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Min. Wage Increase and 401K plans

Todd0611
Posts: 99
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10/15/2015 4:53:26 PM
Posted: 1 year ago
I'm for increasing the min wage, to a point. There have already been news stories out about Walmart getting rid of some jobs, and there was another retailer (can't remember now), to help offset the wage increases given. If you're a publically traded company, and you don't increase prices to offset costs (which increase in labor is), then it will impact your profit margin, which in turn will lower your stock price. If I have Walmart in my portfolio, and the stock goes down, then obviously the value of my portfolio goes down (depending on my other stocks, but this wage increase would impact many companies).

If prices aren't raised, in order to remain competitive, and these companies give pay increase, how do they realistically offset costs? Any basic understanding of economics shows that you either have to increase revenue to offset costs, or find another way. Retail is extremely a competitive market, and I am for increasing to get people a decent wage, but how to you keep the stock price from dipping, which hurts people's 401k's. Companies need to show a profit, in order for people to invest in them, so would a wage increase just be a short term negative impact to stock prices?

With the continued rise in health costs, some of the additional money earned by workers would be put back into the economy via spending, but if people have to keep paying more for health insurance plans, then that money won't make it back into the economy- please correct me if this is wrong. I just see these as logical concerns when it comes to increasing the min wage too high. Also, if you already work for company "X", and make $12-$16 an hour, and you've been there a few years, then a new hire comes in and makes $15/hr, aren't you going to feel devalued, unless you get a raise as well? If you do get a bump, then company costs go up even more, which again effects the profit margin, which hurts stock price, which hurts 401K's.

CEO pay reduction probably would not offset the rising costs enough, and raising prices to increase revenue, makes it harder to be competitive (unless all companies raise prices- which would offset the additional buying power consumers get from the increase). Think about small businesses, who employ 10-20 people, can they incur these costs, without going under? I know it would be easier for the large companies, but doesn't small business make up over half of the business in the US?
ColeTrain
Posts: 4,315
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10/15/2015 9:26:48 PM
Posted: 1 year ago
At 10/15/2015 4:53:26 PM, Todd0611 wrote:
I'm for increasing the min wage, to a point.

What does "to a point" mean, and where is that point?

There have already been news stories out about Walmart getting rid of some jobs, and there was another retailer (can't remember now), to help offset the wage increases given. If you're a publically traded company, and you don't increase prices to offset costs (which increase in labor is), then it will impact your profit margin, which in turn will lower your stock price. If I have Walmart in my portfolio, and the stock goes down, then obviously the value of my portfolio goes down (depending on my other stocks, but this wage increase would impact many companies).

I don't see how this is specifically relevant to wage increases and their ramifications policy-wise... I think the real issue lies with eliminating poverty and unemployment. It's true; the wage increase would impact ALL companies as a federal policy. It'd be fundamentally detrimental, but I'll not get into that right now.

If prices aren't raised, in order to remain competitive, and these companies give pay increase, how do they realistically offset costs?

They don't. Raising the mw is a bad idea.

Any basic understanding of economics shows that you either have to increase revenue to offset costs, or find another way. Retail is extremely a competitive market, and I am for increasing to get people a decent wage, but how do you keep the stock price from dipping, which hurts people's 401k's.

You're catching on. Logistically, there's no way that MW increases can be widely beneficial economically. There's too many facets by which costs are an issue. A wage increase won't *really* get the people that need them a decent wage, the MW can't achieve that lofty status.

Companies need to show a profit, in order for people to invest in them, so would a wage increase just be a short term negative impact to stock prices?

A wage increase would have a long-term negative impact to both stocks and economy in general.

With the continued rise in health costs, some of the additional money earned by workers would be put back into the economy via spending, but if people have to keep paying more for health insurance plans, then that money won't make it back into the economy- please correct me if this is wrong. I just see these as logical concerns when it comes to increasing the min wage too high.

I think I understand here... and I think you're mostly right.

Also, if you already work for company "X", and make $12-$16 an hour, and you've been there a few years, then a new hire comes in and makes $15/hr, aren't you going to feel devalued, unless you get a raise as well? If you do get a bump, then company costs go up even more, which again effects the profit margin, which hurts stock price, which hurts 401K's.

Yeah, there's big problems with the $15 plan specifically, but we'll not get into those now... If you want to read, I've made a thread about MW in the economics forum. We can discuss this further there, if you wish.

CEO pay reduction probably would not offset the rising costs enough

It wouldn't.

, and raising prices to increase revenue, makes it harder to be competitive (unless all companies raise prices- which would offset the additional buying power consumers get from the increase). Think about small businesses, who employ 10-20 people, can they incur these costs, without going under?

