CBO: Democrats' proposed Min-wage hike would cost businesses $15 billion

[Anonymous1776]

so, if a ceo went from being paid $200,000 a year to being paid $2,000,000 a year, do you have the same concerns of prices going up

If a business voluntarily raises the wage of an employee, CEO or otherwise, they've done so because they feel the job the employee does or will do is worth the increase. The employee produces enough to warrant and offset the cost of the increased wage. In the case of a minimum wage increase, no such increase in productivity has taken place -- the government simply passed a law.

...only with just the Ceo getting more in salary..... there are no NEW potential purchasers for the widgets being sold like there could and would be if all those people at min wage were getting an increase....?

Unless the CEO stuffs their salary under their mattress, their money would also go back into the economy. That misses the point, of course, because the business wouldn't have increased the CEO's salary to begin with had the CEO not been perceived as being a worthy investment. Businesses can't sustain themselves by making investments in resources that don't provide a return. Again, passing a law that artificially raises wages, doesn't provide a return.

and are you suggesting that we never ever raise the minimum wage even when prices in the market for all goods are going up and up and up and up . . . are you implying that there was no cost of living increases over those 10 years because there was no hike in the minimum wage?

You mean inflation, which is caused by government's mismanagement of our money supply and economy. Yes, there is not only no need for a minimum wage, there is also no need to ever increase it, as wages would eventually increase to correct for inflation.

 

[LordBrownTrout]

Good point

Better we take it out of the hide of low cost workers

Better we leave it in private hands instead of a frivolous govt.

 

[Anonymous1776]

The amount of the wage hike goes right back into the economy as consumption . . .

No one will disagree that an employee will spend their wage back into the economy. However, as I said before, when an employee goes to spend their increase in the economy, as you suggest, they will find that they are not able to purchase any more than they could before the increase. The reason is that prices have risen to offset the wage increases of their fellow workers at other businesses.

. . . and increased consumption means increased sales, including increased sales for businesses employing minimum wage workers.

Wrong. They are not able to purchase any more product than before. While they make more, they also pay more for the same thing. It's just another government shell game to buy votes.

 

[Care4all]

so, if a ceo went from being paid $200,000 a year to being paid $2,000,000 a year, do you have the same concerns of prices going up

If a business voluntarily raises the wage of an employee, CEO or otherwise, they've done so because they feel the job the employee does or will do is worth the increase. The employee produces enough to warrant and offset the cost of the increased wage. In the case of a minimum wage increase, no such increase in productivity has taken place -- the government simply passed a law.

There is nothing stopping the employer to expect more and raise the productivity level of his employees either, and this is what is done by most employers to compensate.

...only with just the Ceo getting more in salary..... there are no NEW potential purchasers for the widgets being sold like there could and would be if all those people at min wage were getting an increase....?

Unless the CEO stuffs their salary under their mattress, their money would also go back into the economy. That misses the point, of course, because the business wouldn't have increased the CEO's salary to begin with had the CEO not been perceived as being a worthy investment. Businesses can't sustain themselves by making investments in resources that don't provide a return. Again, passing a law that artificially raises wages, doesn't provide a return.

they certainly can sustain themselves by using more of their budgeted salaries on the ceo.... with less of their budget spent on the worker bees....and that is precisely what has happened the past 3 decades or more.....evident by the numbers....and you are WRONG that it does not provide a return..... you have done NO Cost benefit analysis....you are only discussing the cost.....

and are you suggesting that we never ever raise the minimum wage even when prices in the market for all goods are going up and up and up and up . . . are you implying that there was no cost of living increases over those 10 years because there was no hike in the minimum wage?

You mean inflation, which is caused by government's mismanagement of our money supply and economy. Yes, there is not only no need for a minimum wage, there is also no need to ever increase it, as wages would eventually increase to correct for inflation.

if that's the case, if that's what your ''faith'' is in, then WHY HASN'T IT CORRECTED ITSELF all on its own? Why are the min wage earners losing ground as once again, is evident in the analysis numbers Anonymous?

And 15 billion ain't a whole heck of a lot when it comes to a $16 trillion GDP....especially since most of it will be made up with an increase in productivity....Prices on key items won't rise due to a min wage increase, you won't see an increase in inflation due to this....

