Fast Food locations closing down rather than pay employees more

[realibrad]

This is sad. People who do not understand economics, are trying to do "good" for the poor, and not realizing they are doing "bad".

Want the poor to get paid more, then just raise the minimum wage. Never mind that they are not more productive. Oh, so now more people are under employed and or unemployed...opps. But at least those who still have a job get a little more.

Show me a study of where minimum wage is better than no minimum wage, and Ill show you a very flawed report. I'm calling out anyone who can do this, because its basic economics. If you make labor more expensive, you will see less consumption of it in the market. Its sad that people think killing a job that "abuses" its employees by under paying, is somehow better than some money.

The argument boils down to, better to have no money than some money...

 

[sandorski]

This is sad. People who do not understand economics, are trying to do "good" for the poor, and not realizing they are doing "bad".

Want the poor to get paid more, then just raise the minimum wage. Never mind that they are not more productive. Oh, so now more people are under employed and or unemployed...opps. But at least those who still have a job get a little more.

Show me a study of where minimum wage is better than no minimum wage, and Ill show you a very flawed report. I'm calling out anyone who can do this, because its basic economics. If you make labor more expensive, you will see less consumption of it in the market. Its sad that people think killing a job that "abuses" its employees by under paying, is somehow better than some money.

The argument boils down to, better to have no money than some money...

Every single time the increase of the Minimum Wage has been proposed the Opposition has decried how it would hurt the Economy/Jobs. The vast majority of the time none of the fears were realized when Minumum Wage was actually raised.

"Basic Economics" or not, real world data says otherwise.

 

[realibrad]

Every single time the increase of the Minimum Wage has been proposed the Opposition has decried how it would hurt the Economy/Jobs. The vast majority of the time none of the fears were realized when Minumum Wage was actually raised.

"Basic Economics" or not, real world data says otherwise.

But you are missing the real issue. Every time the minimum wage has been raised, we have seen a rise in the "natural unemployment" and a rise in underemployment. We also see an increase in the number of jobs that are exported, which offset the decrease in national production, which in turn drives up global demand, making the effects seem smaller than they are.

I will grant you that many have exaggerated some of the side effects, but they are real. The problem is that many are not so easily seen. Also, keep in mind that the people making minimum wage is somewhere around 5%. So taking jobs away from those people will only show a small effect to the overall economy.

The issue is that many of the poor are unskilled. For them to get employed, the employer must make more than they are paying for the work done. You cant pay workers more than what they make the company, its impossible. That is not a morality issue, its just an empirical fact. So, how do you hire an unskilled worker who makes less money than they bring in? The answer is you dont. So now you have 1 fewer future job. It used to be that if you were not inherently smart, you could at least start from the bottom, and work your way up. Now we have removed the bottom jobs, because they are "immoral". The sad truth is that we hurt them far more than we help them in this way. People just feel better because the aim of the law is to help, even though data shows it does not.

Unless you have data that shows minimum wage is a net gain? Can you, or anyone?

 

[TheSlamma]

Many thousands of automation and machine building jobs were created to make and program and maintain these automated machines. I know that it's not the same number as the number lost but it's better than zero. Offshoring takes the entire plant and sends it out (in most cases) eliminating production workers, engineers, managers, janitors, etc. Not only that, but the suppliers are effected as well.

I would rather have an automated plant in the US employing 25% of what it used to than to have 100% of the plant offshored (not to mention that many of those jobs are better paying because of the skill set required to keep the automation working).

Of course, there's nothing to say that the machines have to be built here and that's been tried with marginal success at best (i.e. Chinese equipment generally sucks).

As for the farmer's tractor, who built the tractor? Going from agriculture to factory replace one industry in America with another. Now we are replacing that industry with low wage service jobs.

Ross Perot...."I told you so".

Not really sure where you are going with this. I will say John Deere makes many of their tractors in India now and of course much of our field labor is illegal aliens being paid under the table for sub minimum wage, when those people get rights and ask for pay within years there will be machines that fill those jobs too and the cycle will continue.