A valid, logical, and real concern. Once again, I could explain further, but not here.

I know it would be easier for the large companies, but doesn't small business make up over half of the business in the US?

This isn't necessarily true... large companies suffer too, especially their employees.
And yes, small businesses are the majority.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
16kadams
Posts: 10,497
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10/16/2015 3:05:38 AM
Posted: 1 year ago
At 10/15/2015 4:53:26 PM, Todd0611 wrote:
I'm for increasing the min wage, to a point.

Article I wrote on this topic: http://www.abqjournal.com...
https://www.youtube.com...
https://rekonomics.wordpress.com...
"A trend is a trend, but the question is, will it bend? Will it alter its course through some unforeseen force and come to a premature end?" -- Alec Cairncross
Greyparrot
Posts: 14,289
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10/16/2015 3:16:57 PM
Posted: 1 year ago
At 10/16/2015 3:05:38 AM, 16kadams wrote:
At 10/15/2015 4:53:26 PM, Todd0611 wrote:
I'm for increasing the min wage, to a point.

Article I wrote on this topic: http://www.abqjournal.com...

Shameless plug.
Todd0611
Posts: 99
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10/16/2015 3:55:51 PM
Posted: 1 year ago
At 10/15/2015 9:26:48 PM, ColeTrain wrote:
At 10/15/2015 4:53:26 PM, Todd0611 wrote:
I'm for increasing the min wage, to a point.

What does "to a point" mean, and where is that point?

There have already been news stories out about Walmart getting rid of some jobs, and there was another retailer (can't remember now), to help offset the wage increases given. If you're a publically traded company, and you don't increase prices to offset costs (which increase in labor is), then it will impact your profit margin, which in turn will lower your stock price. If I have Walmart in my portfolio, and the stock goes down, then obviously the value of my portfolio goes down (depending on my other stocks, but this wage increase would impact many companies).

I don't see how this is specifically relevant to wage increases and their ramifications policy-wise... I think the real issue lies with eliminating poverty and unemployment. It's true; the wage increase would impact ALL companies as a federal policy. It'd be fundamentally detrimental, but I'll not get into that right now.

If prices aren't raised, in order to remain competitive, and these companies give pay increase, how do they realistically offset costs?

They don't. Raising the mw is a bad idea.

Any basic understanding of economics shows that you either have to increase revenue to offset costs, or find another way. Retail is extremely a competitive market, and I am for increasing to get people a decent wage, but how do you keep the stock price from dipping, which hurts people's 401k's.

You're catching on. Logistically, there's no way that MW increases can be widely beneficial economically. There's too many facets by which costs are an issue. A wage increase won't *really* get the people that need them a decent wage, the MW can't achieve that lofty status.

Companies need to show a profit, in order for people to invest in them, so would a wage increase just be a short term negative impact to stock prices?

A wage increase would have a long-term negative impact to both stocks and economy in general.

With the continued rise in health costs, some of the additional money earned by workers would be put back into the economy via spending, but if people have to keep paying more for health insurance plans, then that money won't make it back into the economy- please correct me if this is wrong. I just see these as logical concerns when it comes to increasing the min wage too high.

I think I understand here... and I think you're mostly right.

Also, if you already work for company "X", and make $12-$16 an hour, and you've been there a few years, then a new hire comes in and makes $15/hr, aren't you going to feel devalued, unless you get a raise as well? If you do get a bump, then company costs go up even more, which again effects the profit margin, which hurts stock price, which hurts 401K's.

Yeah, there's big problems with the $15 plan specifically, but we'll not get into those now... If you want to read, I've made a thread about MW in the economics forum. We can discuss this further there, if you wish.

CEO pay reduction probably would not offset the rising costs enough

It wouldn't.

, and raising prices to increase revenue, makes it harder to be competitive (unless all companies raise prices- which would offset the additional buying power consumers get from the increase). Think about small businesses, who employ 10-20 people, can they incur these costs, without going under?

A valid, logical, and real concern. Once again, I could explain further, but not here.

I know it would be easier for the large companies, but doesn't small business make up over half of the business in the US?

This isn't necessarily true... large companies suffer too, especially their employees.
And yes, small businesses are the majority.

