Minimum wage, or Living wage

Maverick74 said:
Ricter, almost all that data is going to be biased if you don't know how to interpret it. It's like me posting data from Jim Chanos who is a notorious perma-bear and saying he spends all his days focused on the topic of markets and he says the markets are going to crash. That is not say he is wrong, but again, remember what I said about financial bias. You just are ill-equipped to properly have this discussion. For example, when examining data on the restaurant traffic in Seattle is it possible that the overall economy in Seattle also improved over that same period which led to a proportional increase in restaurant spending. In fact, most of the east and west coast saw strong upticks in their economies since 2009 that was more then likely the effect of increased restaurant traffic. Also, Seattle, a rather progressive city by most estimations has a much smaller percentage of "fast food" restaurants. Their eateries are more expensive then fast food and so they are not going to be affected by an increase in wages. Try doing that in Ohio and get back to me.

Just to give you some background here Ricter, the general idea here is, raising wages is not a bad idea "if" the market is providing a sub-optimal level of pay. In that case, raising wages can produce a positive effect but only if that is the case. In most cases, you will get a more efficient outcome either by simply letting restaurants keep the current wage and simply offering the equivalent increase in the form of a payroll tax cut or simply increasing welfare in the form of a tax credit to the poor workers. This would not alter the input cost for restaurants and would achieve a superior outcome for the poor.

The problem with simply raising wages especially for fast food is that those restaurants do not have the ability to pass the increase in food costs on to the consumer. As counter-intuitive as it sounds, you WANT them to be able to raise prices. The problem is its shit food that no one will pay a premium for and rightfully so. There are industries though where you can pass the costs on to consumers and they will absorb the burden while at the same time allow higher wages to be given to employees and that is where economists want to see wages increased. But fast food restaurants have no pricing power so increasing their labor costs while leaving them powerless to raise prices squeezes them on the margin which means any business operating on the margin will go out of business by economic definition. So I don't think I'm going to get anywhere with you on this until you learn economics yourself vs passing the baton to a fellow blogger to speak on your behalf.
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What's your take on the sustainability of the US national debt? Coles Notes?
 
Maverick74 said:
Ricter, I don't know how to explain this to you since you have never taken a damn risk in your life, but most businesses fail whether they are restaurants or not, that is a FACT. Restaurants have the unfortunate quality of being in a very low margin business with lots of competition. Ricter, apply some basic logic here if you can, if running a business was easy and profitable, everyone would do it. There is a reason why most people don't. Because it's really hard, just like trading is very hard. Most traders fail to. I'm sorry to have to be the one to give you this news.
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Ya, 16 hour days at the pizza shop. No thanks...
 
Maverick74 said:
The debt is sustainable. What are Coles Notes?
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To what level is it sustainable in terms of debt-to-GDP? Coles Notes must be a Canadian thing.... brief plot summaries of popular books used by students to avoid reading the actual book..
 
Maverick74 said:
Ricter, I don't know how to explain this to you since you have never taken a damn risk in your life, but most businesses fail whether they are restaurants or not, that is a FACT. Restaurants have the unfortunate quality of being in a very low margin business with lots of competition. Ricter, apply some basic logic here if you can, if running a business was easy and profitable, everyone would do it. There is a reason why most people don't. Because it's really hard, just like trading is very hard. Most traders fail to. I'm sorry to have to be the one to give you this news.
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On reading about fast food franchises, it's clear that most of them are profitable, and most succeed longer term, though certain chains are reaching market saturation, apparently. And going by a proxy for inflation, like the Big Mac index, it's clear they have been passing along increased input costs successfully for decades. And still they have grown massively in number. No reason to believe most of the owners are deep in debt and operating "zombie shops", which I guess you meant to imply that they would never get their investment back. It's just not true.
 
Ricter said:
On reading about fast food franchises, it's clear that most of them are profitable, and most succeed longer term, though certain chains are reaching market saturation, apparently. And going by a proxy for inflation, like the Big Mac index, it's clear they have been passing along increased input costs successfully for decades. And still they have grown massively in number. No reason to believe most of the owners are deep in debt and operating "zombie shops", which I guess you meant to imply that they would never get their investment back. It's just not true.
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Ever heard of surivorship bias? It means the sample you are looking at are the ones that remained. You view the winners. The losers disappear out of sight. So yes, there are plenty of profitable restaurants around because the losers went under. Again, survivorship bias is EVERYWHERE. And yes, most of the franchise restaurants are drowning in debt. Do you think they give out those licenses for free? Ricter are you playing with me or are you really this dense? A mcdonalds franchise alone cost 750k!!!!. That's debt Ricter. All these franchisees borrow money from the parent company and "hope" over time to pay it off. Most never do. They scrape by and borrow more. The cheapest franchise I'm aware of are Subways. When I was growing up that was the rage because they were very cheap, I think 75k. Ricter I really have a hard time believing you are this stupid.
 
New restaurant chains are popping up all over. The money is made in the franchising fees. Not the food. Entrepreneurs caught on to this and sell the illusion of prosperity to operators, when its really themselves who make bank. Sort of like the MLM model.
 
achilles28 said:
To what level is it sustainable in terms of debt-to-GDP? Coles Notes must be a Canadian thing.... brief plot summaries of popular books used by students to avoid reading the actual book..
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You have to look at the size of the debt and the size of the economy. It's like looking at a mortgage and comparing someone who owes 50k on a small home vs someone who owes 500k on a large home. The debt might be ten times bigger but that 500k debt is worth more and will appreciate more over time. Our country is like a huge mansion. It's the best house in the best neighborhood and it's appreciating over time. The size of the debt is sustainable based on the size of the economy. Yes, at some point it's not sustainable obviously. The real issue is where the debt is going. Most of our borrowing now is going into unproductive areas that are hindering growth. But that could be cyclical and swing the other way. Remains to be seen.
 
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