Remember being told "you don't understand economics" (Ron Burgundy alert)

[Superman]

Minimum wage hike may force restaurant owner to sell $20 burgers

By Henry FernandezPublished August 02, 2019


https://www.foxbusiness.com/small-b...0XHznqxeNgtlle7eukUgMQjTysAa7tZsCMhaLd_L1Oclw

The minimum wage increase is creating an unintended consequence for small businesses and is forcing one restaurant owner to potentially hike its prices.

Rudy’s and Moomie’s Café in Emeryville, California is considering raising its $13 cheeseburger to a new price of $20 because the new law may cut into their profit margins.

“If we continue to go up and up and up and your cheeseburger that was thirteen dollars today is twenty dollars in two years, I am not sure how that translates into our revenue on a monthly basis,” Rudy’s Café owner Doug Smith told FOX Business’ Robert Gray.

The Congressional Budget Office and other studies have found that a higher minimum wage will lead to layoffs and fewer hours. It is a juggling act for small businesses owners and hitting restaurants particularly hard because of their narrow profit margins. Tipped employees in California cannot make less than the minimum wage as in most other states.

The Bay Area city of Emeryville, California, has the nation’s highest minimum wage at $16.30 an hour, more than twice the federal number and a few bucks higher than the state’s $15.00 rate. It also has one of the highest costs of living in the Bay Area where the median rent for a one-bedroom apartment is $2,840 and homes sell for more than half a million dollars.

 

[ark steel]

Greedy 1%er business owner rolling in the dough wants to keep his Maserati and Yacht.

 

[wig]

has one of the highest costs of living in the Bay Area where the median rent for a one-bedroom apartment is $2,840 and homes sell for more than half a million dollars.

Again, you don't need to raise the minimum wage, you need to drop the property valuation. Let's see CA value homes at the same cost as MT and see how that goes. No need whatsoever for anyone to pay almost 3k for a 1 bedroom apartment. If you're that ******' dumb getting a higher minimum wage isn't going to help you.

Because the second you get your higher wage, the owner of the apartment you live is is going to jack up your rent cause he just had to pay $20 for a ******* burger.

 

[Ironcitysteelers]

Again, you don't need to raise the minimum wage, you need to drop the property valuation. Let's see CA value homes at the same cost as MT and see how that goes. No need whatsoever for anyone to pay almost 3k for a 1 bedroom apartment. If you're that ******' dumb getting a higher minimum wage isn't going to help you.

Because the second you get your higher wage, the owner of the apartment you live is is going to jack up your rent cause he just had to pay $20 for a ******* burger.

Why’s he eating burgers with that rent income

 

[Ron Burgundy]

Because the second you get your higher wage, the owner of the apartment you live is is going to jack up your rent cause he just had to pay $20 for a ******* burger.

Bingo. It ends up, theoretically, being all relative because everyone will raise their prices and workers will demand higher wages to afford higher prices, lather, rinse, repeat. Typically however, prices go up faster than wages since they are more quickly flexible and this results in unemployment. The other problem is that not every job produces say, $15 an hour worth of, uh, productivity, and these are the first ones to go.

 

[Sarge]

How does that affect people on salary? Seems to me salaried individuals would lose an awful lot of buying power.

 

[Aussie_Steeler]

How does that affect people on salary? Seems to me salaried individuals would lose an awful lot of buying power.

It would depend on their bargaining power with their employers - if they are in a strong position they'll demand higher salaries to offset the increased cost of living. I also think the inflationary effects are being exaggerated. I'm not sure how an $8 hour increase in minimum wage would justify a $7 burger price increase.

 

[CharlesDavenport]

It would depend on their bargaining power with their employers - if they are in a strong position they'll demand higher salaries to offset the increased cost of living. I also think the inflationary effects are being exaggerated. I'm not sure how an $8 hour increase in minimum wage would justify a $7 burger price increase.

An $8 increase in minimum wage in that part of CA would be a 50% increase. Currently $16.30. A $20 burger vs. a $13 burger is a 54% increase. Not unreasonable to expect that a 50% increase in labor cost would result in a similar increase in product price in the restaurant industry, where margins are skinny to begin with.

 

[Ron Burgundy]

It would depend on their bargaining power with their employers - if they are in a strong position they'll demand higher salaries to offset the increased cost of living. I also think the inflationary effects are being exaggerated. I'm not sure how an $8 hour increase in minimum wage would justify a $7 burger price increase.

It depends how many employees you have that are under that and you'd have to raise to $15. Also there are other costs and taxes that are a percentage of your payroll that would increase.

For example, when I used to own a small business:
Social Security payroll tax: 7.65%. That FICA deduction in your paycheck is 7.65% but your employer has to match another 7.65% for everyone.
Federal unemployment tax: 6% on the first $7000 of each employee's wages.
State unemployment tax: Varies by state but PA's rate starts out at 3.68% on the first $10,000 of each employee's wages.
Workers' Compensation Insurance: Varies by the risk in your line of work but by the time I sold my company my rate was 11% of total wages.
Liability insurance: Not always tied to payroll, mine was, my rate was about 3%.

