Ralphs, Food 4 Less to close 25% of Long Beach stores over extra $4 per hour

Other than the current situation exacerbated by the Covid pandemic, there is no comparison between the economy today and during the Great Depression.

In bold above...100% BS!

You don't understand business ownership/management...

 

I wasn’t comparing the economy of today to the economy of the Great Depression. What I am comparing is the dependence upon work that all citizens face. No one, aside from a few exceptions, is free from having to sell their time and labor in order to receive a paycheck.

Many people have skills that allow for increased mobility in the job market and can therefore search out a job that will pay them what they desire. Many people however do not and are forced to accept whatever wage is offered. Add in the fact that people in that position generally have little in savings you get people who can not afford to turn down any offer that is made to them, no matter how poor.

Businesses maximize their profits by reducing costs and maximizing their revenue. Laborers produce value to a company and their wages are an expense. Considering these facts, please explain how the bolded portion of my post was BS.

 

It's quite simple; a business does not care how much they pay for labor as long as the inflated consumer prices stemming from higher and higher labor costs can be passed onto the consumer in the price of goods and services. There are no profit conspiracies even though profit is required to be viable.

One of the first actions taken when costs are too high is to automate or outsource, both of which are problematic for employees. A company might give up some of it's profits but in doing so they will cut corners elsewhere like in better equipment or employee training or company growth, etc.

When people talk about an arbitrary $15/hour MW, ASSUMING that every business in the US could adjust consumer prices to make up for the additional costs, anyone care to guess the inflation rate this will cause? Keep in mind that ~75 million Americans earn $17/hour or less and surely millions more earn $20/hour or less...a $15/hour MW will inflate all of these wages. What impact across the board will this have on businesses...almost nothing positive...

 

Certainly property crime is only one metric. But it has an undeniable negative effect on business’s (especially small) ability to function profitability in areas like Long Beach.

I’ve been reading research like your link for years and when the lead sentence on particulars uses the word “could” (correctly) to project results of wage increases and then subsequently uses the word “would” (presumptively) in the rest of the analysis I’m quite skeptical.

I prefer to look at what actually happens when these actions are taken to base my position on, like the study I presented in my preceding post. In that spirit let’s examine some more empirical evidence.

Seattle is a nice case study with an aggressive progressive increase in minimum wage since 2014. When we look at the change in poverty rate over that period we see a drop from 14.4% in 2014 to 11% in 2019. Wow, “evidence “! But then we compare to the national average, which fell from 14.8% in 2014 to 10.5% in 2019, and the “evidence” for raising minimum wage decreasing poverty rates evaporates.

Now, a bit on California poverty and reporting of poverty rates in general. It’s still common for these studies to use income thresholds as measures of poverty even though it’s now widely accepted the supplemental poverty measure is the only way to correctly ascertain real poverty—especially in high cost of living states like California. For instance, here’s how California ranks nationally for poverty rate by income threshold vs. supplemental poverty measure.

Source:
https://www.google.com/amp/s/amp.usatoday.com/amp/40569843

So my point here is even if we are able to increase income of low wage earners a bit with minimum wage increases, poverty rates are very unlikely to fall in high cost of living areas, even if inflation caused by wage increases is low. When someone is spending such a large percentage of their income on food and other necessities, even low inflation has a huge negative impact in that individual. Much more impact than on the six figure earner.

Another failure of minimum wage increases we see in practice is lack of facilitating income equality. Using Seattle again as an example, we see no decrease in income inequality as a result of increased minimum wage claimed by the CBO study and others. In fact income inequality increased from 2014 to present. All the data I’ve seen for NYC shows increased income inequality as minimum wage increases as well. Of course there are many other factors that affect income inequality outside of minimum wage, but if minimum wage increases are claimed to address income inequality we should see more evidence that they do.

It’s not that America must have an “impoverished” class, it’s that it always will, regardless of how we try and eliminate it. Of course “impoverished” is subjective anyway. Our “poor” fare nearly as well as much of the European “middle” class when measured by consumption.

But even if we ignore the subjectivity of “impoverishment” we are still left with the fact the financial situation of many “impoverished” is a choice. There are people who no matter how much they make in wages will be “poor” because of spending habits. There are also people who haven’t the desire to move into higher income brackets. So unless you make everyone equal through complete wealth redistribution, there will always be a demographic at the lowest income bracket (no matter what that income bracket is in real terms). And there is a demographic that chooses to be low income and low asset for various reasons including it’s the path to their desired quality of life (I know because that’s how I grew up). Finally, there is a demographic that wishes to drug themselves into oblivion and will never benefit from any wage increase.

In conclusion, raising the minimum wage is mostly an exercise in futility fueled by philanthropic tendencies that are as old as recorded history. It’s a way for many to feel they are giving back to society without actually having to make the hungry a pot of soup or mentor a young person to financial success. It’s a way to feel generous and virtuous by distributing other people’s property in a manner they wouldn’t on their own. It’s a policy I’m not vehemently opposed to (from an economic standpoint) but one I can’t find much actual evidence to support. It’s certainly not the panacea many believe it is.

