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Thread: Los Angeles Raises Minimum Wage to $15 an Hour

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    Re: Los Angeles Raises Minimum Wage to $15 an Hour

    Quote Originally Posted by Unrepresented View Post
    Thread synopsis: California's economy is compared unfavorably to republican controlled states, notably Texas. Predictions of it crumbling into the sea amid cheers are high.
    Actually, Texas isn't doing as well as it could, because of the price of oil dropping. That is making oil profits less, and fracking less economical
    No one needs a war more than a Politician who is low in the Polls.

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    Re: Los Angeles Raises Minimum Wage to $15 an Hour

    Quote Originally Posted by jmotivator View Post
    I like how the Labor department puts out propaganda like this where they make blanket denials without actually linking to sources.

    It's also a nice touch that their first denial is really a tacit admission that the economy really sucks.
    Well, shouldn't be surprising that the ubber Liberal/Progressive Secretary of Labor, Thomas Perez, would put his stamp of approval on such propaganda. Spend enough time reviewing their messaging campaign, and it's quite obvious the methodology is the same, no matter where it's presented.

    Headlines, and claims, with very little meat. Exactly what the target audience has been trained to swallow.

    "If 600 economists, seven of them Nobel Prize winners in economics, have said no problemo to increases in minimum wage, deeeang it all, must be A-OK. Count me in".

    Except, most economists have put a cap on those increases where big negatives kick in. Any discussion in Perez marketing piece about his good friends in the labor Unions pushing for $15/hr? Hmmm. Nothing. Just a big goober laden kiss on how awesome an increase in the minimum wage would be, and how any concerns are just myths.

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    Re: Los Angeles Raises Minimum Wage to $15 an Hour

    Quote Originally Posted by MTAtech View Post
    The minimum wage is 80 years old and yet America continues to have a resilient and robust economy.

    The problem is that the myths that conservatives convince themselves are real, like increasing the minimum wage will cause people to lose their jobs and it will drive out small businesses, are not real.
    Minimum Wage Mythbusters - U.S. Department of Labor
    So raising the minimum wage, no matter how much, has no effect on employment?

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    Re: Los Angeles Raises Minimum Wage to $15 an Hour

    Quote Originally Posted by ludin View Post
    yep and they know they can't afford to pay a dishwasher 15 bucks an hour.
    Quote Originally Posted by ludin View Post
    yep and they know they can't afford to pay a dishwasher 15 bucks an hour.
    Standard restaurant model: total labor costs (MW workers, subMW workers, Managers, etc) = 25-30% of total costs, and operate at ~5% margin
    So , let's use some easy #s,

    Total Costs = 1,000,000
    Revenues= 1,052,600
    Margin = 52,600
    LaborCost_LOW=250,000
    LaborCost_HIGH=300,000


    Assume MW = 1/2 of total LaborCosts
    In LaborCost_LOW that would be 125,000
    In LaborCost_HIGH that would be 150,000

    Let's assume that you now need to double this (to make the math easier....)

    NEW:
    LaborCost_LOW: 375,000
    LaborCost_HIGH: 450,000
    TotalCost_LOW: 1,125,000
    TotalCost_HIGH: 1,150,000
    To maintain a ~5% margin, ceteris paribus
    Revenue_LOW = 1,184,000
    Revenue_HIGH = 1,211,000

    So Revenue needs to increase by ~
    Either 132,000 or ~158,000

    Since this place is running on ~1.05M in revenue, let's assume a ticket averages $10
    They are moving then 105,000 tickets a year.

    To recoup 132,000 or ~158,000 they would have to increase ticket price by
    1.25$ or $1.50 (~12-15%) --- in other words, the typical amount of inflation that
    restaurants face in a 5-6 year window anyways.


    Now before you go bat guano crazy, consider in the last decade, ice cream has gone up in price (at least here) by about $1 (~20%) while decreasing the volume by ~25% in the container. Hence a net change per unit volume of ~47%----- Consumers weather gradual price increases far more robustly than you give them credit for if the good/service is worth "it" or is unique.

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    Re: Los Angeles Raises Minimum Wage to $15 an Hour

    Quote Originally Posted by tech30528 View Post
    We don't need to know macro, we know as a percentage what our cost of employment is. If the COE is now 30% and it doubles, that has to be made up somewhere. One way to do it is to employ fewer people (expect that) and the other is to raise prices. So while doubling employment cost does not double prices, it may very well lead, in this example, to a 20-25% increase in order to stay in business. I did my payroll last night. If we were required to pay a minimum wage of $15 an hour my payroll costs would go up about 30% and I would have to increase my labor rate to compensate. It's just simple math, it doesn't take a couple of years of college and theoretical study. I run my bank numbers at least once a day, I always know where the business is financially. The assumption that businesses can just write bigger checks is sophomoric at best. Most businesses are not publicly traded. Assuming that companies can offset increased pay scale by shorting dividend payments simply does not apply, and for those who are publicly traded doing so would pretty much tank future investments.

