Knee-jerk anti-government sentiment is not a viable political philosophy.
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.
President Donald J Trump, 45th President of the United States of America. A victory born in the hearts and minds of Everyday Americans
So , let's use some easy #s,
Total Costs = 1,000,000
Margin = 52,600
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....)
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.
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.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.
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.
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.
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.
"I never meant to say that the Conservatives are generally stupid. I meant to say that stupid people are generally Conservative. I believe that is so obviously and universally admitted a principle that I hardly think any gentleman will deny it." --J.S. Mill
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.