 

[realibrad]

Not really sure where you are going with this. I will say John Deere makes many of their tractors in India now and of course much of our field labor is illegal aliens being paid under the table for sub minimum wage, when those people get rights and ask for pay within years there will be machines that fill those jobs too and the cycle will continue.

Just a quick thing. Being from CA and knowing a few farmers, the illegals actually make just above minimum wage. It is under the table, which makes it cheaper because of taxes and what not, but it is hire than minimum wage.

 

[kia75]

But you are missing the real issue. Every time the minimum wage has been raised, we have seen a rise in the "natural unemployment" and a "rise in underemployment". We also see an increase in the number of jobs that are exported, which offset the decrease in national production, which in turn drives up global demand, making the effects seem smaller than they are.

Those are mighty big words. Source? Why would a minimum wage increase underemployment? Can you show an increase in number of jobs exported after a minimum wage increase?

I will grant you that many have exaggerated some of the side effects, but they are real. The problem is that many are not so easily seen. Also, keep in mind that the people making minimum wage is somewhere around 5%. So taking jobs away from those people will only show a small effect to the overall economy.

I'm a bit confused, perhaps you can clear things up for me. Up above in the first quote you say raising the minimum wage has a big effect on the economy, at the bottom you say in has a small effect. Which is it?

The issue is that many of the poor are unskilled. For them to get employed, the employer must make more than they are paying for the work done. You cant pay workers more than what they make the company, its impossible. That is not a morality issue, its just an empirical fact. So, how do you hire an unskilled worker who makes less money than they bring in? The answer is you dont. So now you have 1 fewer future job. It used to be that if you were not inherently smart, you could at least start from the bottom, and work your way up. Now we have removed the bottom jobs, because they are "immoral". The sad truth is that we hurt them far more than we help them in this way. People just feel better because the aim of the law is to help, even though data shows it does not.

The Data shows the opposite, and you're saying a lot of stuff that... well... sounds nice but frankly just isn't true.

Minimum wage members bring A LOT OF MONEY in, way more money then they cost.

McDonalds makes ~$18,000 profit for every employee they have, while other stores like apple make ~$500,000 profit for every employee they have. They could certainly afford to give everyone raises.

Wal-mart could afford to give every worker a 50% raise and suffer no bad effects other then a lowering of their stock price

Then why doesn't Wal-mart give everybody 50% raises? Because the purpose of Wal-mart is to make money, not to employ people. Wal-mart is already hiring as few people as they can, at the lowest wages they can. They can afford to pay much more. Same with McDonalds, and almost any other employer. They pay as low of wages as they can, not how much the job is worth. If they paid what the job was worth then near minimum wage Apple Geniuses would be making 6 digit salaries. They don't, of course because it's easy to replace an Apple Genius, but one shouldn't confuse what a person is paid for what that person is worth.

There's been talk that places like McDonalds and the like have actually welcomed a minimum wage increase. Why? Because like, Ford said, it's good business for your employees to be able to afford your products, and less and less people are now able to afford eating out. An increase to the minimum wage would give people more money to spend at McDonalds. The problem is that McDonalds isn't going to raise their wages unless everybody else does, having a larger labor cost then your competitor is bad business, and frankly there just aren't enough McDonalds store for a few dollar raise to make a difference. But if everybody raises their wages then McDonalds isn't at a cost disadvantage, and more people can afford Mickey D's.

Unless you have data that shows minimum wage is a net gain? Can you, or anyone?

Minimum wage is a net gain

EVERY SINGLE MINIMUM WAGE HIKE SINCE THE 1930's has been a net gain. I'm not quite certain why you think this time will lead to catastrophe when we have literally about 80 yeas worth of proof saying otherwise. If you think this time raising the minimum wage would be a catastrophe then show what makes this time different then the past 80 years. It's great to have all these little theories, but until the theories are proven in the real world, we need to remember that they're just theories.

 

[Engineer]

Not really sure where you are going with this. I will say John Deere makes many of their tractors in India now and of course much of our field labor is illegal aliens being paid under the table for sub minimum wage, when those people get rights and ask for pay within years there will be machines that fill those jobs too and the cycle will continue.