So if you have to raise someone's wage from $9/hr to $15/hr then you would need to take $6/hr x hours worked x each percentage above x number of employees x 52 weeks = your extra cost.
If someone works full time at 40 hours a week it isn't just another $240 of cost to the employer, its $240 plus $240 times each of those percentages above for each week.

 

[Superman]

It depends how many employees you have that are under that and you'd have to raise to $15. Also there are other costs and taxes that are a percentage of your payroll that would increase.

For example, when I used to own a small business:
Social Security payroll tax: 7.65%. That FICA deduction in your paycheck is 7.65% but your employer has to match another 7.65% for everyone.
Federal unemployment tax: 6% on the first $7000 of each employee's wages.
State unemployment tax: Varies by state but PA's rate starts out at 3.68% on the first $10,000 of each employee's wages.
Workers' Compensation Insurance: Varies by the risk in your line of work but by the time I sold my company my rate was 11% of total wages.
Liability insurance: Not always tied to payroll, mine was, my rate was about 3%.

So if you have to raise someone's wage from $9/hr to $15/hr then you would need to take $6/hr x hours worked x each percentage above x number of employees x 52 weeks = your extra cost.
If someone works full time at 40 hours a week it isn't just another $240 of cost to the employer, its $240 plus $240 times each of those percentages above for each week.

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[Troglodyte]

An $8 increase in minimum wage in that part of CA would be a 50% increase. Currently $16.30. A $20 burger vs. a $13 burger is a 54% increase. Not unreasonable to expect that a 50% increase in labor cost would result in a similar increase in product price in the restaurant industry, where margins are skinny to begin with.

No, think of it this way: If a restaurant owner has ten employees he now has to pay an additional $7/hr. ($70 total) and he sells 40 burgers an hour, he has to increase the price $1.75/burger to cover that cost.

 

[Superman]

No, think of it this way: If a restaurant owner has ten employees he now has to pay an additional $7/hr. ($70 total) and he sells 40 burgers an hour, he has to increase the price $1.75/burger to cover that cost.

Ron Burgundy can take his rektonomiks degree and **** off. Flog has spoken!

 

[Superman]

that ****** better hope he sells 40 burgers in an hour, too.

 

[xjx]

An increase in minimum wage will increase inflation.

 

[Troglodyte]

that ****** better hope he sells 40 burgers in an hour, too.

If he isn’t, he sure as hell doesn’t need ten employees.

 

[oneforthebus]

No, think of it this way: If a restaurant owner has ten employees he now has to pay an additional $7/hr. ($70 total) and he sells 40 burgers an hour, he has to increase the price $1.75/burger to cover that cost.

Right...as long as you don't figure in increases in payroll taxes and increased cost of supplies from suppliers who also have to raise payroll. And also covering the hours where employees aren't selling burgers but are prepping, setting up, cleaning etc. Of course in liberal La La Land none of those things exist.

 

[Superman]

If he isn’t, he sure as hell doesn’t need ten employees.

your faulty analogy, not mine.
hopefully your condescension allowed you to review onefor's post as well.

 

[Troglodyte]

Right...as long as you don't figure in increases in payroll taxes and increased cost of supplies from suppliers who also have to raise payroll. And also covering the hours where employees aren't selling burgers but are prepping, setting up, cleaning etc. Of course in liberal La La Land none of those things exist.

No, the ten employees includes cooks, dishwashers, busboy. etc. you don’t need ten waiters to sell 40 burgers an hour.

And you’re not figuring in what those employees do with their extra $56/day in earnings.

 

[Superman]

No, the ten employees includes cooks, dishwashers, busboy. etc. you don’t need ten waiters to sell 40 burgers an hour.

And you’re not figuring in what those employees do with their extra $56/day in earnings.

you keep changing your faulty analogy. maybe someday it'll get realistic.
those extra earnings? taxed in some way or another. cuz gubmint gotta grow

 

[CharlesDavenport]

Socialism is great with the spend money thing, not so much with the make money thing.

 

[Booted]

Now flog is an expert in the restaurant industry. I would welcome tibs' take as at least he accomplished things in this area.

 

[Troglodyte]

you keep changing your faulty analogy. maybe someday it'll get realistic.
those extra earnings? taxed in some way or another. cuz gubmint gotta grow

What changed in my analogy? How is it faulty?

And extra earnings are bad because they’ll be taxed? JFC!

 

[Booted]

What changed in my analogy? How is it faulty?

And extra earnings are bad because they’ll be taxed? JFC!

There's a lot more to it than employee income tax. ****, that's the last of the employer's concern.

 

[Superman]

What changed in my analogy? How is it faulty?

And extra earnings are bad because they’ll be taxed? JFC!

oh, by all means, do tell us idiots how this will make everything better.
we await your majestic education on all things economic, flog.

 

[Troglodyte]

oh, by all means, do tell us idiots how this will make everything better.
we await your majestic education on all things economic, flog.

Well, it will reward people who are willing to work the least desirable of jobs and much, if not all, of what they earn they will put right back into the economy.

Now, using a burger joint as a model, show how a $7 increase in minimum wage would result in an even larger increase per burger.