Skip to main content

Good Intention, Bad Idea

Updated 1.29.2014 - Last night President Obama stated in his state of the unior address that he believes that minumum wage should be increased to $10.10 an hour. This is a biref illustration to demonstrate what this action would do

Hey y'all, today I've got another post about the math of politics. So pay attention or leave now.
 
If you keep up with the news at all you'll know that President Obama proposed a minimum wage increase . Although in theory this sounds like a great idea it's really not and I'm going to break down why. My first job out of college was in staffing so I'm pretty familiar with the type of work and pay rates that might go on in a typical warehouse - an example of a work environment where you would find minimum wage employees. We're going to go with the tried and true business school scenario that our warehouse is for a widget company. So here goes . . .
 
Here is the list of positions, the pay rate, # of positions and annual position cost for the warehouse:

movers $7.75 20 $322,400.00
packers $9 40 $748,800.00
forklift $12 8 $199,680.00
team lead $14 10 $291,200
office support $16 5 $166,400.00
area manager $18 4 $149,760
warehouse manager $24 1 $49,920.00

 
This widget warehouse has a 35% wages to sales ratio and sells 1 million widgets a year - without overwhelming you with too much math this means that the price of a widget is $5.55.
 
Congress then enacts legislation that the minimum wage be increased to $10.10 an hour. Hurray, all the movers get an increase! But it's not that simple, because packing is harder than moving - so the packers get an increase and so on and so on. So now the wage costs looks like this:

movers 20 10.10 $420,160.00
packers 40 $12.00 $998,400.00
forklift 8 $14.00 $232,960.00
team lead 10 $16.00 $332,800.00
office support 5 $18.00 $187,200.00
area manager 4 $20.00 $166,400.00
warehouse manager 1 $26.00 $54,080.00

Although wages have increased the company will maintain a 35% wage to sales ratio - because that's what companies do. The price of a widget is now $6.69.
 
You'll notice that although each position got a raise, the increase was smaller and smaller as the position rank increased, this is how it works in the real world - do not expect a raise if you make above minumum wage anbd it is increased.  This is how it happens in the real world - everyone will not get the 28.77% increase the movers got.
 
So now we can do a comparison of every one's current annual earning and their new earnings with the increase and we can see how many widgets everyone can afford.

Now Minimum Wage Increase Widgets Per Year
movers $16,120.00 2904 movers $21,008.00 3140 236
packers $18,720.00 3373 packers $24,960.00 3730 357
forklift $24,960.00 4580 forklift $29,120.00 4352 -228
team lead $29,120.00 5247 team lead $33,280.00 4974 -273
office support $33,280.00 5996 office support $37,440.00 5596 -400
area manager $37,440.00 6746 area manager $41,600.00 6218 -528
warehouse manager $49,920.00 8995 warehouse manager $54,080.00 8084 -911
37841 36094 -1747


 
Notice that although the majority of the employees can now afford more widgets the total number of widgets sold went down as the higher earning individuals did not receive an earning increase that matched the increase in widget cost. Since less widgets are being sold the company will now reduce their staff. As a result of all of this here is the final result:
 
5 movers and packers lost their job - they now get $ from the government to buy widgets
55 movers and packers can afford more widgets and are better off
28 "skilled employees" received pay increases but can afford less widgets and are worse off
 
So, while a majority of the people are better off, the widget society as a whole has declined in it's position. And again, as I stated in my conservative values post, the more skills one has and the harder one works to increase standing - the more one is punished by government's policies. And since to read this blog you must a. know how to read b. work from or possess a computer / smart phone chances are one of those skilled workers is YOU!


