The wealthy elite will need to get this through their heads. They must start paying people more. There isn't a choice. Businesses are sitting on trillions of dollars that haven't been used to "create jobs".
EDIT: Jesus. I apologize for making an economic sounding argument for this. I've taken it out. How's this...the wealthy elites need to pay people more for the sake of the stability of the social fabric. Find some economic rational for that if you like. (That's what economists really do anyway...Provide the theoretical underpinnings for the operation of their class.) They need to understand that having slightly smaller profit margins will be good for them as well, in the long run, due to a more stable republic. I understand that, as libertarians, you guys don't think that government can play a part in that. I do. We have a fundamental disagreement about that.
Propitiation follows: I know that all of you guys are very economically literate libertarians. I should never have fronted like I was anywhere in your league. I could tell you were not only attractive but powerful and noble as soon as you came in the room. Your ability to recite the economics that you picked up at Uni is not only impressive but frightening. Surely, your might and prowess will be known through the ages.
>The added demand from paying higher wages to people at the bottom
The business that will pick up the slack in this example is one overseas. These employees would lose their job and would be unemployed, not increasing demand with higher wages.
Unless you are hoping trump enacts some seriously strict trade tariffs, it's pretty stupid to believe that every business hit with this raise will survive with the same number of employees due to increased demand.
How can a business fail if by definition its sitting on piles of cash? We live in a centrally controlled command economy and all the politicians in charge of selecting winners and losers (except one widely hated guy at the top) were purchased by those very same businesses, so why are you proposing that mutually beneficial system break down?
What would work would be a nice infusion of inflation. You can spend $X today on Y of labor or Z of capex, or hoard it until next year when the same $X will only buy (0.95)Y of labor or (0.95)Y of capex "stuff", your choice how much "stuff" you want to get for your $X
No, they don't have to, if cheaper labor is available. And it is available.
And no, other businesses won't replace them in CA, because their production costs are higher the moment they start the production. It's basic economics.
It's not fashionable to say, but what a beautiful example of the free market working. California has attracted high value businesses so it's worth more to operate there. They're pushing out the low value ones because they can afford to and their place can be taken by programmers or something. Nevada wants all it can get so it welcomes low value businesses like clothes manufacturing. If they move, everyone wins.
That applies to the workers too. If California is growing too rich around them, they might be under-skilled for the local job market and have to move to Nevada for work. Again, Nevada benefits from more labor.
The downside is that people whose skills lock them into insecure industries like this also sometimes put down roots where they live and suffer more when they have to move. But at least they can see it coming. Raising the minimum wage is bound to cost some people their jobs. If it didn't, that would mean employers can actually afford to pay even more and it should be raised further.
Sometimes I wonder how quickly things could collapse in California if a place like Las Vegas gained enough critical mass in non gaming/convention businesses.
I would take the oppressive heat over the oppressive fog and piss smell of SF if it had the same job opportunities. I know the reason me and the majority of my friends pack into this peninsula like sardines to pay massive taxes, rents, and general COL expenses is purely because of the industry.
Definitely a chicken and egg problem but maybe if the state continues with anti-business and high tax policies, they may accidentally go over board and cause an exodus.
I work in tech in SF, but the reason I stay is because of all of the other features of living in a first-tier city with all of the natural features of the Bay area: world-class museums, galleries, and performing arts; the quick drive to wine country; walking almost everywhere; fascinating people; friends & family who always want to visit.
Part of the problem with Las Vegas is there is nothing else out there for hours. You have Reno (which has a nice little startup scene and a Tesla gigafactory), but there is just nothing out there. No other cities nearby, no Pacific ocean...
I'm pretty sure the writer himself isn't moving, his linkedin implies he mostly does consultancy: so probably he's just moving this factory and suffering some extra travel.
Its going to suck when virtually every single restaurant and grocery store shuts it's doors in California as the supply side economists have predicted.
Minimum wage is one of those ideas that is evaluated more for its intentions than for its results.
We are only employed as long as we can generate sufficient profit for the company, if salaries are artificially raised you only made some people unemployable.
At the same time though companies that can afford to pay more do and what's more that money is far more likely to wind up in the local economy as poor people spend far more of their income than rich people (or companies for that matter).
Low wages only leads to a race to the bottom, greater inequality, and finally lower growth because the people most likely to spend money don't have any. And based on how most OECD economies have been doing since 2008 it looks like the low growth of the last decade will probably hang around for longer. Unless the inequality shifts this will be low growth like it was during several hundred years of the feudal system.
When you have 17 employees and your all business model still revolves around paying them the minimum wage, then you are not really making profit from selling a product/service, your all profit comes from exploring people (your employees) that are in dire need of food/proper shelter.
Your business is not adding anything positive to the economy so you should actually close the doors and go work for that minimum wage you think it's so great.
The only exception here is if you are just starting and you have very few employees (less than 5). In that case it is acceptable that you can only afford low wages, but that can be remedied with tax cuts for the first few years of a company with no need to still keep the minimum wage so low.