Thanks, I graduated college a while back, so I'm not up on all the economic trends, and while I believe I had a good education, I don't think it takes a genius to come up to some of my conclusions. So is it poor education that keeps people from understanding the impacts of raising the min wage? These were simple points I made, and it would seem politicians could come to these conclusions to refute the need for a $15 min wage. I get that some people just hear, "I'm getting a raise", but they don't understand the long term impact. I appreciate you taking the time to go through point by point. Maybe next week I'll have time to look into it more, thanks again.
Greyparrot
Posts: 14,289
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10/16/2015 4:09:06 PM
Posted: 1 year ago
At 10/16/2015 3:55:51 PM, Todd0611 wrote:

Thanks, I graduated college a while back, so I'm not up on all the economic trends, and while I believe I had a good education, I don't think it takes a genius to come up to some of my conclusions. So is it poor education that keeps people from understanding the impacts of raising the min wage? These were simple points I made, and it would seem politicians could come to these conclusions to refute the need for a $15 min wage. I get that some people just hear, "I'm getting a raise", but they don't understand the long term impact. I appreciate you taking the time to go through point by point. Maybe next week I'll have time to look into it more, thanks again.

There just isn't enough coverage about how Min wage limits employment opportunities, and promotes "pay under the table" labor like illegal immigrants, and also relocation of low wage manufacturing jobs overseas. Since most of the jobs we have here are service, and usually above min wage, most don't really see the overall problems.
ColeTrain
Posts: 4,315
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10/16/2015 4:14:53 PM
Posted: 1 year ago
At 10/16/2015 3:55:51 PM, Todd0611 wrote:
Thanks, I graduated college a while back, so I'm not up on all the economic trends, and while I believe I had a good education, I don't think it takes a genius to come up to some of my conclusions. So is it poor education that keeps people from understanding the impacts of raising the min wage? These were simple points I made, and it would seem politicians could come to these conclusions to refute the need for a $15 min wage. I get that some people just hear, "I'm getting a raise", but they don't understand the long term impact. I appreciate you taking the time to go through point by point. Maybe next week I'll have time to look into it more, thanks again.

Yeah, no problem! :) You seem to have a good understanding, overall. I agree, it really isn't that hard to pick up on the ramifications of a MW raise. The proposal of the MW hike is really a classic example of demonstrably crooked politics. On the surface, a MW raise looks fantastic. You pay people more money, pull people out of poverty, and create a better quality of life for minorities. But after, at the very least, consideration of economic theory and logic, flaws become increasingly evident. The money to pay those workers a higher wage HAS to come from SOMEWHERE. If companies were already making plenty of profit, they'd listen to labor unions demanding higher wages. I understand some large corporations could honestly support a higher wage, but as a utilitarian and federal policy, the MW hike is a bad idea. Smaller corporations, especially, would have to do one of three things to compensate for paying higher wages: a) raise prices, b) cut hours, or c) cut workers. For option a, we know that wouldn't be a good thing. Logically, this entirely removes any benefit from a wage hike. If you get paid more money, but suddenly products are all more expensive, what is the gain? More money flowing, which can lead to inflation. For option b, we know this isn't a good things. Less hours = less wages, so once again, you don't actually see the benefits of the wage hike in the first place. For option c, perhaps the most ominous, you see unemployment grow. Who, one might ask, is going to lose their job? It's obvious that a corporation wants to keep its best, most skilled, and better educated employees, and would be willing to pay higher wages for them. But what about the less skilled and uneducated employees? To the company, all things considered, they wouldn't be worth $15 dollars an hour. These would be the ones to lose their jobs, and they are the impoverished. More people without jobs would facilitate more reliance on welfare, which obviously isn't beneficial. Conclusively, the MW hike proposal hurts the people it targets to help, among a plethora of other harmful consequences.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
Greyparrot
Posts: 14,289
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10/16/2015 5:11:32 PM
Posted: 1 year ago
At 10/16/2015 4:50:03 PM, EndarkenedRationalist wrote:
From what I've heard of economics, the minimum wage can be raised to around $10.10 before it starts having significant detrimental effects.

That sounds about right, Any level will have bad effects, but there is a point where it will have exponentially bad effects. Bad in orders of acceptable magnitudes....
Greyparrot
Posts: 14,289
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10/16/2015 5:16:47 PM
Posted: 1 year ago
The pragmatic, efficient way to raise wages is to make business owners compete for workers. That involves having a trained workforce ready to work, and mechanisms in place to fire bad workers, and reward the good ones.
16kadams
Posts: 10,497
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10/17/2015 12:02:35 AM
Posted: 1 year ago
At 10/16/2015 3:16:57 PM, Greyparrot wrote:
At 10/16/2015 3:05:38 AM, 16kadams wrote:
At 10/15/2015 4:53:26 PM, Todd0611 wrote:
I'm for increasing the min wage, to a point.

Article I wrote on this topic: http://www.abqjournal.com...

Shameless plug.

;D
https://www.youtube.com...
https://rekonomics.wordpress.com...
"A trend is a trend, but the question is, will it bend? Will it alter its course through some unforeseen force and come to a premature end?" -- Alec Cairncross