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Capitalism Why Doubling Minimum Wage Would Be A Terrible Decision. 3/1/2016 1:32:53 PM
Capitalism

  In this article I'm going to be using the mindset of a business owner.  I know many of you believe these people to be evil but hear me out because it effects you as well.

 

  Let's say I own a business and I have 10 employees working for $10/hour which is relatively competitive. This means no matter what I have to pay out at least $100 out every hour, $800 per day if they work 8 hour shifts.  That translates into $24,000 per month and as with any business is my single largest expense. In fact the payments of the store, product costs, utility costs, marketting costs, legal costs and shipping costs combined wouldn't come close.

 

  Now all of a sudden minimum wage is doubled.  Well this causes a few problems that I'm going to need to work around.  Instead of being able to offer competitive pay, I'll be struggling to pay the bare minimum since my largest expense just increased by 50%.  Now I'm up to $150/hour, $1200/day, and $36,000 per month. That's almost $150,000 extra per year for just labor. ($12,000 extra per month x 12)  At this point all businesses have Four options:

1.  Lay off a few of the employees forcing others to pick up additional responsibilities.

2.  Find cheaper products which means lowering quality or getting it from overseas.

3. Automate systems. In other words find a machine or software that does the job that an employee would normally do.  There are thousands of examples of this with machines made for this in the past but with our technological improvements there are many more options available. Examples are Walmart with their self checkouts, McDonald's with their ordering terminals, and restaurants that have a tablet at each table for people to order from.

4.  Finally and most prominent, Raise Prices.

 

  Every business that employees Americans will face these choices. If this is where the margin deficets stopped then it may be more managable, but it's not.  Not only has my labor increased by 50% but so too have a lot of things. My product that has hundreds of employees working to manufacture, produce and prepare my products (since these companies also need to pay out more) raise the product's price as well.  The shipping companies that hire people to get my products to me now costs more. The marketting companies have to pay their guys higher than $15/hr to stay competitive and therefore they need to charge higher rates. Obviously real estate would be higher and therefore increasing building costs. And of course the extra taxes, forced benefits, forced vacations for the whole employee's family etc etc that Sanders wants to put on businesses.

 

  Here's where the problems really begin.  The major companies that were supposed to be targetted do not become the victims.  They have the money to automate alot more of their systems.  They have the money to get massive bulks of products from overseas significantly lowering their individual prices.  Or if necessary move their entire company overseas, but still sell in America. Small businesses that have to pay 5x more in labor, even more in products and provide all these extra benefits simply won't be able to compete. 

  The end result of this is thousands of businesses shutting down, Millions of Americans getting laid off, and the value of the Dollar significantly plummeting.  If Sanders put in place everything he's trying to, eventually most of the jobs left in America would be government jobs.  The long term effects of this could be Devastating.

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