Comments by "Xyz Same" (@xyzsame4081) on "Amazon Exec Goes After Bernie u0026 Gets Pummelled" video.
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@newbieprepper8451 The PRICE POINT would move upwards, the whole dynamic balance would be reshuffled, that also worked very well in the Golden Era (post WW2, the purchasing power of the federal minimum wage peaked in 1968) Sales prices can be increased because ALL have a level playing field. (and the jobs cannot be outsourced no competition from Mexico or China). Low wage jobs are typically service sector jobs. It trickles up, but manufacturing pays more anyway, so that is not impacted, and thre labor is a much smaller share of costs.
Revenue would go up, so if the profit margin is 3 - 6 % that is now based on a higher amount (my estimate 20 % higher see below).
Will consumers still buy ? Yes, if they _could_afford it in the past they will afford it after the price increases. Especially if the mood is optimistic = people feel financially secure. (Then the companies could tap into a new consumer segment, those that have double income).
Allegedly 9 % of costs in a restaurant are labor industry standard. If you include costs in food, half products, services that they buy, it is likely more, those prices would go up as well - somewhat. So if wages and all related costs double, prices would go up by 9 % or whatever, it they pass on all the costs. Which they probably do.
Let's assume they pay fed min. wage, it is still 7.25 because the state is a poor state - or Florida - and it goes up to 15 till 2025. Then it would be a doubling.
Or they have more biz and that can absorb some of that. But maybe they would like to make more profit and pass it all on, like the competition does (most likely).
In Seattle they had extensive research done, while the initially controversial increase to 15 USD was rolled out. In phases and big biz had to lead the way. Which meant the chains got the consumers used to the new price points, smaller restaurants had more time and had a little edge in the transition phase.
Prices in restaurants went up. Not in retail, not street vendors. Nothing dramatic, could be that the restaurants seized the opportunity. Inflation did not go up (restaurant bills are a small part of costs of living).
Let's say they pass on all additional wage costs. Eyeballed 15 % - or let's make that even 20 %. But till 2025.
Now WHO are the patrons ? Middle class and upper can easily afford that price hike and will continue to dine out, they like it. If the bill was 100 it will be 120. If the beverage cost 3 USD it will cost 3.60 USD because of the wage hike related inflation. In 2025, not right away.
Even wealthy people get annoyed if they know the price of something (daily expenditures) and it goes up. Must somehow mess with the gatherer / hunter instict of humans ;)
So for psychological & sales reasons it is better to have the price hikes gradually. Consumer might even comment critically - and then they will continue to "buy". And get used to it.
Double wage costs mean 20 % price increase but FULL 100 % increase of wages for people working minimum wage and those who have slightly more also get a raise.
A person had 15,000 before taxes (per year, 40 hours) and in 2025 they have 30,000. At that level of income that is massive. In other words it will lead to optimism. Now if they want to dine out or treat themselves they might even able to do that w/o being imprudent. That extra budget covers plenty of 3.60 beverages, and even an occasion a 120 restaurant bill. It by far outweighs the disadvantage that the price has gone up by 0.60 or 20 USD (and another minimum wage worker gets much better paid).
That money (even if saved up for a while) is going to be spent and directly and indirectly it will find its way into the restaurants and other service sector companies. The person is frugal with dining out, but can afford the hairsalon more often, saves up for a car, can pay for tutoring ....
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