ChunkySalsa
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Lurking in the economics sub-forum, I've heard about corporations not paying a living wage. If the government did not offer welfare, food stamps and other such programs, the employees of these corporations would not be able to afford basic subsistence. As a result, these low wages are effectively being subsidized by the government.
I'm curious about the hypothetical situation of raising corporate taxes proportionately to cover the negative externality imposed by their employees being on welfare. Ignoring how politically unviable it is (and the right-wing wet dream of killing all welfare programs), what would be the economic consequences of such a policy? How would businesses react to such a change? Who would win and who would lose?
... What many ignore is that employers view total labor costs, while the employee views only their take home pay. The fact that your employer must now pay more to supply your medical care insurance surely causes your labor cost to increase with no increase in your production (or in your take home pay)....
I own my own small company. My payroll that I sent to the direct deposit system on Wednesday of last week that hit my account yesterday, was ~$29.000.00. That was every ones net pay, except mine. After I pay the feds and state, Workers Comp, benefits and other fringe costs (just labor related mind you) the cost to the company (me) is over ~$60,000.00. For one week. I only have one employee that doesn't really understand the real cost to the company and asks for a raise every month. He's also the least productive employee as far as revenue production and positive corporate ROI. He happens to be an attorney with knowledge in the area of law that deals with my industry sector, so I need him (but only until I can find a qualified replacement).
Oh, the reason I said except me regarding pay? I don't write myself a check when things are tight so that I can make payroll for the employees (since 2010 its been once or twice a month on average). Things are looking up since we're diversifying into an IT area, but the investment to make that possible is keeping me from paying myself.
... They see PPACA as a "free" perk, granted by the generousity of a benevolent gov't provider, not as simply a mandate that your employer now pay more in labor costs for the same production.
How would Walmart move their jobs overseas?We as Americans would all lose. They'd simply move whatever those low income jobs were overseas, then import the products right back in at a higher price.
How would Walmart move their jobs overseas?
I addressed this in the post. How about instead of quoting one sentence, you quote the entire post?
You're getting lazy, JP.
Unbelievable. Now you join JP in being too lazy to read. Instead of replying to my post, you reply to me correcting JP for isolating a single sentence out of a post where I directly addressed what he said.Seriously, most minimum wage jobs are jobs in local retailing. Those jobs really can't be moved. And minimum wage has nothing to do with all those "high paying" manufacturing jobs that have moved overseas as to be "high paying" they obviously have to pay more than minimum wage.
Rather than higher business taxes on businesses that pay low wages, a higher minimum wage would be a lot easier to implement, and still have the same effect.
Unbelievable. Now you join JP in being too lazy to read. Instead of replying to my post, you reply to me correcting JP for isolating a single sentence out of a post where I directly addressed what he said.
We as Americans would all lose. They'd simply move whatever those low income jobs were overseas, then import the products right back in at a higher price. So these people lose their jobs, and we the consumer get more expensive products. The only people who don't lose are the corporations.
For job positions that can't be moved overseas, the larger corporations would crush the small businesses. Wal-Mart could certainly afford to pay their workers double, but Mom and Pop grocery down the street can't. So you push the small businesses out, and the Wal-marts of the world get a bigger market share because they have the kind of deep pockets to take a temporary loss to drive their competition out of business.
Frankly put, you can't make someone pay someone else for MORE than they're worth. No successful businessman is going to hire someone at a loss. We need to instead focus on education and continuing education programs so that those who have the desire to improve their situations can.
Conflict theory 101Econ 101...
Everybody would lose. Garbage in, garbage out......
- Mr. Baker uses society's limited resources in a certain way
- If consumers value how he's using society's limited resources, then they'll give him their money
- The more money Mr. Baker receives the more influence he'll have over how society's resources are used
- The amount of influence Mr. Baker has reflects how much he benefits others
- Transferring Mr. Baker's influence to his employees will decrease the total amount of benefit that we derive from society's limited resources
ttwtt78640[/QUOTE said:This situation was not caused by falling labor costs, but by raising social "safety net" spending and increased costs of gov't mandates.
Conflict theory 101
4. The amount of influence Mr. Baker has reflects how much he benefitsothershimself
5. Transferring Mr. Baker's influence to his employees will decrease the total amount of benefit thatwehe derive(s) from society's limited resources
What vitiates entirely the socialists economic critique of capitalism is their failure to grasp the sovereignty of the consumers in the market economy. - Ludwig von Mises
The entrepreneur in a capitalist society depends upon the market and upon the consumers. He has to obey the orders which the consumers transmit to him by their buying or failure to buy, and the mandate with which they have charged him can be revoked at any hour. Every entrepreneur and every owner of means of production must daily justify his social function through subservience to the wants of the consumers. - Ludwig von Mises
No, it's quite believable. I never bothered to read in school either.
Anyhow, I did skim back over your post, and I guess I owe you somewhat of an apology as you did touch base on such issue.