Goddamn employees. The business loses so much money when we have to pay those employees! :/
Soon those 8$ ph employees in Nevada will get squeezed by automation or cheaper employees in some other state/country. And they'll be given the ultimatum, "work more for less or get the boot".
This is a common downwards pointing death spiral in many of the western countries. There's going to be a huge economical squeeze starting with the blue collar workers in the next +10 years. Will be hard to compete with a robot...
"domestically manufactured clothing is more expensive, but retail and wholesale customers who care about quality and working conditions have historically been willing to pay for it"
.. so pass the price rise on to customers? After all, sewing industry is normally one of the first things that gets offshored. But here they're already willing to pay better prices for "ethically" manufactured goods.
This is ridiculous. The guy should be happy. Thanks to higher wages, he will be able to raise his prices and offer better services. Instead, he wants to protect his benefits without evolving his business. No surprise California prefers to value high tech startups who try to pay their employees well.
Why in the world would you think he would be able to raise his prices? For him to sell, he needs to compete with clothing shops in other states (and countries) that don't have the same minimum wage.
Don't try to run the math, it will show that it's not that much for the business in the long run, especially since their labor cost are probably a small fraction of their costs.
I'm supposed to feel bad for an employer who claims to care about his employees—but not so much that he's willing to pay them a living wage? And is willing to incur the cost of moving out of state to avoid paying a rate that won't go into effect until 2021? How much business has he lost? Well... none. But he would. Really. Just like VCRs were the "Boston strangler" of the film industry.
"but not so much that he's willing to pay them a living wage?"
The problem with word choices like that is the implication the human beings working for him are not living, and further, that's OK.
The reality is that "we" are paying the living wage to his employees via higher taxes in very expensive government services so he can pocket more profit than if he responsibly took care of his own employees.
If all the welfare queen small business owners left, tax rates could drop quite a bit. Life would, frankly, improve for everyone except the parasites future hosts in LV and other areas.
By the time minimum wage hits $15, he will be operating at a $200k loss. Are you implying that he is lying about that? Or are you just suggesting that some of the employees would be better off unemployed while the remaining that he could afford pick up the slack? Or would you rather the business fold entirely and all of them become unemployed including the owner?
Another way to think of this would be that if this business can only afford to operate while the state subsidizes its employees dietary, medical, and transportation costs then maybe it is a bad business. Walmart apparently has the same problem.
Luckily, Trump is going to make America great again and will keep all those manufacturing jobs where owners don't like to pay minimum wage because they can't afford to pass on the raise because nobody wants to buy cheap apparel at this price point.
While I understand why the author is complaining, he should much rather complain to all his potential customers that make a purchase decision based on price instead of ethically supporting american workers.
I'm really waiting to see all those voters spend significantly more on "Made in Great America" apparel to make sure to keep all those jobs...
[+] [-] youdontknowtho|9 years ago|reply
EDIT: Jesus. I apologize for making an economic sounding argument for this. I've taken it out. How's this...the wealthy elites need to pay people more for the sake of the stability of the social fabric. Find some economic rational for that if you like. (That's what economists really do anyway...Provide the theoretical underpinnings for the operation of their class.) They need to understand that having slightly smaller profit margins will be good for them as well, in the long run, due to a more stable republic. I understand that, as libertarians, you guys don't think that government can play a part in that. I do. We have a fundamental disagreement about that.
Propitiation follows: I know that all of you guys are very economically literate libertarians. I should never have fronted like I was anywhere in your league. I could tell you were not only attractive but powerful and noble as soon as you came in the room. Your ability to recite the economics that you picked up at Uni is not only impressive but frightening. Surely, your might and prowess will be known through the ages.
[+] [-] hueving|9 years ago|reply
The business that will pick up the slack in this example is one overseas. These employees would lose their job and would be unemployed, not increasing demand with higher wages.
Unless you are hoping trump enacts some seriously strict trade tariffs, it's pretty stupid to believe that every business hit with this raise will survive with the same number of employees due to increased demand.
[+] [-] VLM|9 years ago|reply
What would work would be a nice infusion of inflation. You can spend $X today on Y of labor or Z of capex, or hoard it until next year when the same $X will only buy (0.95)Y of labor or (0.95)Y of capex "stuff", your choice how much "stuff" you want to get for your $X
[+] [-] imaginenore|9 years ago|reply
And no, other businesses won't replace them in CA, because their production costs are higher the moment they start the production. It's basic economics.
And then there are robots.
[+] [-] unknown|9 years ago|reply
[deleted]
[+] [-] fil_a_del_fee_a|9 years ago|reply
[+] [-] JanezStupar|9 years ago|reply
[deleted]
[+] [-] Hondor|9 years ago|reply
That applies to the workers too. If California is growing too rich around them, they might be under-skilled for the local job market and have to move to Nevada for work. Again, Nevada benefits from more labor.
