"Poverty cycle" for businesses

I'm all for the "Star Trek" society! But humanity ain't ready or willing. As long as the degree of greed exists, this is what we have. So, disincentivizing striving to be a 1%er is NOT the way to go...yet. Again, something for free has no value.

On Saturday, November 1, 2014 5:22:17 PM UTC-4, F. George McDuffee wrote: l

I disagree. I think it as better to keep larger numbers of minimum wage wo rkers employed and having the government subsidize them . I see the altern ate as increasing the number of minimum wage earners that are unemployed an d having the government pay a lot more for assistance to the unemployed. O ne way the government pays part of the costs. The other way the government pays all of the costs.

Also if they are employed , they will not commit as many crimes.

Raising the minimum wage will increase the rate at which we automate.

Dan

On Saturday, November 1, 2014 5:44:04 PM UTC-4, Ed Huntress wrote: d have to eat healthier foods. Win/win, wot?

Are your labor costs including the cost of benefits? And how many businesses are going to raise the cost of the burgers above that $4.79 and blame the extra price increase on the minimum wage increase?

Dan

Simple solution, reform labor laws. Provide for a yearly COLA tied to the rate of inflation. That would at least slow down the errosion of the buying power for low wage workers.

Best Regards Tom.

That's a figure I got from a trade association. It's supposed to be total labor costs per restaurant, across the fast-food indisutry. Another source said that the restaurant industry as a whole averages

As; many as can get away with it. And if they *do* get away with it, it tells us that labor was underpriced before the increase.

I'd oppose automatic increases. They make it too easy to start a wage-price spiral.

They could become community organizers which will lead them to bigger and better things.

Best Regards Tom.

I have to dissargree with that, a spiral might occur but i believe it would be short term. Employers and workers would quickley realize there is no benifit to either of them in engaging in a posture of one upsmanship.

Best Regards Tom.

Iggy, (at the risk of breaking the off-topic cycle)

I spent many years in sales and marketing for an auto parts distributor. I visited independent auto parts stores all over Texas and Oklahoma. Many, many of them were Mom and Pop outfits that were in a decades-long rut, mak ing maybe $30K/year net, working 6 days a week, and no vacations. They had a business that was unsellable, and were flat worn out. Those people were trapped in their cycle. Usually the best thing that happened to them was wh en they finally had that bad month that broke the back of the company. They had to get a job, and they were much happier. I spent a lot of time and e ffort helping my customers break that cycle and move their business to the point where they could hire some help, take some time off. I know a guy like that right now that let his store (in Dallas) get redu ced by the big national chains until he isn't even making a living. He has a good job waiting for him, but he has to unload the inventory first. He c alls me once a week to help him find a buyer. And it's *real* cheap right n ow. Anyone want to buy a complete auto parts store? The other side of that job was working with people looking to buy a busi ness. In so many cases they were planing to quit a job and buy a store wit h their life savings. After visiting with them, looking at their business p lan (if any) and running the numbers, most of the time they would have been "buying a job". Those people I encouraged to re-think the plan. They woul d have ended up 10 years later trapped in a store, savings gone, and making less money than they did working for The Man. Oh, and no benefits. Math skills: You would e surprised at the number of business owners who do not know the difference between markup and margin. I have taught that su bject many, many times. ROI is another eye-opener for most of them. I would tell a store owner " Oil is the most profitable product line in your store". Of course, most hat ed oil. They made 10% (markup!) on it, where they might make 35-40% on an i dler arm. But that idler arm sat on the shelf for a year waiting for a sale , where their entire oil inventory would turn once a month. I still did not convince many people. There are still people doing quite well in that business, but the ones t hat excel - and escape the trap - are the optimistic, pragmatic entrepreneu rs that have fun playing The Game. If the business isn't growing, it ain't fun. But those people, and those skills aren't that common. And people that c an maintain all that over decades of time are exceptional.

Crom help us...

Both small and big businesses can be in a business poverty cycle. What determines if the business is in poverty is a non-working business models, low returns, and a lot of distractions for management.

GM is a perfect example.

Thank you for a GREAT post, specific and illustrating similar points.

Owning a store, with a high cost inefficient business model, is a perfect example of a business trap.

In any kind of business involving inventory, it is also not immediately obvious how much money one is making, if you do not properly deal with stale inventory. So there is always a temptation to fool oneself into thinking that one makes more money than is the case in reality.

Ed, what are the other costs? Costs of burgers, costs of electricity, buns, trash disposal, etc. Right? They are all affected by the wages of people who work there.

Most low paid people will be out of a job eventually, due to automation. With high minimum wage, it will happen a little sooner.

That happened to a lot of used machinery dealers in chicago (lake street) they held onto obsolete machines in the hopes of selling them someday. Even as they were slowley going broke they would not discount anything.

Best Regards Tom.

I saw in a recent news article that Nestle, Japan is installing a thousand robots to act as sales-clerks in Japan.

The article:

Nestle parades a robot sales force Published: 29 Oct 2014 at 18.44 | Viewed: 1,655 | Comments: 0Online news: World UpdatesWriter: AFP TOKYO - Food giant Nestle said Wednesday that its Japan unit would hire 1,000 robots as sales clerks at stores across the country.

A file picture taken on June 28, 2014 shows Japanese mobile communication giant Softbank's humanoid robot "Pepper" displayed at a high-tech gadgets exhibition in Tokyo

The first batch of the robots -- a chatty humanoid called Pepper -- will report to work by the end of this year at outlets that sell coffee capsules and home espresso machines.

"From December, they will start selling coffee machines for us at big retail stores," said Nestle Japan spokeswoman Miki Kano.

"We are sure that our customers will enjoy shopping and being entertained by robots."

Pepper -- which has already been at work, chatting with customers at wireless giant SoftBank's outlets -- has proved an effective marketing tool for the Japanese mobile carrier, delighting managers who put it to work collecting customer opinions.

The 120-centimetre (four-foot) tall robot, which moves on rollers and has what looks like a tablet computer strapped to its chest, was unveiled in June by SoftBank president Masayoshi Son.

He billed it as an "emotional" robot that understands "70 to 80 percent of spontaneous conversations".

Pepper is set to go on the market from February for about $2,000 apiece.

One can only speculate when MacDonalds will follow.

Ed, is that the total cost of labor, or only salaries? If total cost it seems surprisingly low, at least based on what the costs were in Indonesia when I worked there.

Old Fartes? Keep in mind you posted that on usenet.

Wes

"Old Farts" these days, not like when I was a boy! ha! We used to have us real geezers in those days! Not like now. They'll let anyone with a little grey hair be an old fart. Tain't fitting, we used to have us some standards!

-- pyotr filipivich "With Age comes Wisdom. Although more often, Age travels alone."

John B. Slocomb on Sun, 02 Nov 2014 15:24:24

What is the total cost of labor? Not just the Wages paid the employee, but the "Employer's contribution" as well? Not to mention the "Payroll tax" levied to fund bus services, fair wages for county contractors, bike path. Or other (governmental) costs to a business based upon the size of their workforce. And that is before we get into the questions of benefits. Or the fact that if a contracted pay scale is based on "prevailing wages" -- raise the minimum wage by 5% and your raise everybody else wages by 5%. [Oh wait, that rarely happens. Those making less than the new minimum wage are now making 'more' money, at minimum wage. But I digress.] I have been told the company figured it was cheaper to have two guys working 40 hours equivalent in over-time, than to hire a third body.

-- pyotr filipivich "With Age comes Wisdom. Although more often, Age travels alone."