Why does the price of goods have to increase if the minimum wage increases?

[Anonymous]

As if the corporations will go bankrupt if they make 35 billion a year as opposed to 40 billion a year.

[Astarlessnightsky]

I doesn't, or not in the way some people claim it does.

Wage cost are about ~30% of a product, sometimes less, sometimes more.

A 100$ item would be 30$ salary cost, the remaining 70$ are profit margin, raw materials, transportation, ...

If you raise wages by a whopping 10% the item would cost 3$ more.

So 10% increased wages would cause the price to explode from 100 to 103$.

Thats about the annual price increase due to inflation, nothing concerning or deal breaking. But the worker has 10% more money to spent.

[AhmetHasanCan]

If labor costs increase in production, the price of the product also increases. Some manufacturers, using this as an excuse, can unfortunately increase the price of the product by 20% or more even if labor costs increase by 10%.

[MarjorieJ]

I asked a financial wizard what causes inflation. He didn’t even bat an eye, he said unions do.

[MarjorieJ]

@DrPepper12

[MarjorieJ]

I hate you. Don't ever reply to me again.

[Agape93]

So companies don't lose their profit margins.

[WindAtMyBack]

Most companies that have a lot of minimum wage workers are in businesses that are difficult to stay afloat. Labor costs in those kind of business make or break a company. That's why you see so many restaurants and small retailers go out of business.

Controlling labor costs is EVERYTHING in many business sectors. If labor costs go up, that WILL make-or-break many companies. They only have two choices. Raise prices, or go out of business.

When you buy something, almost all of that cost is for labor. When the cost of labor increases, prices must also increase. There are exceptions, but that's not the norm. It will not only cause prices to increase, but it WILL cause companies to go out of business and lay off workers.

Having said all that, it's not about whether prices will increase or not (they will). It's about how much they will increase and whether it's significant.

[Surely]

I see no one mentioned that the stock holders need to receive their dividends. So when the cost of the product goes up. The stock holders need to still receive their share of the company.
Plus they still need money to reinvest in the company.

[lightbulb27]

corporations is one factor... but they are beholden to wall street. if they fail to provide earnings, execs lose their jobs. they don't want that... so where do they get the additional $. Answer... they can raise prices, shrink portions, cheapen product ingredients, outsource work, etc.. Cutting their own paycheck when the heck would that show up in their mentality?

they don't "have to"... it's selfishness and greed which are strong motivators.

[RavVid]

Well in some industries labor is a major cost so if labor goes up by 20% then the retail price needs to go up by 20% to maintain profit margins. Typically food is labor intensive and transport intensive towards the final counter price and the margin is only a couple of percent to the corporation due to the high level of competition.

[Anonymous]

Because when the minimum wage increases that mean in general a larger share of the market is in play. And that business 101. You always fight for a larger share of the market. Because if you don't your competition will. In business there's no such thing as standing still. You're either growing or dying.

[Anonymous]

Because labor costs are one the largest segments of any industries cost the other being what they have to buy which ultimately mostly comes form labor as well.

[exitseven]

When costs increase the increases are usually passed along to the consumer.

[seeyounexttuesday]

I see government schools did their job and kept you ignorant.

[DrPepper12]

It doesn't?

[Asker]

No..

[DrPepper12]

Cuck? Interesting.

[Fury_storm]

you're stupid

[Asker]

No u