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Los Angeles Raises Minimum Wage to $15 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.

Somewhere.....a brain has exploded.
 
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)

Stop this. You're making brains explode.
 
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

The study was done by Nicholas Potter, now a researcher at Washington State University. He said some businesses in Santa Fe did close and some said it hurt their competitiveness. But workers were overwhelmingly positive about the pay hike. And the fear of massive restaurant closures didn’t happen, he said, though the cost of eating out did go up some.

“It seemed to have helped workers and not hurt business too much,” he said.

Potential price increases at restaurants was the biggest negative impact identified by the Berkeley researchers. The cost of eating out went up 2 to 3 percent when the minimum wage rose 25 percent. That means dining out in Seattle could go up as much as 7 percent if the city goes to $15 an hour.

But another Berkeley researcher said there isn’t an overwhelmingly negative impact on any type of business where the minimum wage has been raised.

Actually, "the problem is that" liberals marvel at their idea of 'mystery hole' economics; just as the tourists at hillside shacks are assured that there are gravity holes that violate the laws of physics, and think they see balls rolling up ramps, gullible liberals flock to the partisan showman urging them to see violations of the laws of economics... "see the city where if you increase the cost of labor, nothing happens except folks purchase MORE more labor" and "our souvenir shops sells below cost because we make it up in volume".

Please...

Telling us that the US economy has had the bad idea of MW for 80 years says nothing about how much better it might have been (or might be) for the affected if it had never been established. The longevity of a number of bad economic and fiscal ideas (e.g. tariffs, agricultural subsidies, water and reclamation subsidies, etc.) tells us nothing other than the persistence of public ignorance and/or the power of special vested interests.

The issue is not how well we do in spite of pin-headed prejudices, or whether it affects most people, BUT of what effect it has on those it claims to help, and the consequences to those it does not. Telling us (falsely) that the net result is the same misses the whole point of the controversy - it's as disingenuous as claiming that a new tax that exclusively takes from the poor (and gives a break to the rich) is 'irrelevant' because the net revenue is the same.

THE core ISSUE is not the aggregate effect on an economy (although it may be an issue), but the effect it has on certain trades, people, and income groups.
 
ludin;1064646584]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.
So....what you're saying is, that without some form of MINIMAL amount being REQUIRED of employers to pay their help, they would gladly pay them less and less in order for themselves to make more???
plus that margin that you talk of is being spent to fix or repair things in the restaurant.
First, that was left out in order to dumb this down for some folks. Second, repair costs AREN'T an every year issue, unless they are taking proper care of their equipment. If you have to fix something EVERY YEAR...you're either using it wrong, or you need to get a new one/call in on the warranty.
you also fail to see that some people might not pay $12 dollars for his lunch.
Temporary. For, you see, those people getting paid more at the restaurant or going to SPEND more, and when they DO, OTHER people are going to make more. That's what happens in a consumer economy vs a production economy.
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.
So, the amount they made in profit PRIOR to a rate increase wasn't sufficient all along, and they just wanted an excuse to INCREASE their GM%? You're really not painting a very rosey picture of small business owners, lol.
you also forget that he now has increased taxes that he has to pay for. his tax bill just went up.
Explain.
you leave a lot of factors out of your stacked hypothetical.
Well, yeah, it's a simplified scenario.

By all means, come up with your own and present it.
 
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.

So what you are saying is, you have people who are VITAL to your business, but who's value brought in to the company vary.

And this applies to minimum wage how?
 
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.

Uh, just last year, when they raised minimum wage in CT. A LOT of people got raises. None of the managers, mind you, but almost ALL of the hourlies.
 
Id bet anything that ABOLISHING the minimum wage would make wages raise faster than artificially raising the minimum wage for political reasons.

I'd bet anything that you're wrong.
 
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!

That has happened WITHOUT increases to minimum wage.

Why?
 
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.

So, by making it easier for businesses to operate, money will materialize in people's pockets to spend?
 
So what you are saying is, you have people who are VITAL to your business, but who's value brought in to the company vary.

And this applies to minimum wage how?

In that I can not get by with fewer employees so if $15 an hour became the standard I would have to raise prices to keep them.
 
You're the one that brought up walmart. Sam's club is a part of walmart, and it is a wholesale club, which is what Costco is.


If you didn't like how they stacked up, why did you reference it?

I wrote "Walmart, or some other kind of business". Would it have made a difference to you had I written Target, or other kind of business? Costco is a membership store stocking items in bulk containers or counts, and utilizes a combination of pallet rack slotting and middle of the store racks for a comparatively limited number of sku's. That means they need fewer employees to man and service the operation.

There is no comparison, and holding up Costco as an example of a "liberal" business model with $20/hr jobs ignores this fact.
 
