Re:What harm do minimum wages do?
by nemothekid on Wednesday August 19, 2020 @03:24PM
(#24214988)
I know you were trying to make a broader point, but Facebook has been flirting with 90% gross margins for more than 5 years.
Re:What harm do minimum wages do?
by AnthonyMouse on Wednesday August 19, 2020 @03:51PM
(#24215395)
But then you have to ask, how can they do that? And the answer is, of course, the network effect of their social network. The value derives predominantly from that and not what the employees are doing -- if they did the same work for someone else who doesn't control a popular social network, it wouldn't create the same returns.
In economics this is called a barrier to entry. Industries with lower barriers of entry are more competitive (see: restaurants) and have lower margins. Industries high high barriers to entry tend to gravitate towards monopolies. For industries with the highest barriers to entry (like tap water) markets don't work and we have to use heavy handed regulation to avoid letting the industry completely screw over the populace (see: water barons).
Of course it is pretty weird to think of a social network as a utility.
They've conned their users into doing 99.9% of their work for them for free in the form of collecting, collating, and entering many petabytes of personal data to be ready for sale. I'd have super-high margins if I could do this in ANY industry.
That's not the right question to ask, since many other costs besides labor figure into gross margins.
Re:What harm do minimum wages do?
by prostoalex on Wednesday August 19, 2020 @02:34PM
(#24214225)
What formula then is used in calculating “someone worth $50/hr“?
Does it omit or include those costs?
It's not always easy to quantify. Consider people like janitors or security guards. They may be absolutely critical to the business running even though they don't produce revenue directly. Even if minimum wage was set to $100/hr for these jobs, it would still be worth it for many companies to hire them, since producing any revenue could be contingent on having people in those positions. At the same time, they are very competitive labor markets, so without a floor, the pay could go very low despite being essential to the business.
When someone is directly contributing to revenue, like a factory worker or salesperson, it's a bit simpler since you can look at their output, but you still need more information than gross margin to know the maximum a company could profitably pay an employee, since a company might design their operations very differently depending on the price of labor.
$100/hr is considerably more than I make as a software engineer. if my employer was required to pay a janitor $100/hr, they would fire them and have all the junior engineers spend the last hour of their day cleaning. having someone clean the building is essential for any business with a physical presence, but it's only worth hiring a person specifically to clean if they can be paid less than your core employees or if they can do it much more efficiently. this is why restaurants typically do not employ janitors.
Another example that has come to mind lately is how do you quantify non-production skilled or intellectual labor?
The value of maintenance, safety, quality are often only only apparent after being cut
They may be absolutely critical to the business running even though they don't produce revenue directly.
They don't produce revenue, but one must assume they provide some value and in this case avoiding the loss of revenue due to theft, fires, etc.
Re:What harm do minimum wages do?
by reallydontask on Thursday August 20, 2020 @03:53AM
(#24220914)
Enterprise software vendors?
What business sectors enjoy consistent 90% gross margins?