Originally Posted by
MrSplitshot
You work at a Tire Store making $12/hour mounting tires. That's all you've got. Let's say you work 40 hours a week, so there is $480 before taxes and you bring home around $400/week, or $1600/mo.
Not exactly easy to pay for all of life's necessities (Shelter, Food, Transportation, Medical) and live comfortably on that, I understand...especially if you are the only bread-winner, are married, have kids. Tough. I'd bet some here will say that it can be done though, with the right budgeting, self control, and perseverance...but I digress.
Let's say we take that $12/hour and make it $24/hour....wow....it just got a little easier to meet your bills. Good day for Johnny Tire Buster....even though research will tell you that the more you make, the more you spend. It's all relative. But again, I digress.
The Tire Store currently charges customers $5 to mount a tire, $50 for an alignment, $15 for an oil change. It's owned by a local businessman who took over the business from his father, he's fighting the big national chains who have enormously more money than him, and has already cut prices to a degree just to compete. He doesn't have much retirement, he's 53 years old, and has no succession plan for his business. Now, just on the one employee in this example, his labor costs have doubled. If he's going to remain in business, he can either:
(a) Cut his staff in half....but probably won't be able to get the work done for customers if he does, so they'll get upset, start giving bad reviews, and going elsewhere.
(b) Raise his prices to offset the $25,000+ additional expense caused by raising wages....but then he can't compete as well with the national chains and his business will fall off.
(c) Just eat all of that additional expense as a direct hit to his bottom line....which isn't really an option....he's already on a shoestring budget trying to survive as a small middle class business owner and keep the doors open. He doesn't live like a king or anything. He's a normal guy.
(d) Some combination of A-B-C.
He's going to do (D).
He'll cut a guy....maybe 1 back in the shop, even though it hurts....he'll raise his prices to the consumer a bit and hope to God nobody complains too much....and he'll eat a little of it in a lowered bottom line, because he's known Johnny Tire Buster back in the shop for 20 years, has seen his kids born, considers him family, and can't bear to let him go unless it's dire straights. He's a businessman, but he also has a big heart. (This is most businessmen in America, unlike what you are lead to believe about Wall Street and greedy business owners.)
The result:
Fewer jobs.
Higher prices to people coming in for goods and services...which cuts back into those higher wages they are earning...and also earns the government some more sales tax revenue too.
Small businesses that fail in favor of larger/national businesses with more cash flow and access to resources.
I'm not saying I know a quicker/better solution, but I'm not buying into Government mandated drastic increases in wages yet.
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