Well, that I don't doubt. At some point though, who will the 'consumers' be (the machines won't buy the stuff). Of course, a rising middle class in China and India might fill in the gap of a sagging US consumer. I suppose it will have to go to some sort of governmental support for the masses.....or simply mass chaos. Time will tell.

On a side note (more OP related), I don't know if raising the minimum wage helps or hurts but I did read an article that stated if the minimum wage was increased to $10.00 an hour, it would cost Walmart $2 billion more per year. However, they would generate over $13 billion in additional profits from the extra spending from those people (everyone) that receives a minimum wage hike. Now I'm not saying that every company that pays more will receive more but it's interesting nonetheless.

 

[MrPickins]

If restaurant profits are so thin then how does Chik Fil-A manage to survive when they leave an entire day of profits on the table?

Thank you for once again proving you don't understand even the most basic of business concepts.

Can you explain how closing the store affects profit margins?

This.


(In case you don't get it, the owner takes a somewhat smaller net profit, but the margin remains the same)

 

[Zaap]

Of course, a rising middle class in China and India might fill in the gap of a sagging US consumer.

LOL. Yeah, gee, a few billion potential customers (savages all!) might just be a more sought after prize than a couple million God's Gift to all creation excellent first-world US "SUPER-CONSUMERS!!!"

 

[realibrad]

Those are mighty big words. Source? Why would a minimum wage increase underemployment? Can you show an increase in number of jobs exported after a minimum wage increase?



I'm a bit confused, perhaps you can clear things up for me. Up above in the first quote you say raising the minimum wage has a big effect on the economy, at the bottom you say in has a small effect. Which is it?



The Data shows the opposite, and you're saying a lot of stuff that... well... sounds nice but frankly just isn't true.

Minimum wage members bring A LOT OF MONEY in, way more money then they cost.

McDonalds makes ~$18,000 profit for every employee they have, while other stores like apple make ~$500,000 profit for every employee they have. They could certainly afford to give everyone raises.

Wal-mart could afford to give every worker a 50% raise and suffer no bad effects other then a lowering of their stock price

Then why doesn't Wal-mart give everybody 50% raises? Because the purpose of Wal-mart is to make money, not to employ people. Wal-mart is already hiring as few people as they can, at the lowest wages they can. They can afford to pay much more. Same with McDonalds, and almost any other employer. They pay as low of wages as they can, not how much the job is worth. If they paid what the job was worth then near minimum wage Apple Geniuses would be making 6 digit salaries. They don't, of course because it's easy to replace an Apple Genius, but one shouldn't confuse what a person is paid for what that person is worth.

There's been talk that places like McDonalds and the like have actually welcomed a minimum wage increase. Why? Because like, Ford said, it's good business for your employees to be able to afford your products, and less and less people are now able to afford eating out. An increase to the minimum wage would give people more money to spend at McDonalds. The problem is that McDonalds isn't going to raise their wages unless everybody else does, having a larger labor cost then your competitor is bad business, and frankly there just aren't enough McDonalds store for a few dollar raise to make a difference. But if everybody raises their wages then McDonalds isn't at a cost disadvantage, and more people can afford Mickey D's.




Minimum wage is a net gain

EVERY SINGLE MINIMUM WAGE HIKE SINCE THE 1930's has been a net gain. I'm not quite certain why you think this time will lead to catastrophe when we have literally about 80 yeas worth of proof saying otherwise. If you think this time raising the minimum wage would be a catastrophe then show what makes this time different then the past 80 years. It's great to have all these little theories, but until the theories are proven in the real world, we need to remember that they're just theories.

So, here is the CBO's estimate if you were to raise the minimum wage.

"Effects of the $10.10 Option on Employment and Income
Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects (see the table below). As with any such estimates, however, the actual losses could be smaller or larger; in CBO’s assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers."

This is a known effect. So well known that its often forgotten.
As for underemployment and job exportation. I'm too lazy to look up those right now, but it follows the logic. That is, labor being more expensive locally, it then becomes cost effective to get the labor externally. If not externally, then underemploy because it absolves you of the tax burden. You see fast food doing this a lot right now.

