Leaked documents show strong business support for raising the minimum wage
As always, lots of opinion from people who have never taken a risk, used their own money, launched a non-trivial business, ran it for a decade and lived the reality of a competitive imternational marketplace while trying to survive govenrment fucking shit up all around you.<p>Nah, forcing a 50% hike in minimum wage will only have one effect.  And anyone who has operated a non-trivial business for a while knows what that will be.  What was Ross Perot&#x27;s famous line about a huge sucking sound?<p>Do you non-business folks want me to spell it out?  Well, I don&#x27;t have the time to describe all that will happen.  I&#x27;ll just pick one consequence.  This one highhlights the economic tsunami this will be:<p>You only need one, or a handful, of people at minimum wage to destroy jobs and even the very viability of a business.<p>So, you have 50 people earning $15 to $20 per hour today.  Maybe you have another ten earning $25 to $50.  And you have, say, five, earning minimum wage.<p>In five years your minimum wage folks go to $15 per hour.  An incredible 50% raise.<p>The folks making $15 to $20 know this.  They don&#x27;t want to be at minimum wage or thereabouts.  Their wages are likely to have to go up.  What do we do? One group just got a 50% raise.  Do we give everyone a 50% raise?  No, let&#x27;s try $5 per hour.<p>We now go from $15 and $20 to $20 to $25.  In other words, 25% to 3% hike in wages for mid-range employees.<p>Of course, those making $25 to $50 now want their cut.  Let&#x27;s give them $5.  So, $30 and $55 it becomes.<p>On the aggregate, mid-range employees probably represent the bulk of your labor expenses.  Your real costs just went up somewhere around 33%.<p>Can we raise our prices?  Probably not.<p>What we now have is a hit in profitability AND a cashflow squeeze.  And we know we can&#x27;t survive them.<p>Well, fuck it!  Let&#x27;s fire the minimum wage earners and problem solved.  We only have five of them and they triggered this mess.<p>Will that solve the problem?  No.  Your employees know about this new scale out there.  They don&#x27;t think it is fair that they earn anywhere close to what a 14 year old kid can get at Del Taco.<p>Well, shit!  We didn&#x27;t solve the problem.<p>Oh, wait a minute.  A Chinese competitor who understands the math just lowered their prices by 10%, forcing us to follow suit and causing a further squeeze to our finances.<p>We need to take drastic measures.<p>We need to lay-off enough people to remain viable.  We migt even have to shift some of the remaining people to part-time work.<p>The trouble is that we were straining to keep up as it was.  We really can&#x27;t produce enough goods with 25% less man-power.<p>Only one choice remains.  We contract to have our goods and services made and performed in China and India.  We shrink dow to a management and marketing team in the US, get out of the lease for our 50,000 square foor facilty and move into a 1,500 square foot office space.<p>And there you go:  The huge sucking sound you&#x27;ll hear is that of millions of jobs leaving the US.<p>Thanks everyone!  Good job!  We are really good at destroying ourselves from the inside.  They are laughing their asses off in China right now.