage because they are graduates. But the fact people feel that those who work labor jobs aren't worth that much tells me how classist people are in society about those who work non graduate jobs. I was even shocked to hear how much money garbage men make. They make more than I thought.

Now today businesses are having troubles hiring new workers and a school district near me is so desperate for bus drivers they are willing to give them a $30,000 bonus plus willing to pay them $22 an hour.

you fix it by magic . .......If the state has Taxed the price of supplies and gasoline for shipping to the point of economic instability . And forces a wage that cannot match the profit margin of the business providing the product or service . And they refuse to change their tax structure .For the Companies That supplies the businesses .
Then the State should create
[Direct Payment Subsidies ]to any employee. Whose work is not valuable enough to recieve the basic minimum wage . And Should be adjusted to meet any Cost Of Living increases.

( and just incidentally if the issue is a Covid situation have Fauci and the USA and China make financial reparations to all the companies and people hurt by Covid ). Considering that the Wuhan Lab that made this is in China. btw just for your Information . i have read that Covid19 has a United States Patent number . meaning it was built and designed by someone filing that Patent in the USA or at least someone in the USA has taken credit for it.

Ever owned a small business? I have, I paid myself the lowest salary I could live on, which when I totaled up my weekly hours put in practically living at the restaurant, worked out to a princely $3/hr, after I'd already put about $150K into remodeling the space, buying the equipment, paying the state their cut at every step with the various permits and inspections, etc. This is very common with small business owners, we're often the lowest paid on a per hour basis, my counter help made 4X my wage, my cooks made 5X, so don't try to tell me that is about not respecting workers.



Class has nothing to do with it. If gravel sells for $.50/lb, and a guy with a hammer can crush 20lbs of rock an hour, that I have to pay him something less than $10/hr in order for the economics to work out has nothing to do with respect or anything, it has to do with I would lose money paying more.



That's a little different in that school districts are government programs and not businesses, their constraint is their budget of tax dollars, not the ROI of a particular job.

I have a solution to this dilemma.

Maintain the minimum wage but allow eligible people (single mothers with children for example) eligible for interest free loans that can be paid back in their own time.

So the thing about all loans that work is that they must start repayment immediately. There must be a payment every month and missed payments should carry a penalty. Otherwise nothing will ever be paid back.

The flaw in Dox47's argument is that he is taking prices to be fixed.
If the minimum wage rose, that would apply to all small businesses, hence all would need to raise their prices to avoid going out of business. So businesses such as cafes, hairdressers, small retailers and so on would need to charge a little more.

What it would actually do is raise the value of the work done by low-level staff compared to those in businesses less affected such as government entities and large corporations. In other words, it would have a levelling effect and reduce the gross imbalance between the pay of top executives and those working equally hard in restaurants, hairdressing salons etc.

Yes, it may be painful for small businesses in the short term but it would be good for many people in the long term. There will always be people wanting a haircut, even if the price goes up a bit.

Yes there would need to be some surety to ensure the person will pay back. Perhaps a contract and/or collateral.

Everyone deserves to be paid more, but especially minimum wage earners.

Businesses have record profits. Their CEO’s have extremely high pay - higher than ever. They can afford to spread the wealth around a little bit and pay people better.

The standard retort to this is that private (and even government owned) companies want to attract the best senior managers/execs/CEOs and to get the best leaders you need attractive bonuses/packages.

Its not like people just fall into CEO positions because they were simply in the right place. Companies seek leaders with a track record and reward them accordingly.

The market dictates the salaries/bonuses, not unlike the stock exchange.

Insanity. There were CEO’s in the USA long before their compensation was more than 30x a working class income. There are CEO’s all over the world right now, successfully leading corporations, that aren’t paid anywhere near that sort of premium. It’s a uniquely greedy situation in the USA designed for the rich to get richer and the poor poorer.

What restaurant where can’t pay a dishwasher a $15/hr minimum wage?

Every restaurant here pays that more more. Minimum wage is $15.20/hr here now. (That’s still low.)

One restaurant advertised a full time dishwashing job at $25/hr trying to get anyone to take the job.

How can you possibly figure $15/hr is beyond the value of the labour?

You can set that challenge if you like, but it's irrelevant because that's not what we're talking about. And I'm pretty sure you know that.

Costs are made up of lots of different elements, not just labour. And prices are dictated by lots of different elements too.

My argument here is that Government hand-outs are often used to top up the wages of employees whose companies are paying very generous shareholder dividends, or making private owners very rich indeed. That's a way of getting middle class people to subsidise working class folk so they can afford to work for exploitative bosses who are way richer than both. It's a deliberate bit of divide and conquer nonsense to set us plebs against each other, while we're all getting ripped off. Effectively you might as well pay the cash straight to the ultimate beneficiaries and cut out the middle (wo)man.

If companies were forced to pay a living wage then they'd need to balance their books themselves, without being continually bailed out. That doesn't mean buying for $15 and selling for $10, because they don't do that at the moment. In VERY simple terms they buy each item for $15 and the cost of labour to produce and sell it is currently $11, so they sell for $52 and pocket the $26 change. Government meanwhile is filling the employee's $4 gap. Take that away and the labour cost rises to $15, and the company then has the choice of either raising prices, reducing their cut, or producing / selling more to keep the absolute profit the same. Or some combination of all three, depending on the market for that particular item, and a huge number of other factors too.

You would think this would be popular with free market capitalists, as subsidizing worker's wages is dangerously close to socialism, and after all a good business should be able to stand on its own two feet and compete, for That Is The Way.

But apparently not. Funny old world, isn't it?

The employment sector is like any other part of the economy subject to market forces. A lot of restaurants and family owned businesses claim they can't run if they are forced to pay their staff > minimum wages. Prior to COVID it was a big issue that Asian owned family businesses were employing overseas students for $5- $8/hr fir waiting tables and washing dishes. When asked what would happen if they were forced to employ experienced waiters or hospitality staff at the minimum wage (> $20/hr) the restaurant managers would simply say they would close down.

My nephew got a job in a Vietnamese restaurant through a friend. He was being paid $15/hr because he was 15 yrs old. He got the sack within two weeks because the owner thought he was being paid too much