As for your second contention, I do feel like I was consistent on the effects to the economy. I think something interesting happened there. I listed off the side effects that would be caused by a raise in the minimum wage. Those things being bad, were never given scale. I never said it would have a "Big" effect, but it would have real effects. Those effects are bad, but the implications for the economy are not "Big" depending on how you define big.

The next point you made was probably the best one. The link you gave took all of Apple's profits, and divided them by the total number of works. In no way did it adjust for value driven in by the workers. It also showed that apple on average pays its "store workers" around $12 an hour. Not the CEO's pay or any exec, just the store workers. A minimum wage hike would do nothing, and you added the revenue driven in by people who drive in way more value and then said the store workers should get some of that.

You sound like you think its possible to have a company that employs workers and is not driven by profits. You seem to think that a company should cap its profits and that would be good for the world. Ask economists and you will find that your view is vastly in the minority.

 

[OverVolt]

meh.

 

[realibrad]

I don't think companies are underpaying. I think its an issue of companies not investing in things that may or not make money. There is a ton of capital out there, but nothing worth while to invest it in.

Population is growing much faster than middle class jobs. Tech has allowed the upper income earners to earn even more, as they are better able to utilize the tech. The upper classes are better represented in government, and have thus gotten laws into place to protect their wealth. Decentralize the power, and break down the barriers to income, and you will find more equality. You will never have equality, as we are not equal.

 

[ch33zw1z]

I don't think companies are underpaying. I think its an issue of companies not investing in things that may or not make money. There is a ton of capital out there, but nothing worth while to invest it in.

Your employees are always worthwhile to invest in. Without them, there is no business.

 

[Engineer]

Your employees are always worthwhile to invest in. Without them, there is no business.

And when there is a huge surplus of workers that need little to no training (because many of their jobs were sent away), the companies really don't care. You are just a number to them...literally. As far as many of these types of companies are concerned, you are nothing but an expense.

Even McDonalds and Wendys have looked at taking orders (drive through) from offhsore order centers (using cameras at the drive through ordering station for customer verification) all in an effort to eliminate the person at the window taking the order.

 

[ch33zw1z]

And when there is a huge surplus of workers that need little to no training (because many of their jobs were sent away), the companies really don't care. You are just a number to them...literally. As far as many of these types of companies are concerned, you are nothing but an expense.

Even McDonalds and Wendys have looked at taking orders (drive through) from offhsore order centers (using cameras at the drive through ordering station for customer verification) all in an effort to eliminate the person at the window taking the order.

Understood. Which is the problem we have now. Giving to employees costs money. I'm not just talking about minimum wage workers, it's the middle class employees feeling the pinch as well.

What do companies get? Employees that aren't going to work as hard, do as much, or take the responsibility that they may have otherwise.

You get what you pay for.

 

[Engineer]

Understood. Which is the problem we have now. Giving to employees costs money. I'm not just talking about minimum wage workers, it's the middle class employees feeling the pinch as well.

What do companies get? Employees that aren't going to work as hard, do as much, or take the responsibility that they may have otherwise.

You get what you pay for.

But after a point, in a driven down economy, you'll find people who so need the money and job that they will work for it, regardless of treatment because it's all that they can get. Gone are the days that most of those people can jump on an assembly line or factory and spend a generation building, not only for the company, for for their own financial security. Now? Just jump on the burger line and hope to get enough welfare to get by.

What Henry Ford was so well known for (taking care of employees) has been pushed by the wayside for CEO compensation and shareholder value, all driven by the stockholders, of which, 80%+ are at the top of the wealth chain already.

(but...point taken).

 

[Darwin333]

I'm going to have to try that one night.

Most of the time it actually takes less time to get my food than going through a drivethru and I spend roughly the same thing (maybe a buck or two more) for far superior food and they throw in free bread.

 

[sm625]

It only takes one person to load patties, pickles, onions, lettuce, and tomatoes into the burger cooking machine. And once all those jobs are gone, you stupid commie mindless morons can all worship your stupid minimum wage laws as you stand around a 50 gallon steel drum burning scraps under a highway bridge. God the stupidity of these people and their bankrupt ideas... But dont worry, the government can just borrow money to cover up the fact that these horrible ideas are totally financially ruining us. We can just borrow and print and wreck and destroy forever and ever into the sunset. This could never possibly end very badly....