And there never has been an increase in inflation due to the min wage hikes we've had thus far that is noteworthy, evident by the analysis of the numbers.....nor have we had a tick up in unemployment from it, evident in the analysis of the numbers....

I think you need to review the over all numbers and analyze them for yourself.....and I am not saying that your premise regarding this is illogical in some way....because it truly seems only logical...but when you dig in to the numbers like I spent doing, it turns out not to be true...

The Nation will survive and many in our nation will have benefited....

 

[JFK_USA]

And most if not all of that $15 billion would be infused in the economy because low wage workers spend almost all of that money. So instead of $15 billion sitting around and being transferred between the 1%, it's going to be in the entire economy creating jobs and wealth for the entire nation.

Don't see the big deal.

 

[Anonymous1776]

Yep.

This is the worst, most hostile government/business environment in recent memory, and either they don't understand business dynamics enough to see it, or they refuse to admit it.

Maybe both, I don't know.

See, I don't really see it that way. I honestly believe that by keeping wages low, we have helped create an economic atmosphere that is not conducive to growth.

The problem with that is that it's productivity that drives growth, not the artificial raising of wages. Increased productivity increases wages.

When you see that the minimum wage has gradually been lowered as a percentage of the average wage, it also makes us realize that has reduced the average wage.

First, the minimum wage may not have increased over a period of time, but it has never been lowered. The more accurate way to frame this is that the average wage can increase despite not having raised the minimum wage. For example, if you look at the 80s, the minimum wage didn't increase from 1981 to 1990, but the median income increased by about $5000 during that period. It turns out the average wage can increase without having government artificially raise wages after all.

On the other hand though, we see the exact opposite extreme where there is an argument that there should be no minimum wage at all . . . Remember, there was a time in this country when there was no minimum wage.

Having no minimum wage law shouldn't be confused with having no minimum wage. There would be a natural minimum wage set by the market, dictated by employers competing with other employers for employees and employees competing with other employees for employers.

. . . and on top of that we should remove all social welfare programs.

Social welfare should only exist for those who are unable to care of themselves. If we are to have social welfare for those who are able to care for themselves, benefits received should be paid back later. This would help reduce fraud and waste and would encourage the able to care for themselves.

Strikes became violent in many cases with workers being beat and sometimes killed. We do not need to go back to that.

Yes, many times union strikers felt they had the right to trespass and otherwise violently interfere with the businesses owner's ability to conduct business and with competing workers' right to make a living. That's never a proper or valid negotiating technique.

I can tell you one thing; companies that pay more do not have that type of employee turnover. They actually save themselves money in the long run.

I agree with the idea that smart employers will pay employees enough to keep them as long as necessary. Then again, some jobs are difficult or dangerous and may be prone to high turnover with relatively little regard to pay, while others may require very little skill and may be prone to attracting employees who aren't interested in staying long. In the end, employers only hurt themselves when they don't pay employees what they are worth. Smart, successful employers know this.

 

[rightwinger]

Good point

Better we take it out of the hide of low cost workers

Better we leave it in private hands instead of a frivolous govt.

Hell yea...

Same with that pesky 40 hour week, OSHA, child labor laws, equal opportunity laws

Let's let the free market settle things...that has always worked so well

 

[Skull Pilot]

Then he needs to change his business model and practices so that he can run a business well enough to make a profit AND pay his employees a decent wage.

And what if the market for his area of business does not support the higher prices he would have to charge in order to pay the extra wages?

The market includes your competitors too and they too will have to pay the higher minimum wage, right? so it's not like you will have to charge more for your widget or service than they do....the "market" will just pay the higher price if there is no cheaper price to be found...

I went through a Brazilian leather shortage once...all of our leather shoes from Brazil retailed for around $26, the following season with the same shoes, had to retail for $38.00 due to this leather shortage (which came from an increase in leather couches being purchased due to a fad) and the higher cost of goods prices....

I was absolutely certain, beyond any doubt, that I was going to lose my ass that year in sales....I knew there was no way in the world these women would pay $38 for the same shoe they bought the previous year for $26...

I was WRONG and made one of the biggest mistakes of my career by not buying these $38.00 retail shoes in the depth that was needed to service and sell and meet the demand.....

so you would be surprised at how well the "market" can absorb minor increases...shoot, they absorbed a HUGE increase in price with my example.....