The downside is that people whose skills lock them into insecure industries like this also sometimes put down roots where they live and suffer more when they have to move. But at least they can see it coming. Raising the minimum wage is bound to cost some people their jobs. If it didn't, that would mean employers can actually afford to pay even more and it should be raised further.
[+] [-] hueving|9 years ago|reply
I would take the oppressive heat over the oppressive fog and piss smell of SF if it had the same job opportunities. I know the reason me and the majority of my friends pack into this peninsula like sardines to pay massive taxes, rents, and general COL expenses is purely because of the industry.
Definitely a chicken and egg problem but maybe if the state continues with anti-business and high tax policies, they may accidentally go over board and cause an exodus.
[+] [-] numlocked|9 years ago|reply
[+] [-] bluedino|9 years ago|reply
[+] [-] Trombone12|9 years ago|reply
[+] [-] lintiness|9 years ago|reply
[+] [-] coldtea|9 years ago|reply
Strange how all kinds of business have been able to prosper in places with the same or much higher minimum wage laws...
[+] [-] prostoalex|9 years ago|reply
Food deserts in poor neighborhoods in the US are an example - http://hub.jhu.edu/magazine/2014/spring/racial-food-deserts/ - the margins simply don't make sense, even if the rent is cheap.
[+] [-] hueving|9 years ago|reply
Note that this is basic supply and demand, some businesses sitting right at their maximum labor price point will be shut down.
[+] [-] cmdrfred|9 years ago|reply
[+] [-] amalrik_maia|9 years ago|reply
[+] [-] tankenmate|9 years ago|reply
Low wages only leads to a race to the bottom, greater inequality, and finally lower growth because the people most likely to spend money don't have any. And based on how most OECD economies have been doing since 2008 it looks like the low growth of the last decade will probably hang around for longer. Unless the inequality shifts this will be low growth like it was during several hundred years of the feudal system.
[+] [-] norlowski|9 years ago|reply
He is just saying that this will be a common occurrence.
Discussions like this should always goes back to first principles - you can't force people to pay a certain wage, no matter how good your intentions.
[+] [-] Trombone12|9 years ago|reply
[+] [-] jbmorgado|9 years ago|reply
Your business is not adding anything positive to the economy so you should actually close the doors and go work for that minimum wage you think it's so great.
The only exception here is if you are just starting and you have very few employees (less than 5). In that case it is acceptable that you can only afford low wages, but that can be remedied with tax cuts for the first few years of a company with no need to still keep the minimum wage so low.
[+] [-] ensiferum|9 years ago|reply
Soon those 8$ ph employees in Nevada will get squeezed by automation or cheaper employees in some other state/country. And they'll be given the ultimatum, "work more for less or get the boot".
This is a common downwards pointing death spiral in many of the western countries. There's going to be a huge economical squeeze starting with the blue collar workers in the next +10 years. Will be hard to compete with a robot...
[+] [-] pjc50|9 years ago|reply
.. so pass the price rise on to customers? After all, sewing industry is normally one of the first things that gets offshored. But here they're already willing to pay better prices for "ethically" manufactured goods.
[+] [-] chillydawg|9 years ago|reply
[+] [-] brianwawok|9 years ago|reply
[+] [-] chrisbennet|9 years ago|reply
http://www.forbes.com/sites/eriksherman/2016/01/08/seattle-f...
[+] [-] soufron|9 years ago|reply
[+] [-] hueving|9 years ago|reply
[+] [-] muzz|9 years ago|reply
[+] [-] mattmanser|9 years ago|reply
How could an increase in $5 per hour for minimum wage translate into $40,000 per employee? Worst case scenario:
260 days * 8 hours * $5 increase = $10,400
[+] [-] madebysquares|9 years ago|reply
[+] [-] thatfrenchguy|9 years ago|reply
[+] [-] mcphage|9 years ago|reply
[+] [-] VLM|9 years ago|reply
The problem with word choices like that is the implication the human beings working for him are not living, and further, that's OK.
The reality is that "we" are paying the living wage to his employees via higher taxes in very expensive government services so he can pocket more profit than if he responsibly took care of his own employees.
If all the welfare queen small business owners left, tax rates could drop quite a bit. Life would, frankly, improve for everyone except the parasites future hosts in LV and other areas.
[+] [-] hueving|9 years ago|reply
[+] [-] youdontknowtho|9 years ago|reply
Another way to think of this would be that if this business can only afford to operate while the state subsidizes its employees dietary, medical, and transportation costs then maybe it is a bad business. Walmart apparently has the same problem.
[+] [-] unknown|9 years ago|reply
[deleted]
[+] [-] grundprinzip|9 years ago|reply
While I understand why the author is complaining, he should much rather complain to all his potential customers that make a purchase decision based on price instead of ethically supporting american workers.
I'm really waiting to see all those voters spend significantly more on "Made in Great America" apparel to make sure to keep all those jobs...