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Los Angeles Raises Minimum Wage to $15 an Hour

Thank you for reading your bumper sticker. That doesn't make it so and insulting hard-working Americans by calling them "losers" doesn't help your case. The reality is low earning workers are constrained at what they can purchase. If they earned more, they could consume more. Remember, their earnings are your income. If they have more income, you get more sales, which means you earn more.

Moreover, when minimum wage workers get raises, their pay bumps up against supervisory workers, who then demand higher wages.

Contrarily, a pay raise for minimum wage Americans is a pay raise for everyone else.

If you are making a minimum wage job your career then you are not hard working.

Name one time raising the minimum wage resulted in a raise for the people who actually did work hard for their salary? Ill go watch paint dry while you desperately search for that unicorn.
 
No, that would be on top of the typical amount of inflation.



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.

Nowhere did I say it wasn't on top of the otherwise inflation. I just said restaurants regularly manage those size of "difficulties".

Your link mentions health concerns, fragmentation in the sector, and lack of innovation as drivers of the decline, not price.

Got something that actually supports your claim?
 
No, that would be on top of the typical amount of inflation.



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.

we don't buy ice cream anymore unless it is on sale or a buy one get one type of deal. why? to expensive.
 
If you are making a minimum wage job your career then you are not hard working.

Name one time raising the minimum wage resulted in a raise for the people who actually did work hard for their salary? Ill go watch paint dry while you desperately search for that unicorn.

for all the minimum wage increases I never got a raise above my normal one. my job was devalued and I lost money due to price increase as people adjusted their amounts upward.
 
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.


SMH.
The owner's salary is included in the total labor costs.
 
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.

You can intentionally misrepresent my point all you want, but you just destroyed your own argument.

You said an option is to let some of them go. Pick one, two, three.... Now maintain the same # (variety) of services you offered before.
 
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.

It would appear you have assumed the labor cost of non-minimum wage employees would remain constant. Is it not reasonable to assume a current employee who has received merit increases would expect a pay increase as well? Do you think such an employee would be satisfied that a new unskilled, employee would be making as much as they were?
 
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.


your math, and your assumptions are actually quite reasonable here....up to a point

so 12% inflation on food prices.....but you forgot about a few things

lets also assume they lose just a few customers because of price increase

now....you only addressed the minimum wage workers

what about the rest of the staff?

is the guy who has been there for eight years, never missed a shift, and now a shift supervisor staying at his 15.50 rate?

what about the rest.....if the newbies, or no skills are coming in at $ 15, what do you now pay those who have been there with you for awhile, and earned their place?

what kinds of raises do they all get? or do they....and if not, what happens to morale in your shop?

we can get back to that.....

if your prices are going up 12%, what do you think the rest of the businesses are having to do?

what will that do to total prices you are paying for everything else?

will your suppliers keep their same prices?

so, lets say overall prices increase 6-8% city wide.....again an assumption

so who has benefitted?

a. the city has.....you earn more, you pay taxes on more
b. the state has....same reasoning
c. the feds have....same reasoning
d. the unions have....most of their contracts are based off of minimum wage numbers

have the MW workers really benefitted?

who has been hurt?

the fixed income people....the seniors on social security who have to wait for their raises in their checks AFTER the inflation has already occurred

so is it worth it?

you tell me
 
It would appear you have assumed the labor cost of non-minimum wage employees would remain constant. Is it not reasonable to assume a current employee who has received merit increases would expect a pay increase as well? Do you think such an employee would be satisfied that a new unskilled, employee would be making as much as they were?

his percentages are also wrong. it is 30-35% of total costs not 25-30% he is aiming on the low side.
he leaves out a ton of factors.
 
It would appear you have assumed the labor cost of non-minimum wage employees would remain constant. Is it not reasonable to assume a current employee who has received merit increases would expect a pay increase as well? Do you think such an employee would be satisfied that a new unskilled, employee would be making as much as they were?

Other than the owner (well paid), manager (pretty well paid), do you think many employees in a restaurant are outside of the MW and the subMW (tipped) pay range?
 
Id bet anything that ABOLISHING the minimum wage would make wages raise faster than artificially raising the minimum wage for political reasons.
 
his percentages are also wrong. it is 30-35% of total costs not 25-30% he is aiming on the low side.
he leaves out a ton of factors.


Common Food & Labor Cost Percentages | Chron.com
Fast food (where a lot of these MW are... or rather, an operation which relies MORE proportionally on MW workers as a fraction of the business personnel) it is not 30-35%, it is 25-30% .


curious you ignored the part about owner salary.
 
his percentages are also wrong. it is 30-35% of total costs not 25-30% he is aiming on the low side.
he leaves out a ton of factors.

they were close enough for me to make my remarks

and yes....he left out quite a few "other" things
 
Nowhere did I say it wasn't on top of the otherwise inflation. I just said restaurants regularly manage those size of "difficulties".

