Quote (InsaneBobb @ Feb 3 2021 12:17am)
I would potentially agree if that's how the economics of a business worked. Smaller businesses can't afford it. If you employ 20 workers and per worker post-overhead less wages, you're making $20/profit per hour, then maybe you could pay $15/hour average. The remaining $5/hour*20 workers isn't just paying you some magic $100/hour. It's also going to cover business upgrades and improvements as well as providing a rainy day fund. Now expand that to something the size of amazon. If you're hiring a million workers, and your average pay per worker is $19.75/hour but profit per worker is $20/hour, you're only making $0.25/worker per hour. It's not necessarily that you're "underpaying" them. If you raised their average pay by just $1, you'd go bankrupt. But, because you've taken your size of business to such an extreme, even with only a $0.25/worker profit, you're gaining $250,000 per hour profit. So, you reinvest a bunch into the business and pay yourself what, the equivalent of $250K/year? You come off looking like the bad guy because you made so much, yet you're paying more than the smaller business, making a much slimmer profit margin, just have a better process.
Or at least, that's the gist of it.
So the first thing is that workers are less than 20% of the business cost even in high-labor businesses like fast food. So the whole "pay them $0.25 more an hour would bankrupt you" is not really how these things would go. Amazon for example made 11.59 billion profit in 2019 and has about 800k workers. That means they could afford to pay every worker an addition $7 an hour and still break even, assuming all workers are full time. Walmart could afford an additional ~$60,000 a year per worker. These are just examples to show that even in worker-heavy businesses the companies are not operating on razor thin margins as far as employee pay is concerned. Now consider that labor cost is < 20% of the total cost of these businesses, and you see that they could make up the cost by a less than 20% increase in prices.
The second thing is that increasing minimum wage increases the income of the lowest class of people, who have the greatest propensity to spend. When a Walmart worker gets a raise, most of that raise is spent buying things at Walmart. Increasing pay for the group that is most likely to spend drives demand, which allows more profit from those same companies. So even though they could raise prices to compensate, they don't actually have to because the economy as a whole is doing more business which drives prices down and profits up.
The third thing is that companies already operate with the fewest number of people they can. They don't make a habit of hiring extra people out of the goodness of their hearts, and they don't pay more than they have to. So as long as the person is making you more money than they cost, they will be retained, and in order for that to happen even at some place like McDonalds you would need to raise the minimum wage to probably $30 or more.
This post was edited by Thor123422 on Feb 3 2021 01:27am