No idea what we're talking about?

LA County has just a shade over 10 million, not 18.55 million.

Los Angeles County QuickFacts from the US Census Bureau

Unemployment rates are not a reflection of the total population, as you have calculated with your 1.4 million figure from the bogus 18.55 million.

The average rent in the City of Los Angeles is indeed $2,043, as reported by Rent Jungle, but rents across the city vary across an extremely wide margin, which throws your calculations into the dumpster.

http://planning.lacity.org/MapGallery/Image/Citywide/CityBoundary.pdf

View attachment 67184610

Perhaps you should reacquaint yourself with the city boundary's, as well as some facts, before staking any intellectual high ground jet57.

Google this: population los angeles and watch what you get.
 
grew up in Vista

pop was stationed at pendleton

love certain things about the state....hate others

the paradise of weather, and beauty has been ruined by the politics of the state

i originally was going to retire there....no more

Either Sante Fe, or El Paso.....just havent decided which

Some of the politics suck that's for sure. But it's (Northern California) still one of the best paces in the world to live.

I don't understand how you can allow politics to spoil a good retirement.
 
Google this: population los angeles and watch what you get.

I did. That's why I didn't question your city population number. Everything else missed the mark by a country mile. Best step down from the perch before another contrarian brings more fact to fiction.
 
Some of the politics suck that's for sure. But it's (Northern California) still one of the best paces in the world to live.

I don't understand how you can allow politics to spoil a good retirement.

Sure if you're rich enough to own property and or buy a home.

Its "No Poor People Allowed "in places like Berkeley and San Fransisco and Palo Alto.

Well that's not right'' its "Middle Class Allowed ".

I mean really, who can retire in a place like Palo Alto?Not your average Middle Class American.
 
Well, yeah, it's a simplified scenario.

By all means, come up with your own and present it.

Why would one wish to spend a mountain of effort with one (of thousands) of hypotheticals to "prove" something? One can just as easily change numbers on sales volume, rent, margin, other costs of doing business etc. to "prove" that a "typical" restaurant owner is as rich as Bill Gates or as poor as St. Francis of Assisi? Now, it happens that the hypothetical offered by Selvin K. was illustrative of a possible business - an owner whose "salary" is very modest 52K a year, and an implied price adjustment of upto 16 percent over 5 years (which was a number I came to using the simplified 1/3rd of labor cost rule) BUT these are just one of hundreds or thousands of possibilities.

What we do know, however is that:


a) 2/3rds of restaurant ventures fail. In other words, the majority don't make survivable profit or lose money (sometimes an owner's entire savings).

b) Whatever the inflation rate in the industry, the hypothetical price increase from min. wage is added on top of that (which causes more business customer loss) or it is taken out of profit (which is likely to be small given the failure rate).

c) All costs are an every year, month, and day issue. If an owner has to pay an average increase in min wage salary of 8-10 percent more per year, its a cost added to rising food, rent, utility, and maintenance costs.

d) In general, shop-keepers don't just absorb it. Its a highly competitive industry and most use alternate strategies to stay afloat: eg, cut food quality, restrict benefits, cut air conditioning, cancel benefit increases, delay or restrict future raises, cut hours, reduce employees, etc.

You don't need a 'scenario', you need a reality check with the everyday challenges of the some who survive, and who do not survive.
 
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I did. That's why I didn't question your city population number. Everything else missed the mark by a country mile. Best step down from the perch before another contrarian brings more fact to fiction.

Oh nonsense. You DID question my population number: a lot of times, people say Los Angeles and they mean - ya'know L.A. at large. Still 800,000 unemployed for that town isn't all that bad in today's market. And everything else was pretty much on target. Look $15 an hour is what's going to be. Pomona's retail space is only $16 a square foot, open up there and you can still pay only $9 an hour minimum which will protect your spread. Don't be ashamed. It's okay if you can't hack the big time.
 
Oh nonsense. You DID question my population number: a lot of times, people say Los Angeles and they mean - ya'know L.A. at large. Still 800,000 unemployed for that town isn't all that bad in today's market. And everything else was pretty much on target. Look $15 an hour is what's going to be. Pomona's retail space is only $16 a square foot, open up there and you can still pay only $9 an hour minimum which will protect your spread. Don't be ashamed. It's okay if you can't hack the big time.

LOL

Give it a rest jet57. You've been thoroughly debunked and exposed. You can't even calculate unemployment correctly. Have a nice weekend. :peace
 
LOL

Give it a rest jet57. You've been thoroughly debunked and exposed. You can't even calculate unemployment correctly. Have a nice weekend. :peace

I've not been debunked by any stretch of the imagination, least of all by you. Exposed as a poster who knows what he's talking about? Okay, I'll accept that.

