Kind of like trickle up economy but it never gets discussed because GOP prefers trickle down where the rich get all the benefits and tax breaks and hope they pass it on haah
A funny thing happens at $15 per hour...
- Thread starter Snarkhund
- Start date
Kind of like trickle up economy but it never gets discussed because GOP prefers trickle down where the rich get all the benefits and tax breaks and hope they pass it on haah
I'm fine with taking it up. Shall I post the initial assumption?
Here is the initial post. Let's begin once again. I'm going to use the P&L I made back then, I don't have the patience to create a new one. Should still be valid.
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Alright, lets do it. A simple P&L of a restaurant. I just put it into Excel. Here you go. Free free to challenge any of the costs. This is Piezoe's Bistro located on the corner of "Fantasy Land Dr." and "Liberal Utopia Pl." Try the Foie Gras. Its to die for.
An eatery with 20 staff that are paid hourly, at $7.10 an hour. You want to give them $15 an hour. Lets assume for easy math they work 160 hours a month (40 a week and its a 4 week month, again for easy calcs). Assuming FICA impact and SS, and a rather small state pay of 3%. The resulting pay raise takes our razor thin margin of 6.4% and completely puts us in the Red. Now, how much of this is gotten back by pricing and through other methods? Please be clear with how much you are getting back and by how much you are getting it back.
(many of these costs as a % of revenue were achieved through discussion with two local eateries in my area of business).
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I'm fine with taking it up. Shall I post the initial assumption?
Here is the initial post. Let's begin once again. I'm going to use the P&L I made back then, I don't have the patience to create a new one. Should still be valid.
---------------------
Alright, lets do it. A simple P&L of a restaurant. I just put it into Excel. Here you go. Free free to challenge any of the costs. This is Piezoe's Bistro located on the corner of "Fantasy Land Dr." and "Liberal Utopia Pl." Try the Foie Gras. Its to die for.
An eatery with 20 staff that are paid hourly, at $7.10 an hour. You want to give them $15 an hour. Lets assume for easy math they work 160 hours a month (40 a week and its a 4 week month, again for easy calcs). Assuming FICA impact and SS, and a rather small state pay of 3%. The resulting pay raise takes our razor thin margin of 6.4% and completely puts us in the Red. Now, how much of this is gotten back by pricing and through other methods? Please be clear with how much you are getting back and by how much you are getting it back.
(many of these costs as a % of revenue were achieved through discussion with two local eateries in my area of business).
I think these numbers are fantasy land.
Min Wage discussed is about a 4-5 year phase in so you jumping in one year is unrealistic. Food prices would be increasing over 5 years so restaurant would not have static income.
Wait staff would be at least half of the 20 and they don't make a full hourly wage due to tips. Average waitstaff hourly rates are between $8-$10/hour so they would not jump to $15 most likely.
Your FICA use of 15.4 is not right either, it is closer to 7.65%. That is why your numbers are WRONG. SS i part of FICA and you counted it TWICE. I really hope you did not get these numbers from a real restaurant owner because makes sense why many restaurants fail.
Employers and employees split the tax. For both of them, the current Social Security and Medicare tax rates are 6.2% and 1.45%, respectively. So each party pays 7.65% of their income, for a total FICA contribution of 15.3%. To calculate your FICA tax burden, you can multiply your gross pay by 7.65%.
You are correct, the Social Security is double counted. That was the spreadsheet formula not breaking it out.
Does that make a material difference? I appreciate all the capital letters, though. It helps make your point!
New EBIT at old wage: 10,786
At $15 an hour: (-17,198)
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Also FICA is double what it really is...so you overestimated labor costs.
Well I see what you are trying to establish but it can be done using correct figures. Restaurants don't have full staff at minimum wage due to tipped waitresses Also the costs need to be accounted for correctly. To say jumping labor to double in an instant is a bad idea is tough to sell when that is not how it would work anyway.
It does make a material difference when wrong numbers are used to make a factual point.
I didn't overestimate any labor costs, other than the aforementioned formula error.
Please explain.
FICA is 7.25%....you used 15% were you adding it or subtracting it, I cannot tell from the spreadsheet.
We've already established that those numbers were wrong. The new EBIT numbers are shown.
The FICA is now 7.25 and the SS is included in the FICA.
EBIT numbers are now 10,786 profit vs. a loss of 17,198.
How else are the labor numbers incorrect?