Minimum wage: how much is too much?

[Ken]

By the looks of things (Bezos et al), Amazon could actually afford to pay a little more.

Yes, a little more. According to my math, which could be off, Amazon could give each of their employees and contractors about a $1.55 per hour raise, and that would take their net income to $0.
This is using their most recent record net profit numbers, which were up 200%+ from the prior year.

According to google....

Amazon's 2020 profits were $21.33 Billion. A number that was hugely deflated for tax reasons, by the way. Their true number is probably MUCH higher.
Amazon's total number of full and part-time employees in 2020 was 1,298,000.

Divide $21.33 Billion profits by 1,298,000 employees and we come up with $16,432 per employee if I am doing my math correctly. If we assume full-time employment is 2080 hours per year that comes to $7.90 per hour.

But since large numbers of Amazon employees are part time or seasonal workers, the actual hourly wage increase would be much larger than $7.90 per hour since most of them work far fewer than 2080 hours/year.

[joshuabgood]

By the looks of things (Bezos et al), Amazon could actually afford to pay a little more.

Yes, a little more. According to my math, which could be off, Amazon could give each of their employees and contractors about a $1.55 per hour raise, and that would take their net income to $0.
This is using their most recent record net profit numbers, which were up 200%+ from the prior year.

If they would pay the top folks a bit less, and spend a bit less on rockets to nowhere, probably they could go a bit further than that yet.

[joshuabgood]

There is always the question of how much minimum wage is too much. Almost never the question of how much maximum wage is too much.

[Ken]

There is always the question of how much minimum wage is too much. Almost never the question of how much maximum wage is too much.

I call it the "Money Disease." The infuriating thing about it is, that once you pile up way more money than you or your children or your grandchildren can usefully spend, every extra dollar added to your hoard essentially becomes worthless. It gives you no direct value, invested it mostly just bounces around in the stock market, and when it spills over into politics it generally just goes to buying politicians to rig the system to make it easier and safer for you to add to your pile rather than making the world a better place in any meaningful way.

I don't actually begrudge the wealthy. I don't even begrudge their "spaceboy" escapades. At least those provided some entertainment value. What I do begrudge is their relentless and continual tilting the playing field even further in their direction and undermining our democracy for no apparent reason other than making their enormous piles even higher.

[Josh]

Prices are going up much faster than wages. When rents are $200/mo higher, someone needs to make more than $200 extra in wages to pay their rent.

House costs are sharply up. If we want people to be able to own their own homes, they’ll need to be paid a lot more.

Cars and trucks are up 40% (although Biden assured us that car and truck prices haven’t gone up; CNN fact checked this as false). If you want your employees to drive to their job, they need to be able to afford a car to get there.

Commodity prices are way up. Fuel costs are rising. Other things like lumber or metals are much higher than 2019. Small businesses have to charge more for their products, and are making less profit.

Food at the grocery store is a lot more expensive than it used to be, particularly in bigger cities. You will be paying more for simple things like beef.

As people have to earn more wages just to make ends meet, they will be pushed into higher tax brackets. (Officially, inflation is low, so these tax brackets aren’t budging.) That means they keep less of their pay, even if their employer keeps giving raises. And they won’t be eligible for as much government help.

If prices continue to rise 40% per year whilst the government insists inflation is actually 6%, we will see jobs with staring wages of $115/hr in 6 years. So a hard working 2 parent family will, on paper, be bringing in $478k. They will not be eligible for child tax credits and will be paying 40%+ in taxes. Since the cost of everything else will have gone up, they will be spending the same amount as when they made $15/hr.

[RZehr]

By the looks of things (Bezos et al), Amazon could actually afford to pay a little more.

Yes, a little more. According to my math, which could be off, Amazon could give each of their employees and contractors about a $1.55 per hour raise, and that would take their net income to $0.
This is using their most recent record net profit numbers, which were up 200%+ from the prior year.

According to google....

Amazon's 2020 profits were $21.33 Billion. A number that was hugely deflated for tax reasons, by the way. Their true number is probably MUCH higher.
Amazon's total number of full and part-time employees in 2020 was 1,298,000.

Divide $21.33 Billion profits by 1,298,000 employees and we come up with $16,432 per employee if I am doing my math correctly. If we assume full-time employment is 2080 hours per year that comes to $7.90 per hour.

But since large numbers of Amazon employees are part time or seasonal workers, the actual hourly wage increase would be much larger than $7.90 per hour since most of them work far fewer than 2080 hours/year.

I see that $21B now. I wondered about the profit number I had found. I had also found a 500,000 number for contractors.
The company will also have payroll tax and associated costs to pay. So if for every $1 in wages, the company cost is $1.30, then instead of $7.90, it would be $6.08.

