08-13-2015, 07:25 PM
(08-13-2015, 07:09 PM)fredtoast Wrote: 2. Costs of goods and services would not have to increase that much because...(1) Labor is only a fraction of the cost. (2) Only a fraction of the workers would get substantial raises. (3) Businesses have been able to give their highest management HUGE raises without driving up prices. Our economy worked just fine in 1965 when the CEO-to-worker compensation ratio was 20 to 1. So why does it have to be close to 300 to 1 today? Instead of raising prices they could just spread around the money they have been pumping into the pockets of their highest paid employees.
Where do you come up with the idea that labor is only a fraction of the cost? Labor in MOST cases is the largest expense an employer has.
Before I move on, I'll give you some specifics. When I was running a store, our annual sales averaged roughly 2.8 Million Dollars per year. Our average pre-tax profit was roughly 9%. That's about $250,000 of profit before taxes, on 2.8 Million Dollars in sales.
Now say they were to increase their labor costs by 50% (minimum wage from $8.00 to $12.00) per hour. Our average labor costs (including taxes, overtime, FICA tax-matching, etc...) were roughly 30%. Increasing it by $4.00 assuming the same sales and no cuts in labor hours would take the labor costs from $840,000 per year to $1.26 MM per year.
This kind of stuff is exactly why the McDonald's in France have touch screen kiosks that you order from.
