About minimum wage

[pocaracas]

 You don't think that a car actually costs, to produce, what you pay for it...do you? 

Obviously it doesn't and I never suggested that it did.  What I said was that regardless of margin, when the costs to make a product go up, the prices generally goes up too. You seem to feel otherwise though. 

 

Do you think that a sandwich, from subway, costs..to produce, what you pay for it?

I don't believe I suggested that.

 

I actually spent a little while driving a truck, as an owner-op (don't judge, I thought it would be cool, plus I had the license, cant waste a license)...do you think it costs, what you pay for transport, to transport things?

I know exactly what it costs to run a truck. Actually scratch that, I know exactly what it costs to run a fleet of trucks. And I know exactly what we charge the customer to run trucks for them and I also have pretty good idea what our customers pay our competition for the same work so I know are prices are in line with current going market rates.

So as all the budding young accountants following along at home are now deducing, I therefore know how much of a profit margin we operate on.  So yeah, that means I'm pretty sure I know what I'm talking about when I say that if I suddenly have to pay my drivers $10 more per hour in order to keep them from leaving to go flip burgers or whatever, I am going to pass along as much of that extra $10 per hour to my customers as the market will allow. And if I know my competitors as well as I think I do, that means pretty much every bit of that extra $10 per hour goes right to our customers.

Every business operates on a profit margin so every business has the ability to absorb slight fluctuations in costs while keeping prices stable. But from where I'm sitting, I believe we'd be looking at double digit precent of increase in costs. So yeah I'm just not buying that any car company, or any other company is going to watch the cost to produce their product go up by 20% or more and just say well we'll keep prices the same and just be happy with making less profit.

The market can accommodate most increases.
If you add $10 to the customer bill, the customer either pays up, or takes his business elsewhere. If it's the same everywhere, the customer either pays up or shuts down the business.
Paying up means that they will then increase their own prices to the next customer... Even if that is their employer...but hey, they got an increased pay, too... It comes full circle... The value of money simply decreases, inflation goes up, the economy moves... Some old loans can be paid off more easily and eventually a new equilibrium is reached.

Also, do bear in mind that people can live with different standards for the price of some stuff.
For example, here in Portugal, where the minimum wage is one of Europe's lowest (500€/month), car and fuel prices are significantly higher than in the U.S. and most of Europe.
So people are willing to pay extra for somethings...it's just a matter of perspective.