I wouldn't "sweat the small things", you'll do just fine Skull, plus you seem like a 'go getter', someone who will not accept failure when it comes to his business, and to me this means YOU WILL figure something out to continue your successful business.

I don't pay MW at all. Not even close. my lowest paid employee get 16 an hr.

 

[NYcarbineer]

So I'm correct in assuming that you do understand how bad the environment is, and that you don't care?

.

Do I have to say everything twice? The environment for labor has been bad for 30 years ever since de-industrialization and globalization got into full swing. It's pretty lame to scream bloody murder over the possibility that here and there the American worker might regain a small bit of all that ground he's lost.

You have to say things twice when you avoid answering a question.

And you just did it again.

This appears to be genetic with partisan ideologues.

I'll take this as a "yes, I know but I don't care."

Thanks.

.

If I didn't care I'd be taking your position.

 

[NYcarbineer]

No one forces you to own a business. If you don't want to pay a fair wage, then move on

SIMPLE

True, businesses who don't offer a competitive wage will be forced to move on, as employees leave to work for competitors who offer similar jobs for higher wages. No government coercion or minimum wage law needed. Simple, indeed!

When a thousand people show up for 100 low wage jobs, where's the competition on the business side?

 

[Mac1958]

No one forces you to own a business. If you don't want to pay a fair wage, then move on

SIMPLE

True, businesses who don't offer a competitive wage will be forced to move on, as employees leave to work for competitors who offer similar jobs for higher wages. No government coercion or minimum wage law needed. Simple, indeed!

When a thousand people show up for 100 low wage jobs, where's the competition on the business side?

You folks truly, really don't get it.

Competition is a factor in everything a business does.

Most of those applicants are probably applying elsewhere, and the company must take that fact into consideration at all times, including hourly wages, work environment, opportunities for advancement, any extra benefits, administrative costs, etc., etc. If they don't keep up with their competition, they lose the best workers to them. They end up with the lousier workers. They have to make a ton of decisions before they even put up a "help wanted" sign. Then it's a matter of supply and demand - if many workers want a job, the company is in the driver's seat. But it still has to choose well.

Cripes. For the hundredth time here, maybe the thousandth, I can't believe I actually have to say stuff like this. We desperately need some fundamental business and economics courses to be required before Americans can graduate high school.

.

 

[CaféAuLait]

The Democrats' War on Businesses goes on.

The non-partisan COngressional Business Office has calculated that the Democrats' proposed wage hike will costs American businesses $15 billion.

The Democrats have made no proposals on what expenses the businesses should reduce or cancel, to pay this extra money with no increase in productivity resulting from it.

--------------------------------------------------------------

Budget office: Wage boost would cost firms $15B | Fox News

Budget office: Wage boost would cost firms $15B

Published April 17, 2014
Associated Press

A Senate Democratic bill gradually increasing the federal minimum wage to $10.10 hourly would require private businesses to spend $15 billion more in salaries when it takes full effect in 2017, the Congressional Budget Office estimated Thursday.

The Senate is expected to begin debating the election-year Democratic measure when lawmakers return from a spring recess in two weeks. Republicans seem likely to muster enough votes to block it, and there is no evidence yet that Democrats are willing to broker a compromise.

The minimum wage is currently $7.25 hourly. The bill by Sen. Tom Harkin, D-Iowa, would increase the minimum in three steps, reaching $10.10 two-and-a-half years after the bill becomes law.

The budget office also estimated that the measure would force state and local governments to pay workers $1 billion more in 2017 than they would otherwise be required. Those governments paid $840 billion in salaries in 2012, according to the Bureau of Labor Statistics.

The federal government would incur just $2 million in added wage costs for the entire decade ending in 2024. That's because it has fewer than 4,000 workers earning less than $10.10 hourly, the budget office said.

But the Democratic bill would cost the government $5 billion in lost revenue over the coming decade.

I think the minimum wage should be raised. But I also wonder if this is costing business 15 billion ( which is really not that much considering the profit margin of many) will they pass such onto the consumer?

 

[Mac1958]

I think the minimum wage should be raised. But I also wonder if this is costing business 15 billion ( which is really not that much considering the profit margin of many) will they pass such onto the consumer?