 

[Zaap]

I've looked into the idea of corporate stock buybacks going hand in hand with companies doing it at the expense of under-paying their workforces. (Encourage anyone else to do the same).

Once you sift through the 300,000,000 million pages of all the usual suspects whining about (you guessed it!) Walmart... then you'll see there's no particular correlation anyone of any real substance can point to.

People are also stuck on stupid believing stocks are just for the rich. Anyone can buy shares in public companies. As such, you're a part owner of that company. If stockholders are always getting endless awards... STFU and buy shares already. (Oh noes! That's just for the rich! I'd rather pay $100 a month for cable and drink away $500 a month at the bar than buy shares of corporations!) But then people might actually learn that just owning shares doesn't make money come falling out of the sky either.

Not that I'm always the biggest fan of buy-backs (for strict economic reasons, not the class-envy conspiracy againt employees nonsense reasons)- mostly I don't like when companies try to artificially jack up their stock price and percieved value with them.

 

[OverVolt]

I've looked into the idea of corporate stock buybacks going hand in hand with companies doing it at the expense of under-paying their workforces. (Encourage anyone else to do the same).

Once you sift through the 300,000,000 million pages of all the usual suspects whining about (you guessed it!) Walmart... then you'll see there's no particular correlation anyone of any real substance can point to.

People are also stuck on stupid believing stocks are just for the rich. Anyone can buy shares in public companies. As such, you're a part owner of that company. If stockholders are always getting endless awards... STFU and buy shares already. (Oh noes! That's just for the rich! I'd rather pay $100 a month for cable and drink away $500 a month at the bar than buy shares of corporations!) But then people might actually learn that just owning shares doesn't make money come falling out of the sky either.

Not that I'm always the biggest fan of buy-backs (for strict economic reasons, not the class-envy conspiracy againt employees nonsense reasons)- mostly I don't like when companies try to artificially jack up their stock price and percieved value with them.

Yea fair enough. "If you can't beat them join them."

That is legitimately what I'll end up doing if it stays like this.

 

[realibrad]

Your employees are always worthwhile to invest in. Without them, there is no business.

No and NO.

Capital is always limited, and so your investments should go to what gives you the most return. This notion that people are magic investments that you should invest in is stupid.

It can very well be the case that a companies money is best spent investing in its workers, but it also may not be the case. You can also under-invest in your employees.

 

[ch33zw1z]

But after a point, in a driven down economy, you'll find people who so need the money and job that they will work for it, regardless of treatment because it's all that they can get. Gone are the days that most of those people can jump on an assembly line or factory and spend a generation building, not only for the company, for for their own financial security. Now? Just jump on the burger line and hope to get enough welfare to get by.

What Henry Ford was so well known for (taking care of employees) has been pushed by the wayside for CEO compensation and shareholder value, all driven by the stockholders, of which, 80%+ are at the top of the wealth chain already.

(but...point taken).

I know what you're saying. But, you still get what you pay for. If you want hard working employees, productive, willing to go the extra mile...then these corporate cheapskates should be prepared to pay for it, otherwise...don't be surprised when you get what you pay for.

 

[ch33zw1z]

No and NO.

Capital is always limited, and so your investments should go to what gives you the most return. This notion that people are magic investments that you should invest in is stupid.

It can very well be the case that a companies money is best spent investing in its workers, but it also may not be the case. You can also under-invest in your employees.

There's no magic involved. It's very simple, you get what you pay for.

 

[bshole]

Oh if only it were. You don't know McOwned very well. He only repeatedly calls out for the hostile takeover of assets from the rich and then kicking them out of the country.

No, that would be me. Get your lefties sorted out dude, you are confused.

 

[realibrad]

There's no magic involved. It's very simple, you get what you pay for.

You are doing it again. Google Marginal Utility. If I spend 100k on 2 workers, but never rent a building, then what good have I done for my company.

If what you said was true, then the 99.9% of employers are complete idiots, because they would be super ultra rich by now, because they would take all their money, and keep giving it to their employees.

Are you actually saying you should give unlimited investments to employees?