This is why we need to leave wages alone…

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The PDF Link above is some interesting issues that arise in the restaurant industry when you raise wages mandatorily and force the food industry to survive. They fold…

My Thoughts From Russia: That Miminum Wage Issue…

The service industry all over the world will start collapsing if we force increases in wages upon businesses, be they ma-pa and or corporations…

I do not claim that people should not make more money and; if you have a good worker they are worth giving raises to…

But? Question is appropriate; many if not most of the service industry is very uneducated, low level workers and they just do not give a %$#@ about quality, quantity and their job…

They live for the weekend and that weekly paycheck…

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My greatest workers were the elderly ladies. They many times just worked full time to simply have health insurance for the whole family. They worked harder, longer and cared about the customers. They had a interest in the company, because the company let them have a special deal on full coverage health insurance. That is called working for benefits, not money…

Right or wrong it is what it is…

But!

Raise wages, every company, corporation and or ma-pa will cut hours, people and benefits to recover and try to survive the wage increase…

First thing that happens is replacing high wage earners…

Second thing that happens is cutting hours below full time…

Third thing that happens is dropping and or decreasing benefits all together…

Forth and not least, close the doors of said business and either reopen after restructuring and or look at ways, such as robotic to replace the brunt of the workers. (This is what companies such as McDonald’s and company are doing!)

Except proactive companies are not always going to go in the order above. many have spent years to develop a system to get around wage increases…

An example is; A ma-pa restaurant will look at the rules. They will do several things to survive. They will take back over running the business themselves only, just as they started it, they will cut employees to the minimum to get below the rules and regulation guidelines and they will take the money and run…. But they will not pay out more than they take in and raising prices is a surefire way to destroy your customer base. Customers are fickle…

Corporations only care about the bottom line and they will do what it takes to keep that bottom line at their expectations. I mean they will do what it takes! You are not a commodity to a corporation, you are not an asset, you are a expenditure and a set expenditure at that. McDonald’s only allows a certain percent of your stores money to go to wages. That is wages from the dishwasher to the CEO that you never see in the ivory tower. My stores had a 23% total gross wage cap and you do what ever it takes to reach that cap on wages. Even if 5% of that 23% is admin wages for the main office…

As you see wages are a huge part of gross business expenditures. You still have food, utilities, advertisement, taxes, insurances and so on and so on… Net profits can be very low…

A good manager is necessary to survive in business, but a good manager is hard to come by. A good manager sacrifices his life for the company, or he fails in the end….as does the unit…

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Simple fact:

An increase in wages can and does remove the net profit that a store makes. In my world of food service, a good profit was 3% at the end of the year, after everything was paid for. 3% and you want to give 5% more to everyone to make life better?

The little picture gives more money to the worker…

The big picture is that a company has to cover much more than just wage increase. Taxes go up, benefits go up and then the simple basics such as free meals for employees go away… Much less everything that follows…

Sorry it does not compute…

Also this is true for the whole world. This is not just a American issue. The market will pay the wages that can be supported and any interference in that market will cause backlash and destruction of businesses…

WtR

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