There would be some of that. Companies would also have to push for significantly higher productivity from employees in the lower hourly rate classes, meaning those people will have to do more with less and the companies will be far more loathe to hire. Some combination therein. Add to that the ACA and other new regulations and we'll just see more of the same - companies playing it safe to mitigate the damage of the current hostile government/business climate. And then they'll be blamed, of course.

.

 

[Anonymous1776]

There is nothing stopping the employer to expect more and raise the productivity level of his employees either, and this is what is done by most employers to compensate.

I agree. As I mentioned earlier, some employers react to minimum wage increases by firing less productive employees. That means the remaining employees that kept their job now take on the additional work.

Unless the CEO stuffs their salary under their mattress, their money would also go back into the economy. That misses the point, of course, because the business wouldn't have increased the CEO's salary to begin with had the CEO not been perceived as being a worthy investment. Businesses can't sustain themselves by making investments in resources that don't provide a return. Again, passing a law that artificially raises wages, doesn't provide a return.

they certainly can sustain themselves by using more of their budgeted salaries on the ceo.... with less of their budget spent on the worker bees....and that is precisely what has happened the past 3 decades or more.....evident by the numbers....and you are WRONG that it does not provide a return..... you have done NO Cost benefit analysis....you are only discussing the cost.....

I never said that increasing a CEO's salary would or would not provide a return. Since each case will be different, there would be no way for me to know. I simply said that a business can't sustain itself by making bad investments that don't provide a return. Therefore, it is in the business' interest to only increase the CEO's salary, if a return on that investment is expected. It doesn't pay to invest in or reward failure.

. . . Yes, there is not only no need for a minimum wage, there is also no need to ever increase it, as wages would eventually increase to correct for inflation.

if that's the case, if that's what your ''faith'' is in, then WHY HASN'T IT CORRECTED ITSELF all on its own? Why are the min wage earners losing ground as once again, is evident in the analysis numbers Anonymous?

The further we get from a minimum wage increase the more time the market has to correct for it. One minimum-wage related reason minimum wage workers are losing ground is their inability to compete with their foreign counter-parts, like workers in China, for example. Also, the minimum wage is but one government policy that adversely affects those who make the least amount of money. Ironically, the same policies that aim to benefit low income earners, hurt them the most.

And 15 billion ain't a whole heck of a lot when it comes to a $16 trillion GDP....especially since most of it will be made up with an increase in productivity

How does passing a law to raise a worker's wage increase productivity? A worker is either productive or they are not. They either earn the wage they are paid or they do not. If you contend that extra money in the pocket will make the worker more productive, they will be at least equally less productive when the price of everything else in the market rises to correct for the artificial wage increase, thereby erasing whatever extra money they perceived having to begin with. That is, of course, if they aren't fired from their job or aren't required to take on the work of those who were.

....Prices on key items won't rise due to a min wage increase, you won't see an increase in inflation due to this....And there never has been an increase in inflation due to the min wage hikes we've had thus far that is noteworthy, evident by the analysis of the numbers.....

As mentioned before, inflation is primarily caused by government's mismanagement of our money supply and economy. However, I think the artificial price increases caused by a minimum wage increase can be considered a type of short-term inflation. Once prices and wages are allowed to settle, the inflation is corrected for.

nor have we had a tick up in unemployment from it, evident in the analysis of the numbers....

There have been many studies on how increasing the minimum wage affects employment over the years. Generally speaking, most studies, as well as most economists, indicate that an increase to the minimum wage leads to an increase in unemployment -- especially among those who are least skilled.

 

[Billy000]

The Democrats' War on Businesses goes on.

The non-partisan COngressional Business Office has calculated that the Democrats' proposed wage hike will costs American businesses $15 billion.

The Democrats have made no proposals on what expenses the businesses should reduce or cancel, to pay this extra money with no increase in productivity resulting from it.

--------------------------------------------------------------

Budget office: Wage boost would cost firms $15B | Fox News

Budget office: Wage boost would cost firms $15B

Published April 17, 2014
Associated Press

A Senate Democratic bill gradually increasing the federal minimum wage to $10.10 hourly would require private businesses to spend $15 billion more in salaries when it takes full effect in 2017, the Congressional Budget Office estimated Thursday.