So what you are saying is that if the restaurant can handle X then obviously they can handle 2X. Clearly there is no logical flow to your assertion.

Your link mentions health concerns, fragmentation in the sector, and lack of innovation as drivers of the decline, not price.

And I am pointing out to you that claiming that the consumer has adapted to the higher prices is absurd given that ice cream sales are declining.

If Ben & Jerrys cut the cost of a pint by $1 what would happen to sales of Ben & Jerrys pints?

Got something that actually supports your claim?

Do you? You made the gratuitous assertion that consumers have adapted to higher ice cream costs. It's your job to show that in the face of declining ice cream sales that price isn't a factor.
 
SMH.
The owner's salary is included in the total labor costs.

you have left out about 1000 different factors.

one your super goes I am making 16 that isn't fair I need more money my job is more difficult. then your manager does the same.

you also left out the fact that now the guy that supplies your food now has to up his prices to pay for his labor costs increases.

you are looking at way more than 1.25 to cover all the cost increases that you are going to get
not to mention the tax bill.

your stacked hypothetical fails.
 
his percentages are also wrong. it is 30-35% of total costs not 25-30% he is aiming on the low side.
he leaves out a ton of factors.

Oh, I'd say about two tons. And you are correct about labor costs. They typically run much higher.

Labor Costs as a Percentage of Revenue in Food & Beverage | Chron.com

Labor Costs

According to the Restaurant Report website, labor costs in the food and beverage industry account for 22 to 40 percent of total sales. In other words, for every $1 in sales, a restaurant spends up to 40 cents in labor costs. Coupled with food costs, some industry trade groups places these costs at 50 to 75 percent of sales.​

As a side note. What is the economic impact of effectively locking out young people from getting their first jobs? How much turn over will there be at $15/hr? In the case of Los Angeles, do people understand that the vast, and I mean almost exclusive, majority of the MW workforce is Spanish speaking? A big percentage of them are shadow workers. Peasants from Mexico and farther south. The will never leave their jobs. How are kids supposed to earn some kind of job experience?
 
Common Food & Labor Cost Percentages | Chron.com
Fast food (where a lot of these MW are... or rather, an operation which relies MORE proportionally on MW workers as a fraction of the business personnel) it is not 30-35%, it is 25-30% .


curious you ignored the part about owner salary.

Food Service Industry: Labor Cost Standards | Chron.com

Varying industry standards put labor costs between 30 to 35 percent of the restaurant's total sales.

so once again you are 100% wrong.

it's in the article you posted yourself but didn't read. supervisors and managers are people to and they eat into the cost of the business.
they will want more than minimum wage to do their jobs.

the average supervisor pay is 15.36 an hour
so he will only be making 36 cents above minimum wage.

average manager pay is 20 an hour.

both of them will want raises.
 
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Other than the owner (well paid), manager (pretty well paid), do you think many employees in a restaurant are outside of the MW and the subMW (tipped) pay range?

Absolutely. I think you've got a picture of some kind of restaurant in mind, and you're fitting your example and math to it. Perhaps a Subway, or some other restaurant is what your picturing, but they are not the typical operation.

This site might help you with the vision you have in your mind.

http://www.foodservicewarehouse.com/education/restaurant-management-and-operations/how-to-determine-what-staff-you-need/c27996.aspx

Whether opening a restaurant for the first time, or simply hiring due to employee turnover, be prepared to keep constant tabs on your staffing needs. In the restaurant industry, a manager often needs to hire for the same position more than once. Learn to determine which positions you need to successfully run the business in order to find and keep the best staff members.


Know Your Staffing Needs

If you are opening a restaurant for the first time, you will need to determine your staffing needs with as much accuracy as possible. Even if you have run your business for a while and need to hire again, consider the following first:
•The type of restaurant you run (ie: fine dining, casual dining, fast food etc.)
•The type of food service you offer (ie: deli-style, buffet-style, fine-dining, etc.)
•The type of food on your menu—this determines what you need to cook and which kitchen stations you require
•The number of tables or seats available in your restaurant--this determines the number of servers you will need.

After you operate the restaurant for a while, you will begin to see the shifts and trends in daily and weekly business, and you will get a feel for which people—and how many people—you need for each part of the day.

staffing.JPG
 
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.

