Quote:
Originally Posted by Tidybuoy
I used to work for Gottschalks Department Stores. I was there for 21 years and my last 10 were spent planning & forecasting. Part of my job was to set the budgets for store payroll.
When minimum wage went up one year, I calculated the annual cost to the company would be about $1.5 million dollars. My annual store payroll budget was about $80 million.
That year, we ended up cutting head count to make up for the $1.5 million that would be spent increasing wages. We had no choice as retail competition was fierce. We were up against companies like Macy's, Penny's, Wal-Mart, Target, Costco and those companies were so much larger than us that they were able to buy merchandise at a much lower cost than we could get.
If you look back in time, you might remember when you got service at stores. Now days, you can barely find a clerk. Checkouts are all becoming Wal-Mart style and there is virtually no one in a store to help you. This is a direct result of higher costs (payroll and other).
Minimum wage might not be keeping up with inflation but my question is: why is inflation increasing so much? We have an extreme % of population not working, collecting govt subsidies, etc. At the same time executive wages have skyrocketed. I would not be focusing on raising the minimum wage but instead working on the top wages. I would let a company pay their execs any amount they want but limit the tax deduction for any single employee to $100,000.
FYI: The $1.5 million minimum wage effect was about 1/2 our annual profit. The company never paid out a dividend and used all profits to reinvest in the business and open additional stores. We employed about 6500 employees and each new store opened employed 75-200 people.
Just my $0.02 worth
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Since the unfortunate demise of that proud institution (which btw my mom still mourns) minimum wage has gone up 17% in addition, and will go up another 17% again this year. That would force almost anyone out of business. And what most people still don't understand is that there are additional costs to employers to just the wage increase. Payroll taxes and workman's comp also go up, as does liability insurance, etc. etc.
I contend that the minimum wage increase that will occur this year will spell disaster for many, many people. Those companies that survive will be choked so lean, that there will be nothing left for raises and bonuses for good employees.