The Senate is expected to begin debating the election-year Democratic measure when lawmakers return from a spring recess in two weeks. Republicans seem likely to muster enough votes to block it, and there is no evidence yet that Democrats are willing to broker a compromise.

The minimum wage is currently $7.25 hourly. The bill by Sen. Tom Harkin, D-Iowa, would increase the minimum in three steps, reaching $10.10 two-and-a-half years after the bill becomes law.

The budget office also estimated that the measure would force state and local governments to pay workers $1 billion more in 2017 than they would otherwise be required. Those governments paid $840 billion in salaries in 2012, according to the Bureau of Labor Statistics.

The federal government would incur just $2 million in added wage costs for the entire decade ending in 2024. That's because it has fewer than 4,000 workers earning less than $10.10 hourly, the budget office said.

But the Democratic bill would cost the government $5 billion in lost revenue over the coming decade.

15 billion total? That is easily manageable. Hey guess what happens if the miminum wage is higher? MORE money being spent.

 

[Anonymous1776]

No one forces you to own a business. If you don't want to pay a fair wage, then move on

SIMPLE

True, businesses who don't offer a competitive wage will be forced to move on, as employees leave to work for competitors who offer similar jobs for higher wages. No government coercion or minimum wage law needed. Simple, indeed!

When a thousand people show up for 100 low wage jobs, where's the competition on the business side?

There's still competition. If a business offers too high a wage, it will have to increase prices or lower product quality to maintain a profit, thereby losing business to a competitor offering lower wages. If a business offers too low a wage, no one sufficiently qualified will show up, let alone 100. This is why it's always important for a business to offer a competitive wage to their employees.

 

[auditor0007]

Yep.

This is the worst, most hostile government/business environment in recent memory, and either they don't understand business dynamics enough to see it, or they refuse to admit it.

Maybe both, I don't know.

See, I don't really see it that way. I honestly believe that by keeping wages low, we have helped create an economic atmosphere that is not conducive to growth.

The problem with that is that it's productivity that drives growth, not the artificial raising of wages. Increased productivity increases wages.



First, the minimum wage may not have increased over a period of time, but it has never been lowered. The more accurate way to frame this is that the average wage can increase despite not having raised the minimum wage. For example, if you look at the 80s, the minimum wage didn't increase from 1981 to 1990, but the median income increased by about $5000 during that period. It turns out the average wage can increase without having government artificially raise wages after all.



Having no minimum wage law shouldn't be confused with having no minimum wage. There would be a natural minimum wage set by the market, dictated by employers competing with other employers for employees and employees competing with other employees for employers.



Social welfare should only exist for those who are unable to care of themselves. If we are to have social welfare for those who are able to care for themselves, benefits received should be paid back later. This would help reduce fraud and waste and would encourage the able to care for themselves.

Strikes became violent in many cases with workers being beat and sometimes killed. We do not need to go back to that.

Yes, many times union strikers felt they had the right to trespass and otherwise violently interfere with the businesses owner's ability to conduct business and with competing workers' right to make a living. That's never a proper or valid negotiating technique.

I can tell you one thing; companies that pay more do not have that type of employee turnover. They actually save themselves money in the long run.

I agree with the idea that smart employers will pay employees enough to keep them as long as necessary. Then again, some jobs are difficult or dangerous and may be prone to high turnover with relatively little regard to pay, while others may require very little skill and may be prone to attracting employees who aren't interested in staying long. In the end, employers only hurt themselves when they don't pay employees what they are worth. Smart, successful employers know this.

Since you are wrong on pretty much everything here, we will just look at your first statement that increases in productivity increase wages. Over the past 40 years, productivity has nearly doubled, but wages are pretty much the same as they were forty years ago. In fact, the value of those wages is now less. But guess what? The wages of those at the top have tripled. I guess you are right. Increases in productivity do increase wages, at least for the top 1% or so of income earners. Too bad it doesn't seem to do anything for all the workers.

 

[auditor0007]

I think the minimum wage should be raised. But I also wonder if this is costing business 15 billion ( which is really not that much considering the profit margin of many) will they pass such onto the consumer?