    If you can make the same # of units with less employees, you shouldn't have been employing that many people to begin with (in a quasi self-fiduciary responsibility sense, although the altruism would be nice)

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    Re: Los Angeles Raises Minimum Wage to $15 an Hour

    Quote Originally Posted by SlevinKelevra View Post
    To recoup 132,000 or ~158,000 they would have to increase ticket price by
    1.25$ or $1.50 (~12-15%) --- in other words, the typical amount of inflation that
    restaurants face in a 5-6 year window anyways.
    No, that would be on top of the typical amount of inflation.

    Now before you go bat guano crazy, consider in the last decade, ice cream has gone up in price (at least here) by about $1 (~20%) while decreasing the volume by ~25% in the container. Hence a net change per unit volume of ~47%----- Consumers weather gradual price increases far more robustly than you give them credit for if the good/service is worth "it" or is unique.
    Ice cream sales are declining so I wouldn't be so sure that the copnsumer is adapting to the increase in prices the way you think they are.
    Give a man a fish and he eats for a day. Teach a man to fish and he stops voting for the Free Fish party.

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    Re: Los Angeles Raises Minimum Wage to $15 an Hour

    Quote Originally Posted by SlevinKelevra View Post
    Standard restaurant model: total labor costs (MW workers, subMW workers, Managers, etc) = 25-30% of total costs, and operate at ~5% margin
    So , let's use some easy #s,

    Total Costs = 1,000,000
    Revenues= 1,052,600
    Margin = 52,600
    LaborCost_LOW=250,000
    LaborCost_HIGH=300,000


    Assume MW = 1/2 of total LaborCosts
    In LaborCost_LOW that would be 125,000
    In LaborCost_HIGH that would be 150,000

    Let's assume that you now need to double this (to make the math easier....)

    NEW:
    LaborCost_LOW: 375,000
    LaborCost_HIGH: 450,000
    TotalCost_LOW: 1,125,000
    TotalCost_HIGH: 1,150,000
    To maintain a ~5% margin, ceteris paribus
    Revenue_LOW = 1,184,000
    Revenue_HIGH = 1,211,000

    So Revenue needs to increase by ~
    Either 132,000 or ~158,000

    Since this place is running on ~1.05M in revenue, let's assume a ticket averages $10
    They are moving then 105,000 tickets a year.

    To recoup 132,000 or ~158,000 they would have to increase ticket price by
    1.25$ or $1.50 (~12-15%) --- in other words, the typical amount of inflation that
    restaurants face in a 5-6 year window anyways.


    Now before you go bat guano crazy, consider in the last decade, ice cream has gone up in price (at least here) by about $1 (~20%) while decreasing the volume by ~25% in the container. Hence a net change per unit volume of ~47%----- Consumers weather gradual price increases far more robustly than you give them credit for if the good/service is worth "it" or is unique.
    yea well what you forgot was that that 52k is maybe what the owner takes. he has to make a pay check and I doubt he will make 52k a year. he will want a bit more.
    plus that margin that you talk of is being spent to fix or repair things in the restaurant.

    you also fail to see that some people might not pay $12 dollars for his lunch.
    so they will lose some customers. also no business person raises prices to break even. they raise prices above the break even.
    so his price would go from 10 to 15 dollars.

    you also forget that he now has increased taxes that he has to pay for. his tax bill just went up.
    you leave a lot of factors out of your stacked hypothetical.
    Last edited by ludin; 05-22-15 at 10:45 AM.

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    Re: Los Angeles Raises Minimum Wage to $15 an Hour

    Quote Originally Posted by SlevinKelevra View Post
    If you can make the same # of units with less employees, you shouldn't have been employing that many people to begin with (in a quasi self-fiduciary responsibility sense, although the altruism would be nice)
    Yeah, except I don't produce "units", I fix cars, and not all mechanics or technicians are created equal. I have a guy who makes $12 who is great for brakes, suspension work and simple maintenance, and I have a top guy who can diagnose complex issues who makes twice that. I have someone who works in the office who also makes $12 an hour, her production is more difficult to calculate since she doesn't actually produce labor hours but is necessary to make the rest of our operations more efficient. This isn't theoretical, it is reality.

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    Re: Los Angeles Raises Minimum Wage to $15 an Hour

    Quote Originally Posted by KLATTU View Post
    So raising the minimum wage, no matter how much, has no effect on employment?
    LA didn't make this decision in a vacuum. They were going by the research http://irle.berkeley.edu/cwed/briefs/2015-01.pdf

    Nobody said that raising the minimum wage to a million dollars a year wouldn't have impacts. What we do know is that if the MW kept up with inflation, the $1.60 MW of 1968 would be $10.88 today.
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    Re: Los Angeles Raises Minimum Wage to $15 an Hour

    Wow, this is like so cool to see my hometown lead the way toward social justice. It's about time rich people in big corporations paid there employees a living wage. I only wish they had made it $50 an hour, or even $100. The capitolist class is just greedy and doesnt care about the people. Its high time we stuck it to the rich. If there is not enough money to go around we can just have President Obama print some more. He is like super smart about economical stuff, he really gets it. Only to bad he cant run for a third term like that Teddy Roosevelt.

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