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HomeFeatured EntriesThe Minimum Wage: A Case Study in Laughable Liberal Logic

The Minimum Wage: A Case Study in Laughable Liberal Logic

In the wake of comments on an earlier post, The Minimum Wage and Liberal Math, I thought to look at the results of raising the Minimum Wage at a real company.

I chose Dunkin’ Donuts, a company Liberals highlighted in a recent email campaign as only paying its workers the minimum wage of $7.25 an hour.

A web search for my Zip Code showed 6 storesall open at least 16 hours daily. For the post I’m assuming 16 hour days per store and just 1 worker per 8 hour shift. The company website says there were 7015 US stores at the end of 2011.

The $2.85 hourly increase in question, $7.25 to $10.10, adds $45.60 to a store’s daily cost of business. Over 7015 stores, that’s $319,884 daily, $2.24M weekly and $116.76M a year.

Add 8.5%, or $9.92M, for employee costs to get a yearly increase of $126.68M.

2011′s net profit for the corporation was only $34.4M. This wage increase puts the company in a $92.28M hole at the start of 2012; well over 2.5 times 2011 profits. To compensate, the company needs $1.7 billion in sales with the same profit margin and no other increased costs. By way of comparison, total sales corporate wide, not just US sales, were only $628.2M for 2011 and that in a 53 week period.

Clearly, a $2.85 increase depends on drastic operational changes and unrealistic growth projections. Yet if Democrats win, that’s exactly what will be forced on American businesses.

What can they afford? 7015 stores generate 40,967,600 annual man hours. Applied to profits of $34.4M, that allows an $0.84 raise.

Except they don’t have $0.84 either. We haven’t talked about corporate staff raises yet.  Or store management. That takes from our $0.84. So do natural increases in costs for everything from coffee to landscaping. There are all manner of expense increases. Obamacare, anyone?

It doesn’t allow for maintenance. But what do well paid workers care about broken equipment or unsafe workplaces. It doesn’t pay investors more either although I suppose only workers deserve raises.

Even if we successfully juggle all of this, $0.84 is only break even. What about future raises and expansion? Shouldn’t there be profits to ensure the company stays healthy and jobs are there next year?

Of course, they could raise prices; make customers pay more tomorrow than today. But Econ 101 teaches raising prices reduces sales leaving the company to meet higher costs with slumping or static revenues. Or they could cut hours. But that reduces revenue AND gives fewer better paid hours to employees.

Space and time prevent extrapolating all the possible scenarios.

All because Liberals decided 100% of workers deserve a “living” wage. And they’ll turn the entire economy upside down to force that outcome regardless of consequences.

And consequences there will be. Remember when Liberals decided 100% of Americans should own a home? We got the Housing bubble and its burst. They decided 100% of Americans should have a college education, too. We got graduates with crippling debt, worthless degrees and no jobs.

Finding the right balance between today and tomorrow, profit and loss, growth and stagnation – is an art best practiced in the Marketplace, not legislative chambers.

Sometimes that balance means raises. Sometimes not. Sometimes it means starting wages are higher. Sometimes not. It also means companies like Dunkin’ Donuts aren’t screwing anyone. They are treating everyone – customer, worker and investor alike – with respect and fairness. All in all, the reality is the Market does a pretty good job when we stop passing laws that force counterfeit and unpredictable pressures on it.

I don’t know exactly how much Dunkin’ Donuts can afford. Whatever that figure is, it won’t be the same as McDonalds or the YMCA. It’s not a “one size-fits all” proposition. I’m impressed that Dunkin’ Donuts finds a way to give raises at all. But it’s in their best interests to meet the needs of those customers, workers and investors. If there’s a way, I trust them to find a way to make it work.

The Liberal way to self improvement doesn’t work. Liberals have demanded and received their path to a “living wage” for years. They’re still demanding it because they haven’t accomplished the goal. They never will. Prosperity doesn’t work like that. Maybe they should stop fixing what isn’t broken; stop forcing others to implement a vision they cannot accomplish themselves.

At the same time, responsible and moral people have promoted hard work and sacrifice and brought more success and prosperity to more people than any Liberal could imagine.

This isn’t happening in a cave. It’s easily verifiable. Go see for yourself.

Resist Liberal lies. Refute Liberal logic. Live free …

Blue Collar Musehttp://bluecollarmuse.com
Ken is an experienced 50-Something and has been married to The Much Younger Trophy Wife for 25+ years. They have 5 children, the oldest of which is currently serving tour #2 in Afghanistan. The rest share a home in Tennessee with their tyrannical dachshund, Rusty and an assortment of teens, friends, political crazy people and relatives ... His views are his own but he highly recommends they become your views ... No, really ...

12 COMMENTS

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12 COMMENTS

    • Understood, but as a decade-long (since my Summer of 2001 conservative epiphany after nearly 15 years of major liberal Democrat activism) let me summarily explain why I prefer to use the label “liberal Democrat” to encompass all the bad policies that are killing this country. Its simple and it builds upon what average people are familiar with. Yes, it is a shame that a mostly good historical term has been bastardized by Democrats since at least the late 60s, but what matters most to me is ending the Democrat party’s historical reputation with uninformed voters; and for that we need to keep it simple and consistent. I’ll do a column on this soon.

      • gc; When you do your column, explain how the modern ‘liberals’ are so adept at sliding in and out of labels and how the progressive label today is so nuanced that many R’s find it quite chic. In fact , Socialist is so non-offensive that Maxine Waters, et al, are quite open about it at times.

