A Basic Income Is Smarter Than a Minimum Wage

Re:A Basic Income Is Smarter Than a Minimum Wage by ikeboy on Tuesday April 05, 2016 @06:05PM (#11434930)

Your math is off by a factor of the profit margin, unfortunately.

209k is revenue. Profit per employee is that times profit margin, which is around 7k. 6 times that $1750 figure is well above profit.

Or just take the 2 million employees they have, multiply by 8 thousand, and get 16 billion, more than their profit.

[ Parent | on HN ]

Re:A Basic Income Is Smarter Than a Minimum Wage by rskar on Wednesday April 06, 2016 @07:44AM (#11438080)

I concede my math is off. The algebra is good, the arithmetic bad, right at the part I was declaring basis points. They're not bps, they're straight percentage points (making the profit margin reductions off by a factor of 1/100 - d'oh!).

Redoing the math: Walmart, PM = -1.51% (=3.5 - 6 * 0.835); McDonalds, PM = 1.66% (=19 - 6 * 2.89). Clearly not tenable.

For the giggles, I then went I calc'd on price increases (putting aside supply-and-demand considerations) to cover $6/hr increase. PM and Markups came to 3.3% and 5% for Walmart; 16.2% and 17.4% for McDonalds. These are gross overestimations to be sure, since the approach is akin to giving every employee a huge wage boost, but really we need to know what proportion of employees would get the increase to meet some minimum wage level. Study at https://www.purdue.edu/newsroom/releases/2015/Q3/study-raisi... puts it around 4.3% for restaurants.

Anyway, plenty of good opinions on what we might see: http://www.usnews.com/news/articles/2015-12-22/minimum-wage-..., http://www.frbsf.org/economic-research/publications/economic..., http://evans.uw.edu/centers-and-projects/minimum-wage-study.

OK, this horse has been flogged pretty good.

[ Parent | on HN ]