Greetings, ocean515. :2wave:

We're in a race to the bottom, and it's working, because the ripple effect of this has not been considered. They are concentrating on the minimum wage jobs, because it's easy to manipulate those people into believing they have been taken advantage of, IMO. What's going to happen when those people discover that things they buy elsewhere suddenly cost 50 percent more than they used to? What will they have gained?

Mark Forbes had an interesting op-ed in the NY Times on minimum wage dated April 3, 2014. It showed that only the government would benefit, since more people would now be paying taxes to both Federal and State coffers, plus other benefits would be reduced or eliminated, like subsidies for health care and so forth. This is just a new tax on employees and customers, because businesses will have to charge more to offset higher wages - OR eliminate jobs, or probably both! It won't be limited to just McDonalds, either!
 
Greetings, ocean515. :2wave:

We're in a race to the bottom, and it's working, because the ripple effect of this has not been considered. They are concentrating on the minimum wage jobs, because it's easy to manipulate those people into believing they have been taken advantage of, IMO. What's going to happen when those people discover that things they buy elsewhere suddenly cost 50 percent more than they used to? What will they have gained?

Mark Forbes had an interesting op-ed in the NY Times on minimum wage dated April 3, 2014. It showed that only the government would benefit, since more people would now be paying taxes to both Federal and State coffers, plus other benefits would be reduced or eliminated, like subsidies for health care and so forth. This is just a new tax on employees and customers, because businesses will have to charge more to offset higher wages - OR eliminate jobs, or probably both! It won't be limited to just McDonalds, either!

There are always consequences to actions, and there seem to be many obvious ones that the proponents appear to want to ignore. I am a firm believer in paying employees a decent wage in return for decent effort. I also recognize there are unscrupulous employers always eager to exploit workers. However, this magic $15/hr number has me baffled.

Where did $15/hr come from? All those economist Perez referenced haven't mentioned $15/hr. In fact, their analysis fell far short of that number, and in fact, cautioned about increases below $15/hr that would harm the economy.

So why $15/hr? Who is behind this magic number? The only group I see pushing $15/hr is the crooks at the SEIU. Yet Seattle, Los Angeles, Oakland, San Francisco, and other cities have picked this bullet out of the air.

What's up with $15/hr?

I sense big doings, by big labor, behind closed doors......:?
 
You can intentionally misrepresent my point all you want, but you just destroyed your own argument.

You said an option is to let some of them go. Pick one, two, three.... Now maintain the same # (variety) of services you offered before.

It is an option for some. Case in point the Chevy dealership I used to work for had a new consultant come in and fired all the hourly paid workers in the shop. That eliminated the tire guys and the sweepers. Problem there is that the commissioned service techs were responsible for cleaning their work areas, which cut down on overall productivity and pissed off the techs who were then cleaning floors instead of turning profitable hours. There is no labor op for mopping a floor. My shop is smaller. One guy is paid hourly, the office help is paid hourly, one guy is straight commission. I get that you want to be right here, but no amount of squirming is going to make it so.
 
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.

First, MTAtech (a self-described liberal), provided a prior link for his "evidence" that said as much, the article quoted even MW supporter economists such as Reich (or Potter) said that at 15 dollars an hour, the assurances of "no worries" no longer longer apply. In other words, the 'libs' on this issue are even ignoring the experts on their own side.

Second, 600 economists on a letter for a modest increase (most of them not labor economists) is a pretty small sample - there are at least 15,000 (or more) US economists. However, depending on which poll you use, it should be mentioned that somewhere between a third to one half of economists support some kind of minimum wage, although fewer than the US population. But even they don't do so because they use 'economic reasoning' or are even familiar with labor market modeling (as my friend, a full-time non-labor economist, reminds me).

Third, letters like this represent political (not economic) choices - they reflect the political "feelings" and gut moralisms. The typical "justifications" of minimum wage by supporting economists are as banal and subjectively driven as that as that of a brick layer or truck driver (probably more so).

In Marginal Revolution there was a short article that underscored that reality. It described Dan Klein's survey work is the sociology of the economics profession which noted how little actual economic reasoning informs the MW opinions of those economists who favor minimum wages. Reading the simplistic and clichéd justifications of these Ph.D.'s made me cringe, as if after interviewing a representative sample of MD's, one discovers that in spite of their training, it believe that we ought to listen to Christian Scientists and ignore medical care.

