Bill Gates About Raising The Minimum Wage

[Revmitchell]

“What do you think about the minimum wage? Should it be raised? And should we want to see models more like Costco – where companies pay their employees a lot more than the minimum wage?”

Ah, the proverbial loaded question. Anyway, Mika was a bit flummoxed by this answer from Gates:

“Well, jobs are a great thing. So you have to be a bit careful: If you raise the minimum wage, you’re encouraging labor substitution, and you’re going to go buy machines and automate things — or cause jobs to appear outside of that jurisdiction. And so within certain limits, you know, it does cause job destruction. If you really start pushing it, then you’re just making a huge trade-off.”


http://www.ijreview.com/2014/01/110131-answer-msnbc-host-looking-bill-gates-raising-minimum-wage/

 

[North Carolina Tentmaker]

Gates’ answer is spot on.

Raising the minimum wage will destroy jobs.

But that is not necessarily a bad thing. If you raise the minimum wage to say $10 per hour, the jobs you destroy are those that are not worth $10 an hour. If an employer cannot get $10 worth (more like $15 after you factor in payroll taxes and mandatory benefits) of work out of an employee, then they will eliminate them. They only have two options if they want to stay in business, eliminate the job, or increase the productivity to the point that the job is worth more than the minimum wage and they can make a profit. If they don’t make a profit they go out of business and everyone loses.

So raising the minimum wage can be a great driving factor behind automation and productivity increases. If we raise the minimum wage we will have to find ways to get the same amount of work done with less people. Automation that might have been too expensive when wages are low will be worth it.

So raising the minimum wage does two things. It will decrease the number of jobs, but it will also increase the relative wealth of those who are still working. In times of low unemployment it makes good business sense. The reason it would be foolish today is we have very high unemployment. Despite government numbers that are much lower our actual unemployment rate is very high. This study shows current real unemployment in the US at 37.2%

http://rt.com/business/us-unemployment-economy-crisis-assistance-006/

That unemployment rate is why raising the minimum wage would be foolish today.

 

[church mouse guy]

Someone said that only 1.6% of workers earn minimum wage. They are probably high school students with their first job for the most part.

 

[Salty]

Someone said that only 1.6% of workers earn minimum wage. They are probably high school students with their first job for the most part.

According to 1.6 million workers are at FEDERAL minium wage. Several Stats/Commonwealth have higher mimium wage. http://www.bls.gov/cps/minwage2012.htm

“What do you think about the minimum wage? Should it be raised?

When the minium wage is raised, more people are at minium wage.

And should we want to see models more like Costco – where companies pay their employees a lot more than the minimum wage?”

Thats up to the company to pay what they want. Now, if they offer higher wages - what is the trade-off. Do they require a higher caliber of person, do they inisist on a 30 day notice to quit - ect, ect

We need to know the ENTIRE story.

 

[Sapper Woody]

They only have two options if they want to stay in business, eliminate the job, or increase the productivity to the point that the job is worth more than the minimum wage and they can make a profit. If they don’t make a profit they go out of business and everyone loses

Or, in the case of a fast food place, they can't increase productivity or cut back any more on jobs, as they've already done that to a degree big businesses would be jealous of. So they have to resort to a third option: raise prices. So now the minimum wage is higher, so people are making more money. But prices are higher, so in reality we've just caused inflation, and most likely a net decrease in minimum wage.

 

[North Carolina Tentmaker]

Or, in the case of a fast food place, they can't increase productivity or cut back any more on jobs, as they've already done that to a degree big businesses would be jealous of. So they have to resort to a third option: raise prices. So now the minimum wage is higher, so people are making more money. But prices are higher, so in reality we've just caused inflation, and most likely a net decrease in minimum wage.

Yes raising prices is one way to increase productivity. If the fast food worker is generating more dollars in sales then their productivity is increased. This can be accomplished by selling more hamburgers at the same price, or the same number of burgers at a higher price.

I agree with you, raising the minimum wage without eliminating jobs would have an effect of raising costs and thereby raising prices and creating inflation.

Inflation is another number our government under reports and lies about. By substituting and changing the items considered in the consumer price index they get away with this. The price of gasoline goes up, so the government says that is an aberration and does not count gas anymore. We ship our textile manufacturing to China and the price for a pair of pants drops, so the government decides to count that, even though they are comparing goods that were made in the USA 20 years ago with goods made overseas today. The housing market collapses and prices fall, so housing gets counted. It is all giant shell game with dire consequences.
http://www.policymic.com/articles/4...e-and-could-the-u-s-be-as-insolvent-as-greece

 

[Revmitchell]

Or, in the case of a fast food place, they can't increase productivity or cut back any more on jobs, as they've already done that to a degree big businesses would be jealous of. So they have to resort to a third option: raise prices. So now the minimum wage is higher, so people are making more money. But prices are higher, so in reality we've just caused inflation, and most likely a net decrease in minimum wage.

If you raise prices on fast food people will stop buying it and they will go out of business. The market does not support higher prices for that product. You cannot beat the market.

 

[InTheLight]

If you raise prices on fast food people will stop buying it and they will go out of business. The market does not support higher prices for that product. You cannot beat the market.

Not true. Wendy's is enjoying upticks in same store sales after raising their prices and going with more sophisticated menu items. McDonald's is struggling to keep sales from declining and they are emphasizing their dollar menu.

People have been predicting the death of fast food with every increase in the minimum wage. So long as the increase is incremental these types of restaurants will stay in business.

 

[Revmitchell]

Not true. Wendy's is enjoying upticks in same store sales after raising their prices and going with more sophisticated menu items. McDonald's is struggling to keep sales from declining and they are emphasizing their dollar menu.

People have been predicting the death of fast food with every increase in the minimum wage. So long as the increase is incremental these types of restaurants will stay in business.

Just stop. Raising the minimum wage to 10 dollars and hour will kill the fast food industry. And while it may suffer small incremental raises for a time eventually it will hurt things. The average consumer is not going to pay 10 dollars for a single hamburger. In other words there are limits to its tolerance.

 

[InTheLight]

Just stop. Raising the minimum wage to 10 dollars and hour will kill the fast food industry. And while it may suffer small incremental raises for a time eventually it will hurt things. The average consumer is not going to pay 10 dollars for a single hamburger. In other words there are limits to its tolerance.

I said incremental. Raising it to $10.00 an hour is a 38% increase. An increase of 10% to $7.95 an hour would have little effect on fast food sales.

Adjusted for inflation today's minimum wage buys less now than it did in 1974.

 

[Revmitchell]

I said incremental. Raising it to $10.00 an hour is a 38% increase. An increase of 10% to $7.95 an hour would have little effect on fast food sales.

I know what you said but you missed my point. The liberals want it to jump that high right now. The protests were demanding 15 dollars. However, even incremental increases will eventually have its impact. The American people are not a bottomless pit of money.

Adjusted for inflation today's minimum wage buys less now than it did in 1974.

Then go do something else that pays more.