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VGPolyglot on 06 July 2017
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Superman4 said:
VGPolyglot said:
I see a lot of people say how there'll be businesses that go bust if they have to pay their workers a higher wage, but the question is, is that really a bad thing? I'm sure there were businesses that relied on slavery that went bust too once it was abolished, should we have kept slavery legal to ensure that didn't happen?

Minimum wage is just that, a minimum. For more talented employees a higher wage is justified, $10/hr for someone to seat people or $15/hr in Seattle is stupid. The minimum wage was designed to enforce payment for services, it was a driving factor in unions back in the day. Raising minimum wage and forcing medical insurance on everyone including employers is a perfect storm of employees not having jobs, working less hours and paying full price for insurance and employers raising prices.

Issue 1: High minimum wage for a small company with say 10 employees, if they started out at $7.70.hr and the owner was forced to increase everyone to $10/hr his cost per year based on a full time employee would increase by $44,160 per year. That is for all 10 employees at 40 hours per week. That is a considerable cost increase for a small business and will surly dictate that owner raise costs.

Issue 2: ACA which requires that all employers provide medical insurance for all full time employees. This is twofold, first that 44K in issue 1 is now increased significantly due to health care costs. Not only is the employer required to pay a portion of the insurance but the employee must now also pay for insurance, that obviously cuts into that minimum wage increase and could end up costing more than the increase. Now the employer must raise prices even more to cover costs. Let’s say the employer is on the hook for $500 per employee, in that 10 employee scenario it will cost the employer an extra $60,000 per year for those 10 employees just for medical insurance. Add that to the minimum wage increase and it now costs that employer $104,160 more per year for those same 10 employees. That is a lot of money for a small business and gets even larger when talking about large business. The employee however now has insurance and will expect to lose anywhere from $100 to $200 per check to cover those costs. That $2.30 per hour minimum wage increase equates to $368 per month of an increase. So the employee is now making less than the $7.70 per hour after medical is taken out.

 

 

In order to cut costs the employers are now cutting employee’s hours back so they do not need to provide medical coverage. Employees will then see an average of 30 hours per week instead of 40 and have no insurance and no chance of overtime. That employee will now make $1200 per month instead of $1232 per month. That isn’t much difference per month however per year that is a difference of $384. That is more than a week’s pay at $10/hr and 30 hours per week. So per year employees with that pay scale will see a decrease in salary of $384 per year in wages and still be forced to purchase insurance, something they were not forced to do before the ACA.

I realize that businesses require the exploitation of their employees to survive, that's why I don't encourage reformation of the current system, because it'll always have the same problems.