My profession is not studying the economy, but I can definitely see all the pros and cons pertaining to raising minimum wage.
If they raise it to fifteen dollars an hour, it could be a serious problem for both companies and consumers.
Businesses are run on operational costs based on categorical percentages with forecasted revenues.
The idea naturally at the end of the day is there needs to be profit left over.
There are two types of expenses fixed and non-fixed expenses.
Fixed expenses are the ones like occupancy, telephone, and utilities.
Even if a company doesn't bring in a cent those costs are there regardless.
Non-fixed expenses are areas an owner has some flexibility with like the amount of product purchased, advertising budgets, or labor.
As we have seen when business gets slow people get laid off.
Why is this important when speaking in terms of raising minimum wage? Right now the economy is not in a positive state, which means forecasted revenues are down.
If the Government were to raise minimum wage it could be a problem where companies go out of business, as a result increasing unemployment and putting the economy further into a slump.
Going back to our operational costs, let's say a company has 20% of the gross revenue for labor, and the government raises minimum wage to $15 which would be a 45% increase could put their profitability in the red.
The only way companies could stay in business is by increasing the retail prices.
In my opinion it doesn't repair the damage, because the extra earned would be equal or greater to the cost of products and services people need to purchase such as food.
Taxation play's a big role in when it comes to increasing minimum wage, as I highly doubt the governments would be willing to reduce the deductions at source to manageable percentage for both business and workers.
Businesses are legally obliged to pay for each employee a percentage of contributions like unemployment insurance, on top of their wage.
Again if we tack this onto the 20% allotted for labor it increases the average hourly wage considerably at the current rate.
The minimum wage in my province is $11.
50/ hour and after deductions at source a worker takes home $9.
67/hour.
If they raise it to $15/hour after taxes would be $12.
22/hour.
The difference from the current wage would be only $2.
56/hour or $13.
00 clear.
How many lives is this going to change when businesses will need to increase sticker prices, maybe layoff more people, and $13.
00 net per week extra is not going to make up the difference.
I agree with the President of the United States when he speaks about lower taxes for the poor and middle class, increasing for those who are wealthy even if they need to pay more of their share in taxation, and reducing more of their loop holes.
Here in Canada I think we need to build from the bottom up again, provide more opportunities for manufacturing, exporting goods, reducing taxes on all levels for workers and businesses, education, and growing a vibrant economy again.
The Government is responsible to make our country be a great prosperous place to live.
It is time to make them accountable how they spend our tax dollars and the money they take personally in a poor economy.
Throwing a bone are way raising minimum wage to $15/hour is not going to change much, except whichever party doing it having bragging rights helping Canadians.
After reading my thoughts I'm sure you agree this makes no sense without a total revamping of everything else economically here.
If they raise it to fifteen dollars an hour, it could be a serious problem for both companies and consumers.
Businesses are run on operational costs based on categorical percentages with forecasted revenues.
The idea naturally at the end of the day is there needs to be profit left over.
There are two types of expenses fixed and non-fixed expenses.
Fixed expenses are the ones like occupancy, telephone, and utilities.
Even if a company doesn't bring in a cent those costs are there regardless.
Non-fixed expenses are areas an owner has some flexibility with like the amount of product purchased, advertising budgets, or labor.
As we have seen when business gets slow people get laid off.
Why is this important when speaking in terms of raising minimum wage? Right now the economy is not in a positive state, which means forecasted revenues are down.
If the Government were to raise minimum wage it could be a problem where companies go out of business, as a result increasing unemployment and putting the economy further into a slump.
Going back to our operational costs, let's say a company has 20% of the gross revenue for labor, and the government raises minimum wage to $15 which would be a 45% increase could put their profitability in the red.
The only way companies could stay in business is by increasing the retail prices.
In my opinion it doesn't repair the damage, because the extra earned would be equal or greater to the cost of products and services people need to purchase such as food.
Taxation play's a big role in when it comes to increasing minimum wage, as I highly doubt the governments would be willing to reduce the deductions at source to manageable percentage for both business and workers.
Businesses are legally obliged to pay for each employee a percentage of contributions like unemployment insurance, on top of their wage.
Again if we tack this onto the 20% allotted for labor it increases the average hourly wage considerably at the current rate.
The minimum wage in my province is $11.
50/ hour and after deductions at source a worker takes home $9.
67/hour.
If they raise it to $15/hour after taxes would be $12.
22/hour.
The difference from the current wage would be only $2.
56/hour or $13.
00 clear.
How many lives is this going to change when businesses will need to increase sticker prices, maybe layoff more people, and $13.
00 net per week extra is not going to make up the difference.
I agree with the President of the United States when he speaks about lower taxes for the poor and middle class, increasing for those who are wealthy even if they need to pay more of their share in taxation, and reducing more of their loop holes.
Here in Canada I think we need to build from the bottom up again, provide more opportunities for manufacturing, exporting goods, reducing taxes on all levels for workers and businesses, education, and growing a vibrant economy again.
The Government is responsible to make our country be a great prosperous place to live.
It is time to make them accountable how they spend our tax dollars and the money they take personally in a poor economy.
Throwing a bone are way raising minimum wage to $15/hour is not going to change much, except whichever party doing it having bragging rights helping Canadians.
After reading my thoughts I'm sure you agree this makes no sense without a total revamping of everything else economically here.
Source...