sorry guys but i have no understanding of economics
its one of my few downsides
could someone elaborate as to why it is bad that minimum wage is $15 in Seattle? It sounds like a good thing because people get paid more.
right?
Businesses have obligations to maintain certain margins of profit. It's not as simple as dipping into a bit of the company's lucrative income, doing that causes the value of the company to fall and reduces public confidence in the company. Since by definition raising wage increases the cost of labor to the employer, the percentage of revenue that must be payed out has to increase. Since there's nowhere for that money to come from, the company has to make one of two changes to solve the problem. The first option is that the company can raise the price of its product to compensate for the higher wage. Since labor is the most expensive cost associated with production of most things, that means your $1 value menu McDonalds burger has to cost $2 now. So, what happens here is that the employee may be making twice as much money; but the products they have to buy are now twice as expensive. The second option is to reduce the cost of labor. Since the company can't lower wages, it can either outright lay off people from their jobs or decrease their hours to a level where the cost is the same. So maybe before John Doe was working 40 hours a week at $7.50 an hour, but now he's working 20 hours a week at $15 an hour. This means that not only is the restaurant understaffed, but John Doe has lost all of his full time employment benefits.
Economists almost universally agree that the existence of minimum wage is a bad thing.
