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Minimum wage hikes trigger 'payroll tsunami,' as small businesses cut back

Posted by  $  mminnick 5 months, 2 weeks ago to Economics
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Recall the old adage: "The road to Hell is paved with good intentions"
Raising the minimum wage puts the squeeze on the employer of low skill workers. The value add just isn't there.
From the article:
"Small business owners across the country are beginning to feel the pinch as more states move toward a $15 minimum wage.
While proposals to raise pay are intended to help workers, several mom-and-pop coffee shops as well as restaurants are responding by cutting hours, eliminating jobs or closing down entirely because they can't keep up with rising wages under the law."
SOURCE URL: https://www.foxnews.com/politics/15-minimum-wage-hikes-payroll-tsunami-hurt-small-businesses


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  • Posted by  $  25n56il4 5 months, 2 weeks ago
    Great $15 an hour. $31,176 a year! That's a pretty good wage. $2,598 a month. $120 a day. (40 hour week x 4.33 weeks in a month x 12 months). Not bad for washing dishes. But the real problem is the increasing costs we see every day. As wages rise, so does the cost of gasoline, food, rent, utilities. Where does it stop?
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    • Posted by  $  Dobrien 5 months, 1 week ago
      When the FED RESERVE is smashed into 1000 pieces.
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      • Posted by  $  5 months, 1 week ago
        I beg to differ. It stops when the progressive governors of the states are tossed out and the progressive agenda repudiated by the voters. I find it interesting that the majority of the states adopting the 15/hr minimum are Democrat governed. Not all but most.Once again using OPM to fund the socialist dreams.
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        • Posted by freedomforall 5 months, 1 week ago
          You are both correct. The Fed causes all the inflation that exists by funding government deficits and expanding credit beyond actual growth (to benefit banksters, boost real estate prices, and expand tax bills.) Then the statists use the inflation as an excuse to institute more government meddling and looting.
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          • Posted by term2 5 months, 1 week ago
            I think that as the ranks of collectivists increase, this is only going to get worse UNTIL the producers decide, one by one, to just stop producing as much.

            The first part of this is for us all to become more efficient and consume less of the "stuff" that we really dont need. That cuts sales taxes, property taxes, excise taxes, government fees, etc. Then you can make less and pay less income taxes. I estimate that everyone could cut 10% in their expenses without really significantly changing their lifestyle. Less money for the collectivists will mean they just cant do as much to hurt us.
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    • Posted by term2 5 months, 1 week ago
      It doesnt stop. But note the dishwasher probably only gets 24-32 hours of work a week now. He/she must get a second job to make ends meet, but that means one less job is open for someone else (Note that unemployment figures would count part time as "employed").
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  • Posted by term2 5 months, 1 week ago
    Collectivists seem to believe that they can do what they want, and the producers will just "make it happen for them" and absorb any costs that come up.
    Fortunately, this ISNT true. Producers are getting more and more fed up with being the fools in this scenario, and are taking actions. Automation of all types in the long term and moving production to china and other places as well as turning our workforce into part time workers in the short term are a couple of ways producers have been .
    "adjusting".
    Small companies are just eliminating workers as fast as possible . Hiring american workers is viewed as an unwanted necessity now, and only done when nothing else will lete them survive.

    Big companies just increase prices and make the collectivist 50% as well as the remaining customers pay the costs.

    Small companies dont have the same flexibility and power to just increase prices. Competition puts a definite lid on that approach.
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  • Posted by mrdenis 5 months, 1 week ago
    It's another lesson in the job-crushing power of a higher minimum wage...

    versus the soul-crushing power of jobs where you work full time but still need government support?
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  • Posted by freedomforall 5 months, 1 week ago
    Former stalwart conservative city of Phoenix, invaded by Californians, has been in decline since the late 80's, and has now committed economic suicide by ignoring natural laws of the free market. Of course, Phoenix has been controlled by Democratic Mayor since 2004, and will be at least until 2023-unless the mayor decides to run for US Con-gress as many past mayors have done.
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    • Posted by term2 5 months, 1 week ago
      Its a shame. I liked Arizona, but I have seen the decline slowly taking hold. Even Mayo Clinic, which presents itself as having superior care, has found it cant accept medicare and medicaid patients as it used to and still provide that level of care. If the dems get medicare for everyone installed in 2020, they will force Mayo to accept the medicare reimbursements, and that will mean the rapid decline in their care. It happens slowly, but this is the result of collectivism
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  • Posted by CaptainKirk 5 months, 1 week ago
    My brother is a HUGE fan of this.
    So, I suggested WHY NOT set it to $100/hr.
    Then everyone would be rich!