 


 


 


 


 
 

 

   
 

Comments

  1. That Sucks..... Why did we pay for a college education again?

    ReplyDelete

Post a Comment

Amazon

Popular posts from this blog

20 Rules for Modern Feminine Style

One of the things I love about the digital age is the ability to connect with others! I recently got a great idea from a youtuber I follow to make a list of 20 "rules" that define my lifestyle and I really loved this idea and thought not only would this be a good exercise for myself but a good topic to share with y'all. So, obviously you do you and wear whatever you want but these are my guidelines for my modern feminine without breaking the bank aesthetic.
1. Focus on pieces with wear ability beyond one season, don't get sucked into too many trends. For example, gingham will always be wearable for summer, plaid for fall, sweaters for winter and floral for spring - but get pieces with classic cuts so you can wear them year after year. For example, a gingham shirt dress is classic, a gingham top with bell sleeves will look dated the second that shape is out. 2. Don't be afraid to spend a little more for quality timeless pieces - a cashmere sweater, a great blac…

Summer Sparkles with Kendra Scott

 Kendra Scott hosted a blogger event for the Memphis Bloggers and there were lots of pretty pieces to try on and see with some sweet treats as well. Look how beautiful these cookies are! Y'all know I'm a big Kendra Scott fan so of course I had to go and check it out. I tend to buy a few pieces of Kendra Scott jewelry items throughout the year because I love their quality and think they have classic style with a trendy twist. During your birthday month you can get one item 50% off so shopping in July is always especially fun and I tend to go for a more trendy piece. As the newest collection has been released there were plenty of options. If you're looking for a versatile piece to wear with lots of different outfits a neutral color is always a good idea.

Of course, bright colors are never a bad idea either. These tassel pieces came out Spring 2018 and I've had my eye on them ever since then - they're so fun!



And of course I love sparkly and glam so thes…

Brahmin Saddle Creek Grand Opening

Earlier this month the new Brahmin store opened at The Shops of Saddle Creek and Memphis could not have been more excited! I arrived right before the doors opened and there was already a crowd formed ready to explore all the goodies inside. Brahmin provided some delicious champagne punch to toast to the grand opening and it wasn't too long after the doors opened that the store was completely full - it took me 1/2 an hour to check out that's how popular the grand opening was! But enough talk, they say a picture is worth a 1,000 words so I'm keeping the text on this post brief and just letting y'all see all the fun inside. Summer 2018 Collection on display right as you walk in   Yummy snacks provided by Brahmin  As you can see, it was very crowded inside The belt bag - can be worn three ways
The back wall behind the register
All the wristlets!
Pretty Indigo - my favorite color

Birthday Discounts

Woohoo! It's my birthday week y'all! Birthdays are always a great time for brands to make customers special and each year I'm able to take advantage of some pretty good discounts in July so I thought I would share the love and talk about some of my favorite discounts and how to get them.

My absolute favorite discount is from Kendra Scott! During your birthday month you can receive one regular item at 50% off. It's your first time you'll have to show your id in store and sign up for their email list but then once they have you on file you can just go into the store and say that you would like to apply your birthday discount to your purchase and give your email address. This year I purchased the Tatiana Long Pendant Necklace which usually sells for $175. This necklace takes the look of the popular Rayne necklace and really amps it up.  
If jewelry is your thing you can also get a $10 credit from Charming Charlie - this discount is sent to Charm Rewards members at the…

The Pink Bride Show Review

Wow, somehow it's March already. Time flies when you're busy stressing over the most expensive day of your life. Yep, that means another wedding post.
When we started planning our wedding I relied a lot on online research, and it was very helpful but also very stressful. Too many choices and too hard to differentiate those choices. Luckily we got engaged right before "engagement season" which meant that bridal show season was soon to follow. I was a little skeptical at first and the first one we attended didn't wow us. Yes, I said we - my groom has been very involved in the process. I don't know about y'all but when I'm looking to do something I research it - A LOT! Do y'all remember when "Get Motivated" toured the country? I spent hours reading reviews so I knew exactly when the legit speakers were coming and when the scam speakers went on. But when I went to research the various wedding shows I I couldn't find much beyond their own …