Putting numbers to the minimum wage debate

[jmowreader]

I am Joe Storeowner. I have a retail establishment that sells $100,000 worth of good merchandise per day, and employs 100 people. I only have to pay them $7.25 per hour.

If the evil Federal Government raises the minimum wage to $10 per hour, I must increase the pay of my minimum-wage workers by $2.75 per hour. After I do that, the ungrateful slackers I pay more than minimum wage come to my office and demand I also give them a $2.75 per hour raise, which adds $2200 per day to my payroll expense.

Someone has to pay for this insanity, and it's going to be all those worthless liberals who forced this on me. I sit down and do some numbers, and quickly realize I can recoup my losses by raising my prices 2.2 percent. Decimal percents are a pain to deal with in pricing, so I raise my prices three percent.

Strange thing: I raised the prices of my $25 pants to $25.75, and now I'm selling more of them than ever before.

[Travis_0004]

1. I think your figure of 2.2% is a bit optomistic, but I get your point.

[jmowreader]

2. It depends on your business

A Walmart with 500 employees and $300,000/day in sales would see payroll increase of 3.6 percent by doing this...causing $25 packages of meat to become $26 packages of meat if they round up, or $25.90 if they don't. Contrast that with the 137 percent increase in the standard of living of the people receiving the raise and it looks a little bit silly.

[obxhead]

3. Coupled with the fact that those receiving the increased wage will

give all (or more) of it back through their increased spending.

The economy EXPLODES in positive ways when the spenders are given money to spend.

[jmowreader]

4. Exactly, and the cost to business is not high

They won't give it all (or any of it) back to their employers, necessarily - someone who works at a motorcycle shop but doesn't have a motorcycle wouldn't spend much money there - but the business owner will see increased revenues.

[obxhead]

5. someone that works at Walmart

Will likely give almost all of it back to their employer though.

My guess is that the smaller business owner, like the motorcycle shop, already pays better than min wage. Its the walmarts of the world that scream the loudest about wage increases.