Categories
Antiwork

Minimum Wage Increases Won’t Help – The Solution is Margins – From a Business Owner

A business owner's perspective I don't buy, I don't believe, and I never will, that increasing minimum wage is the solution to the problem, and believe me, I am with you guys, there is a problem that needs an immediate solution. Consider that wage is an arbitrary number, no different than price, it's malleable and it often inappropriately assigns the incorrect value to a commodity. Cost and Margins are real variables that define value, and I don't mean cost as a price, I mean cost as a real cost, expenditure of energy and the tradeoff of value. There isn't a subcontractor, or contractor, or supplier that hasn't sent me a letter saying that the cost of business is going up, and therefore, the prices are going up. It simply gets “passed on”, the numbers, digits, and accounting all changes, but the value equation (The cost and margins) never do. That's…


A business owner's perspective

I don't buy, I don't believe, and I never will, that increasing minimum wage is the solution to the problem, and believe me, I am with you guys, there is a problem that needs an immediate solution.

Consider that wage is an arbitrary number, no different than price, it's malleable and it often inappropriately assigns the incorrect value to a commodity. Cost and Margins are real variables that define value, and I don't mean cost as a price, I mean cost as a real cost, expenditure of energy and the tradeoff of value.

There isn't a subcontractor, or contractor, or supplier that hasn't sent me a letter saying that the cost of business is going up, and therefore, the prices are going up. It simply gets “passed on”, the numbers, digits, and accounting all changes, but the value equation (The cost and margins) never do. That's why is gets passed on, passed on in this context also means, ignored and meaningless.

Minimum wage is meaningless. What we need, is a value minimum. In the economic structure we have created, profit (not in dollars), but in margin, is how value is defined. We can change the numbers all we want; it can't affect the value of something. 30 cents on a dollar, or 300 on 1,000 is still 30%, the value of those two examples remains the same.

The price we attach to the value is just quick economic data produced by the market for reference (a function of quantity of goods versus quantity of money), it doesn't change the value in the long term.

You can't alter the value of labor by arbitrarily changing the price by compelled legislation. It's as ridiculous of an argument as saying “We'll just pass a law that says Milk must cost 1 dollar a gallon”

Did that law reduce the actual value of Milk by 80%? The answer is certainly, no.

Forget about profit, it's just a number. On the flip side of the equation, you have Margins, that are a far more accurate representation of the value that business owners are extracting from their business.

No matter what happens to the minimum wage, no matter what compelled labor price laws are enacted, the margin will remain the same, the economic data gets passed onto the consumer. Economic data (prices) go up in order to ensure the margin, representative of the cost of doing business, remains the same.

I think a better solution, is to look at ways to refine and distribute the margin side of the equation. Let businesses chase profits to the extreme but have a value sharing equation that distributes margins back to the employees. “Profit sharing” would not even work, because Ofcourse, profit is like minimum wage, just the other side of the equation and can be just as easily manipulated, you have to close the accounting loopholes that businesses would immediately use to increase cost and reduce profit, which they would do to maintain the value margins. The value margin can always be calculated after all the accounting tricks are done.

OfCourse, the other primary factor to be used is to increase the value of labor by reducing the supply. Organized labor is the solution here.

Just some thoughts. TL;DR – Minimum wage won't help.

Leave a Reply

Your email address will not be published.