[RZehr]

There is always the question of how much minimum wage is too much. Almost never the question of how much maximum wage is too much.

The premise is different. The question of how much minimum is to much, is because at some point it has the risk of bankrupting a company if they don’t have the margin, nor the ability to raise prices. Which a lot of small companies can’t do. This is true for both the bottom of the pay scale and the top of the pay scale. A company cannot pay unlimited amounts. The question of minimum and maximum cannot be separated.

There is plenty there is plenty of question about how much is too much. Both at the bottom and top of the scale. Both from a balance sheet perspective and from a national political perspective. Elizabeth Warren said last week that Bezos needs targeted, and needs to pay more in taxes.

[joshuabgood]

There is always the question of how much minimum wage is too much. Almost never the question of how much maximum wage is too much.

The premise is different. The question of how much minimum is to much, is because at some point it has the risk of bankrupting a company if they don’t have the margin, nor the ability to raise prices. Which a lot of small companies can’t do. This is true for both the bottom of the pay scale and the top of the pay scale. A company cannot pay unlimited amounts. The question of minimum and maximum cannot be separated.

There is plenty there is plenty of question about how much is too much. Both at the bottom and top of the scale. Both from a balance sheet perspective and from a national political perspective. Elizabeth Warren said last week that Bezos needs targeted, and needs to pay more in taxes.

You don't think too much accumulation of wealth at the top risks bankrupting companies/economies/consumers?

[Sliceitup]

There is always the question of how much minimum wage is too much. Almost never the question of how much maximum wage is too much.

The premise is different. The question of how much minimum is to much, is because at some point it has the risk of bankrupting a company if they don’t have the margin, nor the ability to raise prices. Which a lot of small companies can’t do. This is true for both the bottom of the pay scale and the top of the pay scale. A company cannot pay unlimited amounts. The question of minimum and maximum cannot be separated.

There is plenty there is plenty of question about how much is too much. Both at the bottom and top of the scale. Both from a balance sheet perspective and from a national political perspective. Elizabeth Warren said last week that Bezos needs targeted, and needs to pay more in taxes.

I’m curious what type of sustainable business models don’t have the margins for pay increases, or the ability to raise prices? I’m sure it exists, but how and why?

I have a small business and the business isn’t sustainable if I don’t have wages calculated into the price. Because if I’m not paying myself, I can’t grow because I won’t have the margins to be able to pay others when my business grows.

Is this a competition thing? Where a business can’t afford to pay workers adequately because others will undercut their prices? Is it poor business management? I can understand that there are times, especially in the beginning when the cash flow isn’t there, but to have a business operate continually like this raises all kinds of questions in my mind.

[Ken]

There is always the question of how much minimum wage is too much. Almost never the question of how much maximum wage is too much.

The premise is different. The question of how much minimum is to much, is because at some point it has the risk of bankrupting a company if they don’t have the margin, nor the ability to raise prices. Which a lot of small companies can’t do. This is true for both the bottom of the pay scale and the top of the pay scale. A company cannot pay unlimited amounts. The question of minimum and maximum cannot be separated.

There is plenty there is plenty of question about how much is too much. Both at the bottom and top of the scale. Both from a balance sheet perspective and from a national political perspective. Elizabeth Warren said last week that Bezos needs targeted, and needs to pay more in taxes.

I’m curious what type of sustainable business models don’t have the margins for pay increases, or the ability to raise prices? I’m sure it exists, but how and why?

I have a small business and the business isn’t sustainable if I don’t have wages calculated into the price. Because if I’m not paying myself, I can’t grow because I won’t have the margins to be able to pay others when my business grows.

Is this a competition thing? Where a business can’t afford to pay workers adequately because others will undercut their prices? Is it poor business management? I can understand that there are times, especially in the beginning when the cash flow isn’t there, but to have a business operate continually like this raises all kinds of questions in my mind.

The problem is often when your competitors don't play by the same rules that you do.

For example, when we lived in Texas I knew building contractors who simply couldn't compete with firms that hired crews of undocumented workers and underbid them. There is simply no way to do it when your competitor can simply call his cousin and have 20 undocumented Guatemalan bricklayers show up the next day to work under the table for half the going wage. You can maybe get by doing big institutional and government jobs like schools which are much more closely monitored. But not ordinary subdivision developments where crews of lightly regulated subcontractors are the norm.

A lot of government regulation like minimum wage rules and safety regulations is really about providing a level playing field for all competitors. So that companies that want to do the right thing aren't driven out of business by those who don't in a race to the bottom.