        • Will do bob. What I think is crucial is for our side to agree upon ONE label to which we tie the Democrats failed policies, and after considering them all, I think “liberal Democrats” is the best and will try and lay that out in a detailed column I have been pondering for years, this week.

  1. “Space and time prevent extrapolating all the possible scenarios.” I don’t recall what the population was in 1787; several million I suppose. And only thirteen states. When the founders brought forth a new nation conceived in liberty it wasn’t just idealistic concepts but rational thinking when they assigned limited powers, including regulatory powers, to the federal government. We are now at 310 million, fifty states and several territories and these people think they can run things. All they can do is run them into the ground.

    • How 535 people believe they have the requisite aggregate wisdom to deal with a SINGLE market segment such as Insurance, let alone all the market segments across all 50 states as you note, is beyond me.

      They need to stick to the Enumerated Powers and nothing more and leave stuff to the states in the event any laws need passing. Beyond that, stay the heck out of the way …

  2. Damned fine analysis, BCM. Simple logic, laying things out as they should be laid out.

    For me your pull quote is:

    Finding the right balance between today and tomorrow, profit and loss,
    growth and stagnation – is an art best practiced in the Marketplace, not
    legislative chambers.

    …which you proved in spades.

    • Thanks, Vassar.

      As a business owner, I have long been mystified at the foolishness of legislatively mandated impacts on the Market.

      Unemployment, SSI, Workman’s Comp, Minimum Wage and on and on and on. Each of these, with the stroke of a pen, created obstacles and hurdles which the Market had to adapt to. The minimum adaptation, of course, was inflationary increases in prices to cover the new costs.

      But the worst thing is that because these things are false constructs imposed on the Market by legislation, there is no way to predict or plan for them. Businesses can plan for even rare events such as earthquakes and floods because there are patterns and histories to use.

      But who can tell when the federal legislature will get a wild hair and send a monetary tsunami to flatten the Market. Just look at the progress of the current anti-gun laws. 90 days ago this was on no one’s radar. Then, due to a couple of incidents, we have scores of bills at the federal and state level. As that is not predictable, neither is the notion of when lawmakers will simply add billions to costs.

      Given that there are Market solutions for just about everything, I’d prefer them to new laws.

    • @twitter-190080466:disqus Now there’s an aspect that I hadn’t considered. Raising the MW most assuredly will raise the “poverty level” with all the downsides you suggest. Excellent point and one that I will make in an upcoming post! Great insight!

    • Understood, but as a decade-long (since my Summer of 2001 conservative epiphany after nearly 15 years of major liberal Democrat activism) let me summarily explain why I prefer to use the label “liberal Democrat” to encompass all the bad policies that are killing this country. Its simple and it builds upon what average people are familiar with. Yes, it is a shame that a mostly good historical term has been bastardized by Democrats since at least the late 60s, but what matters most to me is ending the Democrat party’s historical reputation with uninformed voters; and for that we need to keep it simple and consistent. I’ll do a column on this soon.

      • gc; When you do your column, explain how the modern ‘liberals’ are so adept at sliding in and out of labels and how the progressive label today is so nuanced that many R’s find it quite chic. In fact , Socialist is so non-offensive that Maxine Waters, et al, are quite open about it at times.

        • Will do bob. What I think is crucial is for our side to agree upon ONE label to which we tie the Democrats failed policies, and after considering them all, I think “liberal Democrats” is the best and will try and lay that out in a detailed column I have been pondering for years, this week.

  1. “Space and time prevent extrapolating all the possible scenarios.” I don’t recall what the population was in 1787; several million I suppose. And only thirteen states. When the founders brought forth a new nation conceived in liberty it wasn’t just idealistic concepts but rational thinking when they assigned limited powers, including regulatory powers, to the federal government. We are now at 310 million, fifty states and several territories and these people think they can run things. All they can do is run them into the ground.

    • How 535 people believe they have the requisite aggregate wisdom to deal with a SINGLE market segment such as Insurance, let alone all the market segments across all 50 states as you note, is beyond me.

      They need to stick to the Enumerated Powers and nothing more and leave stuff to the states in the event any laws need passing. Beyond that, stay the heck out of the way …

  2. Damned fine analysis, BCM. Simple logic, laying things out as they should be laid out.

    For me your pull quote is:

    Finding the right balance between today and tomorrow, profit and loss,
    growth and stagnation – is an art best practiced in the Marketplace, not
    legislative chambers.

    …which you proved in spades.

    • Thanks, Vassar.

      As a business owner, I have long been mystified at the foolishness of legislatively mandated impacts on the Market.

      Unemployment, SSI, Workman’s Comp, Minimum Wage and on and on and on. Each of these, with the stroke of a pen, created obstacles and hurdles which the Market had to adapt to. The minimum adaptation, of course, was inflationary increases in prices to cover the new costs.

      But the worst thing is that because these things are false constructs imposed on the Market by legislation, there is no way to predict or plan for them. Businesses can plan for even rare events such as earthquakes and floods because there are patterns and histories to use.

      But who can tell when the federal legislature will get a wild hair and send a monetary tsunami to flatten the Market. Just look at the progress of the current anti-gun laws. 90 days ago this was on no one’s radar. Then, due to a couple of incidents, we have scores of bills at the federal and state level. As that is not predictable, neither is the notion of when lawmakers will simply add billions to costs.

      Given that there are Market solutions for just about everything, I’d prefer them to new laws.

    • @twitter-190080466:disqus Now there’s an aspect that I hadn’t considered. Raising the MW most assuredly will raise the “poverty level” with all the downsides you suggest. Excellent point and one that I will make in an upcoming post! Great insight!

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