A funny thing happens at $15 per hour...

[El OchoCinco]

I have Tsing on ignore so I had to read his posts via incognito, but he purports to be a CFO of a 700MM company.

None of my controllers nor my CFO would make such simple errors in an fictitious income statement.

Or such bold assumptions and then ask me to go do his homework for him.

 

[UsualName]

Because given our current safety nets and benefit cliffs.... the poverty line is a very subjective concept...

But, again... I was not taking a stand on whether increasing the minumum wage is a good thing or a bad thing.

I just think its fucking ridiculous to have a govt mandating an increase in minimum wage when it also imports over a million people a year and lets in millions of undocumented workers.

Like I say... if we are going to be lefty or righty... let us do it correctly.
We are currently getting the worst possible policies from both sides... because that is what the cronies who own our politicians desire.

Its truly a pyscho command economy idea... to mandate a large increase in minimum wage when we take in a million people a year... and do not turn people away at the border.

No. What’s “psycho” is not having a raise in the minimum wage considering it’s been 12 years.

 

[Tsing Tao]

I repeated myself several times about the mistakes in your model but you continuosly overlook it. Why should I continue to go back and forth but let me summarize it again for you:

1. The min wage is to be phased in over 5 years, you jacked it up immediately
2. Revenues over that 5 year period should be expected to increase 2-3% annually ata minimum, you kept them the same.
3. All 20 employess will not be earning the min wage because at least half of them are tipped so their salary would be less than you estimated thus a lower labor cost increase with an increase in min wage.
4. Your Total Labor does not even add up correctly unless there is something hidden.
5. Owner could easily shave off a few hours a week of being open or shifts to save some money.

In the spirit of trying to make a worthwhile discussion of this, I'm doing my best to follow your comments, and re-doing the P&L when you point out valid concerns. You seem to want to be confrontational. I'm just trying to get the model right. So let me address your points 1-5.

1. This was originally part of a discussion with Piezoe about moving to a minimum wage of $15 right away. There was no proposed increase over time. You chose to insert yourself into the discussion, I didn't ask for your opinion. This is fine, I don't mind talking with you, but that wasn't the spirit of the discussion with Piezoe. If we want to change the variables of the hypothetical now based on your rules, we can. but we're changing them.

2. See point #1

3. Again, whether they are earning min wage or not is irrelevant. The total labor cost for a restaurant is in the area where these businesses operate. So if I drop the labor cost per hour, I will have to drop the revenue to keep it in the range where businesses operate. That will result in the same disparity between models.

4. Total Labor adds up perfectly. It is MGMT Comp and Ben + staff Comp + Staff Ben. Right there, right in front of you. I just checked it for a 5th time.

5. So now we're getting into the discussion of what the owner could do to help the business at 15/hr - which was the whole point of the discussion. Happy to talk about what he could do. but we must first reach agreement on the financials.

Restaurant labor is in 3 groups:

Front House Staff (servers hosts and bartenders)
Managers
Kitchen Staff

Or you can divide it into 2 groups of hourly v. annual salary.

Then you have to adjust labor depending on which night of the week. You will have more staff on FRI and SAT then you will have on TUE and WED. So your salary assumptions are generic.

They are generic because it doesn't matter. All that matters is the % cost of labor. And it IS divided between hourly v. salary. That's why there is a MGMT number in there (that is salary).

Also labor should be less than 30% unless this is a really fine dining establishment but even then the prices charged are way higher. You assumed max labor costs because your assumptions are flawed.

Says you. Both places I talked to gave me numbers. Googling further shows that this % (30.8% of gross sales) is not - by any stretch of the imagination uncommon.

But I am supposed to go to homework to fix all the mistakes.

You're not supposed to do anything. Again, you inserted yourself into this discussion. I'm happy to have it, but be constructive and lets get the model to the point we agree, and THEN we can discuss actions to mitigate what is a very obvious disparity in profit due to the wage hike. Or we can just go back and forth pissing on things if you feel that adds more value.

I tell undergrad students I used to teach about models..... garbage in... garbage out.

If you want to make crazy assumptions then it is easy to show how a restaurant goes from profitable to a loss.... but where is the complaints when food costs jump like they have with meat and dairy various times over the past 2 years, what about rent increases etc... labor is a cost of business and despite your wild accusation that it would double in price overnight, restaurants and businesses can adjust to a reasonable increase in min wage. If not then they go out of business just like if their rent increased over the next 5 years with an escalation clause.

You are implying to us all you have vast experience in running a business but it is not s howing in how you model costs and forecasts. I should not have to do your homework for you.

This is nothing other than random attempts at flaming. I am not in the restaurant business. Again, if you want a constructive conversation, I welcome it. If you just want to act like a dick, kindly do so elsewhere?

 

[Cuddles]

No. What’s “psycho” is not having a raise in the minimum wage considering it’s been 12 years.

Minimum wage should at least keep up with inflation, venezuela-like explosion not withstanding

 

[Tsing Tao]

Minimum wage should at least keep up with inflation, venezuela-like explosion not withstanding

So should social security.

 

[UsualName]

Minimum wage should at least keep up with inflation, venezuela-like explosion not withstanding

What bothers me is that the few people who argue against raising the minimum wage never talk about the fact that many of these workers are receiving government benefits. As if that’s not a tax on all of us. Would you rather pay the tax to the government for those workers or pay $.80 extra for a “value meal?”

 

[Buy1Sell2]

What bothers me is that the few people who argue against raising the minimum wage never talk about the fact that many of these workers are receiving government benefits. As if that’s not a tax on all of us. Would you rather pay the tax to the government for those workers or pay $.80 extra for a “value meal?”

You do understand that the government benefits never go away correct? Your argument is false-premised and we've no interest in it.

 

[Buy1Sell2]

Minimum wage should at least keep up with inflation, venezuela-like explosion not withstanding

Wages, not mandated minimum wages should keep up with inflation. -----By the by, mandated minimum wages fuel inflation.

 

[UsualName]

You do understand that the government benefits never go away correct? Your argument is false-premised and we've no interest in it.

Wrong. Benefits like food stamps and housing assistance are means tested. Meaning they decrease as income increases.

 

[Buy1Sell2]

Wrong. Benefits like food stamps and housing assistance are means tested. Meaning they decrease as income increases.

No. those limits will increase as well. This is what's called creeping socialism. Democrat and Socialist policies are based upon feelings.-----Conservative policies are based upon facts and common sense.