    He replied "Kirk, are you crazy... People would do stupid things with that kind of money!"

    Lefties all believe people are stupid... Because of "cognitive bias", trust me... LOL
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  • Posted by evlwhtguy 5 months, 1 week ago
    It is an incontrovertible fact that some individuals are just not worth $15.00 per hour. No business can afford to hire anyone that does not produce more than he earns. These days, many are not even worth the cost of the gunpowder it would take to blow their brains out.
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  • Posted by KC-2019 5 months, 1 week ago
    This level of minimum wage just speeds the transition to automation. This is the minimum wage meant for those first entering the job market not a living wage big difference between the two.
    How do you get started if the person hiring has to pay $31,000 a year plus $6,000 in healthcare plus 2 weeks vacation to a person who has never worked before?
    Without that first job, how do you get experience? connection?
    Especially if you have a high school education or less.
    You don't.
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  • Posted by DrZarkov99 5 months, 1 week ago
    I am not a native Oklahoman, but am proud to be an adopted son. This state is an illustration of the success of a capitalist society. Entry wages (not to be confused with government mandated minimum wages) here are running close to the $15/hr level, driven by a strong labor market. It's not only the energy industry, but the medical research, aerospace, and information sciences markets that are thriving here, unimpeded by interfering, overbearing government heavyhandedness.

    I have no hope that the "blue" states will think to look at "flyover country" for inspiration, but they should.
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  • Posted by ycandrea 5 months, 1 week ago
    I have never been able to understand the whole minimum wage thing. Don't people realize that people without a lot of skills are always going to be paid less? That the only thing minimum wage does is cause everything else to go up? It is just simple math. These workers will always make less than more skilled workers. I just do not get it.
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    • Posted by mccannon01 5 months, 1 week ago
      Being partly (only partly) sarcastic here, but the Marxist ideal of the Neo Communists is all jobs are important to society and should be treated equally (except for the political ruling elite, of course). The dishwasher and burger flipper is no less important than the doctor or engineer and all should be compensated the same. Just because some people are lucky enough to become doctors and engineers does not entitle them to a better wage than anyone else (except the political ruling elite, of course). Of course it's absurd, but I hope I helped you get it now?
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  • Posted by  $  allosaur 5 months, 1 week ago
    Economics 101 strikes yet again!
    As it has before!
    And before that! And before that!
    And before, before, before----ad infinitum!
    Good grief! Now it's happening again!
    But that's impossible!
    What an unbelievable freaking surprise!
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  • Posted by CircuitGuy 5 months, 1 week ago
    This is not one of those issues where we have to rely on experts. Macro 101 explains why price floors create surplus supply, in other words minimum wages cause there to be more people seeking jobs than offering them, i.e. unemployment.

    I think minimum wage policies are a tempest in a teapot, though, because after a lot of political grandstanding they usually end up essentially adjusting it for inflation at a level not far for the going rate for entry-level labor. The raise for people at the minimum is not enough to change their life, and businesses that struggle to pay the minimum would struggle in any case.

    Even though the minimum wage is not set a level that has much effect, it's a plausible way for people to scapegoat the gov't about why their wages are too low or their business is struggling. That mindset leads to people to look to the gov't to manage their lives instead of feeling like they're responsible for their own lives and for maintaining a gov't. I think this is one reason why the right to bear arms is toward the beginning of the Bill of Right: in addition to being about the right to protect yourself, it's about the*mindset that we the people are the adults, the ones responsible for taking care of business.
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    • Posted by term2 5 months, 1 week ago
      Maybe the proponents of minimum wage increases should also require prices to rise by an equivalent percentage at the same time. That might show people that business only exists if its profitable enough to encourage business owners to do the work required to keep them open.
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      • Posted by CircuitGuy 5 months, 1 week ago
        "should also require prices to rise"
        Don't give them any ideas. I can imagine business owners complaining that their costs are going up, causing them to get squeezed by competitors who can allocate labor from other departments or use automation, so everyone should have to raise prices equally.