Their non-economic 'reasoning' stand out as exceedingly cliched batch of political moralisms ...among them:

"regardless of its (bad) effect on efficiency, minimum wage is necessary to support the 'mores' of our society, just like our 'mores' don't permit child labor"
"it provides greater equality of income and respect, which is associated with better democracy - this is a near consensus in our society"
"it reduces poverty and inequality" (by the way, it does not).
"its just fair and society has the power to determine outcomes to make it fair"
"it provides economic justice"
"people should have pride, they should not feel like losers"
"without it our sense of community is undermined, which undermines social norms and the social behavior of those on the bottom".
"reducing wage inequality increases the quality of democratic institutions".
"less likely to become dependent on public programs, more incentive for work, more at stake in the system".

What struck me as interesting is that in spite of a graduate education is economics they don't "think" about political theory, philosophy, or normative/moral questions above the level of the usual 'liberal' clique.

The just "feel" what is right.

Sad...very sad.
 
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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.

Nein. You vill produce zee units. Seriously, all BMW bumpers are equal, so there's little doubt that the German fellow in a fully automated production plant can vastly out produce the third world sweat shop, and therefore can command a much higher wage based on "units". As you point out, however, we don't all work producing something where quality is the minimum acceptable.
 
First, MTAtech (a self-described liberal), provided a prior link for his "evidence" that said as much, the article quoted even MW supporter economists such as Reich (or Potter) said that at 15 dollars an hour, the assurances of "no worries" no longer longer apply. In other words, the 'libs' on this issue are even ignoring the experts on their own side.

Second, 600 economists on a letter (most of them not labor economists) is a pretty small sample - there are at least 15,000 (or more) US economists. However, depending on which poll you use, it should be mentioned that somewhere between a third to one half support some kind of minimum wage. But even they don't do so because they use 'economic reasoning' or are even familiar with labor market modeling (as my friend, a full-time economist, reminds me).

Third, letters like this represent political (not economic) choices - they reflect the political "feelings" and gut moralisms. They typical "justifications" of minimum wage by such supporters are as banal and subjectively driven as that as that of a brick layer or truck driver (probably more so).

In Marginal Revolution there was a short article that underscored that reality. It described Dan Kein's work on the sociology of the economics profession, noting just how little economic reasoning actually informs the opinions of those economists of stature who favor minimum wages. Reading the simplistic and clichéd justifications of these Ph.D.'s made one cringe, as if he/she had interviewed a representative sample of MD's and then discovered in spite of their training, it did not change their belief that we ought to ignore medical care.

Their non-economic 'reasons' stand out as exceedingly cliched political moralisms ...among them:

"regardless of its (bad) effect on efficiency, minimum wage is necessary to support the 'mores' of our society, just like our 'mores' don't permit child labor"
"it provides greater equality of income and respect, which is associated with better democracy - this is a near consensus in our society"
"it reduces poverty and inequality" (by the way, it does not).
"its just fair and society has the power to determine outcomes to make it fair"
"it provides economic justice"
"people should have pride, they should not feel like losers"
"without it our sense of community is undermined, which undermines social norms and the social behavior of those on the bottom".
"reducing wage inequality increases the quality of democratic institutions".
"less likely to become dependent on public programs, more incentive for work, more at stake in the system".

What struck me as interesting is that in spite of a graduate education is a social science, and of accomplishment and stature in their field, those interviewed don't seem especially knowledgeable or skilled in analyzing normative questions - they don't "think" about political theory, philosophy, or normative/moral questions above the level of the usual 'liberal' clique.

The just "feel" what is right.

Sad...very sad.

Well stated. And yes, sad indeed.

As you have so well summarized, the approach this Administration, and it's supporters and followers take, is adversarial. Instead of creating a unified strategy that is inclusive and well thought out, it is a manipulative effort full of clichés and claims, with "enemies" to be vanquished, and victors to share in the spoils.

And left in the dust in this case, are the very people who risk everything to employ the majority of the working people in this country.

As you so well concluded, the foundation is not based in a solid understanding, but in what "feels" right - A well identified "emotional" response to issues and challenges the left is hard pressed to deny.
 
Well stated. And yes, sad indeed.

As you have so well summarized, the approach this Administration, and it's supporters and followers take, is adversarial. Instead of creating a unified strategy that is inclusive and well thought out, it is a manipulative effort full of clichés and claims, with "enemies" to be vanquished, and victors to share in the spoils.

And left in the dust in this case, are the very people who risk everything to employ the majority of the working people in this country.

As you so well concluded, the foundation is not based in a solid understanding, but in what "feels" right - A well identified "emotional" response to issues and challenges the left is hard pressed to deny.

you want higher wages create demand for more skilled workers. that means though that you have to get demand going.
by creating pro-business rules and regulations.

that is where this administration and people like it fail. it is the same reason that businesses are holding onto 1.5+ trillion dollars and not spending it.
 
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