However, if larger corporations could afford to pay more, and were required to pay more, then the mom and pops could also pay more, as they wouldn't lose any competitive advantage to each other or to the bigger companies.
As an employer, if I am forced to pay higher wages, then I either increase my selling price by a small percent (to make up for a 50% increase in the cost of my low paid workers I would need to increase my prices by about 3-5%), or I absorb the additional costs.
I agree that a mom and pop business (like mine) likely can't absorb the cost - unless sales (demand) increases.
I would fully expect my sales to increase if many of my customers had a 50% wage increase (I have customers every day who are interested in purchasing my products, but simply can't afford them, so they leave my shop empty handed or with a product that is less desirable than they desired). If I did have an increase in sales, I could easily absorb the additional labor costs without increasing prices. If we were able to reduce taxes, due to the guberment spending less on means tested welfare, then I would be able to absorb the cost increase even more easily.
So why would I even be willing to absorb any additional labor costs? Because my business exists in a price competitive environment, and I seek to not lose sales to my competitors, as doing so may reduce my net profit. Businesses seek to price their goods and services at what they feel is the profit maximizing price. A small business with an income of $100,000/yr would prefer to absorb $X in costs increases, than to lose their entire profitability to the competition due to not being price competitive.
Sorry Rabid.
But I disagree that local retailers would go out of business. Walmart already pushed local biz away at a lower wage, so I don't see how a higher wage will really change that landscape.
First, I tend to agree with JP and imagep that jobs that can be outsourced already have been, and that Walmart has already squashed the local competition. That said, you (RabidAlpaca) do have a point about these changes further hurting Mom&Pop shops.
How much tax does a small business pay compared to a big corporations? A quick search showed 17.88% for corps and ~30% for S-corps and partnerships. I imagine corporations have armies of accountants and lobbyists that find and create loopholes to get their taxes so low. Small businesses don't get those loopholes, so they already pay a higher tax rate.
Instead of a blanket increase in taxes for welfare employees, could we eliminate tax exemptions? The CostCos with few/no welfare employees would get to keep their sweetheart deals, while the Walmarts are forced to pay the absolute maximum corporate tax rates. Small business wouldn't be hurt to the same degree because they create/take fewer tax loopholes and already pay close to the max.
How would Mom and Pop magically have the same pockets at Wal-Mart? Wal-Mart is sitting on 10's of billions, if not more of hard cash in the bank, Mom and Pop are trying to keep their **** together. You're just adding one more expense to their business.
All businesses compete in the same market. As long as all businesses have the same minimum wage, then regardless of how much that minimum wage is, a change in minimum wage has little if any effect on their relative competitiveness.
First, you did that ****ing **** again where you just pick one tiny sentence of what I wrote and ignored everything else. Pretty lame.
Second, you're trying to say that Mom and Pop can react to a huge financial change EXACTLY AS WELL as Wal-Mart with billions of dollars. If we made minimum wage $100/hr, for instance, do you think Mom and Dad has the immediate capital to implement such a thing, without immediate replacement of that capital through increased sales?
You've ignored all of the questions I've posed for you, so I think I'm done answering you until you do that.
I do believe that Mom and Pop CAN react to a small financial change (like an increase in minimum wage) exactly as well as Walmart. Smaller companies can often be more nimble.
You've never even attempted to address my question about what businessman would hire a worker for a loss? What businessman will hire a kid worth $5/hr to him for $10/hr? He will simply be more selective by only hiring those whose value is worth the new, higher minimum wage.
So I guess if you're not worth the new minimum wage, **** you, you'll stay on welfare.
No, it's quite believable. I never bothered to read in school either.
Anyhow, I did skim back over your post, and I guess I owe you somewhat of an apology as you did touch base on such issue.
However, if larger corporations could afford to pay more, and were required to pay more, then the mom and pops could also pay more, as they wouldn't lose any competitive advantage to each other or to the bigger companies.
As an employer, if I am forced to pay higher wages, then I either increase my selling price by a small percent (to make up for a 50% increase in the cost of my low paid workers I would need to increase my prices by about 3-5%), or I absorb the additional costs.
I agree that a mom and pop business (like mine) likely can't absorb the cost - unless sales (demand) increases.
I would fully expect my sales to increase if many of my customers had a 50% wage increase (I have customers every day who are interested in purchasing my products, but simply can't afford them, so they leave my shop empty handed or with a product that is less desirable than they desired). If I did have an increase in sales, I could easily absorb the additional labor costs without increasing prices. If we were able to reduce taxes, due to the guberment spending less on means tested welfare, then I would be able to absorb the cost increase even more easily.
So why would I even be willing to absorb any additional labor costs? Because my business exists in a price competitive environment, and I seek to not lose sales to my competitors, as doing so may reduce my net profit. Businesses seek to price their goods and services at what they feel is the profit maximizing price. A small business with an income of $100,000/yr would prefer to absorb $X in costs increases, than to lose their entire profitability to the competition due to not being price competitive.
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