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

Popular posts from this blog

Vi Peel

2018 Update: Hello Internet! Welcome to my most popular blog post - I presume you're here because you're considering getting a facial peel. Please keep in mind this is an old post and my photo quality is not great. Please feel free to read and enjoy but I do want to let you know that as the years have passed I have taken a more proactive approach with my skin care and I do not get frequent peels. If you'd like to see my modern approach to skincare check out some of my other beauty posts and I'd love for you to connect with me on Instagram to keep up with my latest and greatest recommendations.
___________________________________________________________________________________

Hello! So I got my first Vi Peel which I was super excited about. Since the Botox post was popular I figure y'all would like this too. Besides, it's well established I'm beyond any sense of privacy or shame here.
I got my first peel years ago - a mild Glycolic peel added onto my fac…

Spring Styles to Wear Now

Is it just me or is 2019 passing along quickly? Welcome to March which is said to come in like a lion and out like a lamb. Sometimes fashion seasons and the weather don't match up but the fashion show must go on! While I'm waiting for the weather to catch up I'm wearing some new spring items with some added warmth now and I'll wear them without the layers later. Here's just a few examples of how you can take spring items and start wearing them now. One of my favorite items to wear is a loose tunic - they are comfortable, cute and flattering. While I love a tunic with skinny jeans right now it needs a little extra layer for warmth so I'm topping this tunic I picked up at the Southern Women's Show with my utility jacket. When the weather warms up I'll either wear with the jeans alone, white pants or even a khaki skirt. Wear It Now Wear It Later

I came across this pink dress I just had to have it - it's so fun and super flattering. To wear …

Body Confidence

I have people tell me a lot that "I'm so confident" with such a tone of surprise and while really I think it's just that I'm a plus size women who happens to be loud and doesn't try to hide from the world but sometimes if I'm in a sensitive mood I'll take that as umm, don't you own a mirror, you should maybe be quiet and go to the gym. I'd say about 90% of the time I can say although I don't have my ideal body I don't hate myself and I don't let it keep me from living my life but then there's that 10% of the time . . .

Last week I had such a moment, You may have noticed that my pics I post on social media are either of me standing or are chest up if I'm sitting - now this is partially because I typically only take pics seated if I'm showing off a product so I was a more close up anyway but also here's something this people never have to think about - when you're plus size and you sit down if consolidates all t…

Lauren James Warehouse Sale Haul

Hello Friends! I know many of y'all kept up with my Lauren James warehouse sale journey over the weekend and if you're anything like me you like following along even if you couldn't make it yourself. When Lauren James announced the warehouse sale I was super excited but not sure I could make it work - it was short notice, a five hour drive and I'd already spent my June spending money. Luckily I have a good hubby who recognizes that sometimes you just need something fun in your life and was ok not only making the trip but with me borrowing from ourselves against my July spending money. Since this is the last warehouse sale Lauren James plans on holding I really didn't want the opportunity to slip by.
Warehouse sales can serve many purposes for a business - as a way to move excess inventory, create buzz and excitement for the brand, reward the most loyal brand fans by giving them access to great deal (which also puts more product into the hands of those most excite…

Lane Bryant Best Fitting Denim

Ask 100 women what is the most versatile items in their closet and I bet 98% will say a pair of jeans. As I mentioned in my 2019 wardrobe goals getting another pair of jeans is on my closet to do this year since right now I only have one pair. And wouldn't you know it but the folks at Lane Bryant must have read my mind since they're offering the Best Fitting Denim event this upcoming weekend and they have asked me to be their special guest so not only I could find my own perfect fitting jeans but help y'all do the same. Lane Bryant offers a good variety of jeans not only in shape but in color, wash and fun details. Before showing the perfect pair for me here's a look at just a few of the options. It was really nice to be able to play around with the wash, length and fit so see what I liked about each.


Although I LOVE the fun ruffle and ribbon embellishments I felt like a traditional pair of jeans matches my lifestyle. I tried on the straight leg and boot cut three ti…