7 ms·

> you can make up the difference by increasing prices by 10% LOL. Beautiful. Just beautiful. With no insight what so ever into the profit margins for a busi

• dang 9y ago
  Please don't do this here.
• michaelmrose 9y ago
  Its obviously an oversimplification. In fact 20% of gross costs being minimum wage labor is arbitrary and high as is an increase in minimum wage by 50%. The point was to demonstrate that even in the case of a massive sudden increase in the minimum wage in an industry where unskilled labor makes up a pretty damn big portion of costs that the price increase that would pay for 100% of that pay increase was comparatively quite modest. For example McDonald's is almost the quintessential low skill job and a McDs franchise can easily pay 20% of its costs to labor. In fact the average mcdonalds employee is paid $10 an hour. Raising rates is one option, accepting lower margins is another if your margins are such that you can keep the doors open. Slashing labor as you have suggested is an unreasonable suggestion because the relationship as stated above isn't linear. In order to make up for labor going up by 50% you would have to slash your labor hours by 33% which is unsustainable. Basically the gist of the matter is that I don't possess nor claim specific insight into a particular business in this post. I'm saying that elementary school math can show that slashing labor is an unreasonable reaction that nobody will do because they when faced with the same scenario will be fully capable of doing the math. I'm not here to solve all the corporate worlds problems I'm here specifically to refute your post.