The Coming Obamacare Shock for 170 Million Americans

[Mr Khan]

thranx said:

Mr Khan said:

Businesses won't have to raise prices on everything. Compare McDonald's prices from the US to, say, Australia, where cost-of-living is about the same but minimum wage is higher. Actual prices don't go up that much.

The price rises will be minimal compared to the real money in people's pockets, especially poor people who actually spend their money rather than just shunt it into some hedge fund like the rich. The net effect would be quite beneficial, but for the bitching of businesses who only see the short-term shock to their bottom lien.

people will loose jobs when min wage goes up. its just not cost effective to pay people 10 an hour for easy work that little training is needed for. After every min wage hike operators will switch to less labor intensive options, such as automation. which just cuts out the employee completely. I know at my pizza place after the next min wage increase it will be cheaper for us to doughball and portion by machine than by people, so we will be cutting hours of current workers. I know chilis has already done this on a massive scale too. So what good is raising the min wage? all it really does is hurt the people will the least skills as they are no longer worth employing. it means everyone i employ must be worth $10 an hour or they loose their job.

http://beta.fool.com/ultimatespinach/2013/05/10/what-restaurant-chain-will-be-next-to-deploy-the-k/34052/

 

Edit: I should add over time it will decrease compition among businesses as it will increase start up costs for business. It costs more intitially to get all the equiptment than to train employees, but if that is not cost effective than people will have to come up with more start up money, which is harder, so it will be done less and less compition will be there to bring prices down.

But people also have more money in their pockets to spend on goods and services. Why do we always neglect that part of the equation? You can't just assume that inflation is going to zero all of it out, especially since we've been in a *very* low inflation environment (QE is the only thing keeping deflation from happening. The market right now wants deflation to happen. Inflation is a boogeyman in Western societies)

Automation is going to happen anyway. That's just an inevitability, because businesses will always root around to try to figure out how to minimize labor costs, just as they'll root around to figure out how to minimize costs of all their other inputs (even I as an advocate for labor will admit that it's not some conspiracy against the working man, but neither is it a process that is kept at bay only because of low minimum wages). Companies will always be working to figure out what the bare minimum number of employees is to get the job done, and guess what: if they have to pay more, they still can't get rid of people without making the quality of the work suffer, because they've likely already cut back to only what is needed.

Note that the chili's article talked more about improving speed of service through automation, rather than about labor costs. That's why you automate.