        In any case, prices will rise, depending on the fraction of production costs that low-wage labor represents and on the inelasticity of demand for the product.
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        • Posted by term2 5 months, 1 week ago
          My little company hasn’t been hit by the $15 minimum wage, but when I if it comes to pass, we will have to raise prices and lose business to competitors from China

          Probably tine to close up and stop mfg altigether
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          • Posted by Lucky 5 months, 1 week ago
            term2-
            Yes. That is the side effect of do-goodist governments.

            Sometimes, there are ways to survive. Here in Australia the legal minimum wage is very high. Companies cut the work force and put on instead another company to do the work, often offsite. The second smaller company may have more flexibility, and may have sources of labor such as new migrants that are not available to big companies. Some of the new migrants are hungry for work. They think, correctly, that a work record beats welfare. Some small businesses work as a good productive team, often family members, there are a few well known success stories.
            Migrants from SE Asia have this built-in work ethic, but (some) Africans as well, knowing where they come from is only a rough guide.

            There are bad side effects to that as well, there is a permanent (white and indigenous) underclass, they do not want to work nor can they work, worse, neither can their children. Welfare dependency is built-in and goes from older to newer generations.

            I know a factory here that is close to 100% Vietnamese on the factory floor, legal wages are paid, and they compete with Chinese made products.
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            • Posted by term2 5 months, 1 week ago
              I have heard that other Asian countries are a serious threat to China. We have outsourced 70% of raw materials and sub assemblies from China. But trumps tariffs are leading us to find suppliers in other countries. USA regulations and minimum wages have caused this outsiurcing
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          • Posted by CircuitGuy 5 months, 1 week ago
            "Probably tine to close up and stop mfg altigether"
            Assorted thoughts:
            - Start using vendors in low-cost regions so you can do some of the longer-turn work there. Your value added would be communicating in English and committing to lead times and specs. Chinese vendors often offer spec sheets in Chinese only, and I wouldn't trust them if I didn't have experience with them.
            - Change the process to make it less labor intensive.
            - Offer some other service, maybe design, with higher margins to offset margins getting squeezed on mfg.

            I had some labor-intensive assembly business at my business for a while. The margins were higher than engineering services, as a percentage, but I couldn't keep a steady stream of assembly business. I sometimes think of what I could have done differently, but I generally happy not to have to think about it because I'm working for someone who, unlike me, is successful at running a business.
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            • Posted by term2 5 months, 1 week ago
              Currently we buy about 70% of all raw materials and sub assemblies from Chinese subcontractors, which is the only way we have survived since 2011. Things were stable until trump put in 25% tariffs tax on what we import from China. We stocked up before the big tariff kicked in, but if he doesn’t eliminate that tariff, this will be the last year we manufacture. That 25% was out profit

              The Chinese are getting smarter at marketing. They stock in the USA now through partnerships with large fulfillment houses. We have survived so far through constant new product offerings, but Chinese are very aggressive at catching up. English isn’t a problem for them much anymore. They are still a bit behind on nuances of product features to satisfy USA market but they are catching up. Chinese are now actually more capitalistic than Americans !!
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    • Posted by  $  puzzlelady 5 months, 1 week ago
      I am weary beyond words of the expression, "the adults". Adults are stupid and stuck in their biases, and have mainly learned to be sneaky, deceitful, power-hungry, supercilious, conniving, and inclined towards collusion and tyranny. They are not the freethinkers who defend individual rights and liberty with uncompromising principles and eternal vigilance.
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      • Posted by CircuitGuy 5 months, 1 week ago
        "They are not the freethinkers who defend individual rights and liberty with uncompromising principles and eternal vigilance."
        That's a better phrase for it. I don't know a good word or short phrase to convey the responsibility for one's own life resting directly on his shoulders.

        I heard an interview with a government official in lame duck administration working hard to pass a regulation before the new administration. The rule was to ban some chemical from hardware stores. It was safe if used according to the warning labels. The official said she scrambled to pass the rule because everything in any store open to the public should be unconditionally safe, not just safe if used as directed. In my mind, that's a rule for little children. As we become adults, we should not need a parent keeping us unconditionally safe. Such a desire is relinquishing your rights. I think about this because I have kids. I want them crossing major roads and using dangerous tools responsibly, as soon as they're ready for the responsibility. I don't want them to go to college and need "adulting" classes or a support fluffy.
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