There would be some of that. Companies would also have to push for significantly higher productivity from employees in the lower hourly rate classes, meaning those people will have to do more with less and the companies will be far more loathe to hire. Some combination therein. Add to that the ACA and other new regulations and we'll just see more of the same - companies playing it safe to mitigate the damage of the current hostile government/business climate. And then they'll be blamed, of course.

.

Companies do push for higher productivity because they are so afraid to raise prices. What they don't understand is that everyone has to raise their prices a little if there is a large increase in the minimum wage, but they don't need to raise them as much as people may think because wages are only a small percentage of the overall cost of doing business. Wages are not the only factor in determining the selling price of a company's product or service. Throughout the years the minimum wage has been raised numerous times. It has never caused an adverse affect on the economy.

 

[auditor0007]

There is nothing stopping the employer to expect more and raise the productivity level of his employees either, and this is what is done by most employers to compensate.

I agree. As I mentioned earlier, some employers react to minimum wage increases by firing less productive employees. That means the remaining employees that kept their job now take on the additional work.

they certainly can sustain themselves by using more of their budgeted salaries on the ceo.... with less of their budget spent on the worker bees....and that is precisely what has happened the past 3 decades or more.....evident by the numbers....and you are WRONG that it does not provide a return..... you have done NO Cost benefit analysis....you are only discussing the cost.....

I never said that increasing a CEO's salary would or would not provide a return. Since each case will be different, there would be no way for me to know. I simply said that a business can't sustain itself by making bad investments that don't provide a return. Therefore, it is in the business' interest to only increase the CEO's salary, if a return on that investment is expected. It doesn't pay to invest in or reward failure.



The further we get from a minimum wage increase the more time the market has to correct for it. One minimum-wage related reason minimum wage workers are losing ground is their inability to compete with their foreign counter-parts, like workers in China, for example. Also, the minimum wage is but one government policy that adversely affects those who make the least amount of money. Ironically, the same policies that aim to benefit low income earners, hurt them the most.



How does passing a law to raise a worker's wage increase productivity? A worker is either productive or they are not. They either earn the wage they are paid or they do not. If you contend that extra money in the pocket will make the worker more productive, they will be at least equally less productive when the price of everything else in the market rises to correct for the artificial wage increase, thereby erasing whatever extra money they perceived having to begin with. That is, of course, if they aren't fired from their job or aren't required to take on the work of those who were.

....Prices on key items won't rise due to a min wage increase, you won't see an increase in inflation due to this....And there never has been an increase in inflation due to the min wage hikes we've had thus far that is noteworthy, evident by the analysis of the numbers.....

As mentioned before, inflation is primarily caused by government's mismanagement of our money supply and economy. However, I think the artificial price increases caused by a minimum wage increase can be considered a type of short-term inflation. Once prices and wages are allowed to settle, the inflation is corrected for.

nor have we had a tick up in unemployment from it, evident in the analysis of the numbers....

There have been many studies on how increasing the minimum wage affects employment over the years. Generally speaking, most studies, as well as most economists, indicate that an increase to the minimum wage leads to an increase in unemployment -- especially among those who are least skilled.

Statistics do not back that up. In some years after an increase in the minimum wage, there have been increases in unemployment, but just as many times their has actually been a reduction in unemployment. Over the long haul, the history of raising the minimum wage shows us no real negative or positive effect on unemployment. What it does show us is that lower paid people make more money and have more to spend. Truthfully, this should happen naturally, but it doesn't, because keeping wages low is the easiest way for a business to make money. The only time it works is when we already have near full employment and nobody wants those jobs. Funny thing is that is when you really see inflationary pressures. Just look at North Dakota currently.

 

[NYcarbineer]

True, businesses who don't offer a competitive wage will be forced to move on, as employees leave to work for competitors who offer similar jobs for higher wages. No government coercion or minimum wage law needed. Simple, indeed!

When a thousand people show up for 100 low wage jobs, where's the competition on the business side?

There's still competition. If a business offers too high a wage, it will have to increase prices or lower product quality to maintain a profit, thereby losing business to a competitor offering lower wages. If a business offers too low a wage, no one sufficiently qualified will show up, let alone 100. This is why it's always important for a business to offer a competitive wage to their employees.

There is no reason to offer higher wages when 10 times as many applicants show up as you have jobs to offer. The minimum wage protects workers from exploitation in scenarios where the balance of power has shifted too far in favor of employers.