You just can't hack reality. Oh, and I have a great weekend planned thank you. YOU do the same.
 
Sure if you're rich enough to own property and or buy a home.

Its "No Poor People Allowed "in places like Berkeley and San Fransisco and Palo Alto.

Well that's not right'' its "Middle Class Allowed ".

I mean really, who can retire in a place like Palo Alto?Not your average Middle Class American.

Yeah, I know what you mean. The housing market has been artificially inflated - again: there's no inventory, so when a house comes up there's a feeding frenzy and the place goes for way over asking price, ya'know, which is good if you're moving to Shrubbery Nebraska, but people aren't sellin out because - where ya gonna go? A friend just sold her condo, and bought a 4 bedroom place out in the central valley, to be near here kids (son and family). But why would a retiree buy a 4 bedroom home? So her kids can have it when she's gone.
 
Yeah, I know what you mean. The housing market has been artificially inflated - again: there's no inventory, so when a house comes up there's a feeding frenzy and the place goes for way over asking price, ya'know, which is good if you're moving to Shrubbery Nebraska, but people aren't sellin out because - where ya gonna go? A friend just sold her condo, and bought a 4 bedroom place out in the central valley, to be near here kids (son and family). But why would a retiree buy a 4 bedroom home? So her kids can have it when she's gone.

My Aunt and Uncle live in Berkeley and she teaches at Berkely SoCal.

They're huge Libs but I love them anyway.

Last time they came to Houston we were talking about the Housing situation in California.

I asked what my 2500 Sq Ft home (valued at around 190 k ) would go for in Berkeley. I don't even remember his answer. I was just shocked !!

Unbelievable. They have the best Weather and location in the Country but its so expensive to live there that only the we'll off can manage it.
 
So, by making it easier for businesses to operate, money will materialize in people's pockets to spend?

usually pro-business ideals drive economic activity. that in turns creates more jobs and more demand for workers. higher demand for workers leads
to higher wages as companies seek workers to come work for them.
 
My Aunt and Uncle live in Berkeley and she teaches at Berkely SoCal.

They're huge Libs but I love them anyway.

Last time they came to Houston we were talking about the Housing situation in California.

I asked what my 2500 Sq Ft home (valued at around 190 k ) would go for in Berkeley. I don't even remember his answer. I was just shocked !!

Unbelievable. They have the best Weather and location in the Country but its so expensive to live there that only the we'll off can manage it.

A friend of mine once owned a 3000 sq foot house in Berkeley, sold it for 57K in the late 60s or early to mid 70s. Current worth is 3,000,000. He now lives in some nice Section 8 housing, kicking himself everyday that he sold that house (and joined a SF commune).

As you may have noticed, I do live near Berkeley...except I live in a modest 1210 sq ft house in a so-so, not so great working class area adjacent to the poor area of Richmond. My house value is over 400K BUT I feel like a not successful guy, given that my boss lived in Palo Alto and now Carmel Valley.

I would love to retire in a better area of coastal California but the California I grew up in (1950s and 1960s) in long gone. Back then anyone middle class could live in Marin or near/on the coast. I grew up in the Carmel Valley area (just outside of it) and we thought of it as middle to slightly upper middle class living. A buddy lived in a beach house, with two other students in So. California. A friend of my dad, an enlisted man in the Navy, owned a beach house in the Monterey area. The state had 18,000,000 in population, lots of great country-side and lots of working class small towns (the Wine country being rural farms).

The national and state politics have changed that. Unrestricted foreign immigration has increased the pop to 40,000,000 - all the great little small towns have turned into 'boutique" villages for the best off, and the really nice areas are islands for the most well heeled elite sorts, keeping the remainder of us into a multi-cultural mix of rag-tag immigrants, poorer whites, blacks, etc. I can no longer live in even the lettuce capital of Salinas, the most clean and most boring middle-class town I have ever lived in - now its way too expensive. And, as one might expect, the sense of California history and heritage has been swamped by a replacement population totally disconnected from the prior regional culture.

Beach combers, surfer culture, living on beaches, driving one's cars on beaches, holing up in redwood forests in domes...all that is gone...crushed by population and the heavy hand of government.

The cost of living is very high (from car tags to parking tickets), the sense of community is gone, and it is just a 'place to live'...much like it is just 'a place to visit'. THE ONLY thing that holds me is the climate - I live in an area that, even for the bay area, is almost perfect.

BUT I am looking to move - my retirement here is just too expensive. But where? That is the vexing question.
 
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I'm not sure how you come to that conclusion. If the $ is there right now in the form of transfer payments, it could be there instead in the form of wages.

Have you ever operated a business? Be honest.
 
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