 

The thing is that while what the city of Long Beach did was reckless and ignored the local reality, the problem of the minimum wage being entirely inadequate is very real. The economics that existed when I was a kid and a teenager or young adult are no longer what people face. Many entry level jobs are no longer a stepping stone to something better. On top of this, many a big business shares a smaller and smaller percentage of corporate income with hourly workers. It has become a question of how much of the pie goes to the few at the top and how much goes to the rank and file. The slice of the pie paid to workers has shrunk over the decades. First it shrank for hourly workers, then it shrank for salaried workers too.

When you think you are hearing an absurdly high wage for an hourly stiff in a menial or lower ranked job, look more deeply into the finances of the corporation. All too often you will learn that the money is there, has been there and an increasingly higher percentage of it has been shifted to the upper echelons. It is not that the higher wage doesn't make sense, it is that it no longer fits within the corporate wage model of who benefits most.

This is not true of every business. Certainly not of small business. It is routinely true of very large businesses.

In this moment I am recalling a conversation I had with an executive of a manufacturing company I had given notice to. I was there less than a year, about ten months. An hourly worker in a technical field they had paid me a $2500 bonus to take the job. They were perplexed that they were having difficulty holding on to workers.

I explained it was simple, the executives were making massive amounts of money while telling workers that wages had to be frozen and profit sharing was impossible. But the internet was a thing and Yahoo Finance had all the stock options for the executives published. Everyone knew how and when executives sucked millions off the top of the profit pie, while telling hourly folks that there just wasn't the money to improve wages or offer a bonus plan. I actually got to sit down with this "Executive VP For Human Resources", at his desk and pull up Yahoo Finance and show him how much money he'd sucked out of the company in the last few months.

Soon after I learned they moved manufacturing to China. The executives were not about to lose their cash cow, or share some of the beef.

That attitude has permeated American business. Greed drives the highest goals of the upper echelons of corporations to a degree unseen since the 19th Century. It is out of balance.

Pushing for a higher minimum wage is just a minor result of this dysfunction in human character.

 

change jobs or here is a thought, start your own company like many of us have done. Get a dose of reality of meeting payroll and managing cash flow

 

I see you have entirely ignored what I posted and are simply pretending we live in a bygone era.

Yes, I have lived in that era, I am an older person and continue to work for a living. I have owned my own business, worked for others, worked in both industry and for government. Seen it all frankly.

The way that work and pay functions in the USA, the way that corporate profit is divided up, has all changed.There is nothing easy about moving up, starting your own business or pulling oneself up by your bootstraps. There are impediments to all that which did not exist in the bygone times people here allude to.

The case of the Kroger markets in Long Beach is an isolated one of its own unique circumstances. That error is on the heads of the city leaders.

But the changes in the nature of how the corporate profit pie is sliced up has been a slow and steady betrayal globally. No where is it more severe than the USA.

 

you are correct, starting a business without risking it all is darn impossible. If it weren't, everyone would do it. We don't want to risk our homes, our savings, our vacations, our weekends off. Those are called employees who want less risk and those who want safety, are called government employees

For those of us who are and have been willing to risk it all, we took the leap. We worked payless months, grew the business, added employees and kept growing. We suffered through Dodd/Frank and the ACA, both of which had devastating effects on small business.

We understand that Democrat votes have negative consequences upon small business yet we press on, shaking our heads in bewilderment reading posts about evil employers and the joys of Democrat politicians.

We create jobs and pay taxes yet are demonized.

 

Nice idea, but that is impossible.

Simply because each community has its own cost of living. And it is impossible to set a standard across the country (e=or even across a state).

And as we have seen, when they try that to the standard of say Los Angeles or San Francisco, the smaller towns in the state suffer greatly with inflation and loss of jobs in short order.

And great, another problem. "Keeps up with inflation". Will it also decrease in times of deflation?

 

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Yesterday afternoon while I was at a Dallas Walmart Neighborhood Market, I noticed the several bins that usually hold carrots were totally empty. I looked around the produce section but there were no carrots to be found. I had carrots at home and didn't need them anyway. But I thought it was very odd. Walmart did have plenty of avocados [which is why I was there.]

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There is no way that the company couldn't have continued operating those stores even with that small wage increase. They're using the increase as an excuse to close stores that they were already planning to close for other reasons, I'll bet. They probably just weren't doing that well. And now better managed stores will take their place.

 

When was the last time we experienced deflation? Especially for any appreciable span of time?

There is no reason we couldn't have a federal minimum wage pegged to inflation, although I think pegging it to a consumer price index would be the more accurate way to go. And yeah, if somehow deflation occurred and continued for long enough, why not allow the minimum wage to go down with it? Good lucking giving employees a pay decrease, though. That would go over really well

 

Do math much?

Most grocery stores have from 40-60 employees. That is close to $10k per week. Half a million dollars a year.

If the store is not making that much, you just close it.

 

And you completely ignored the most important part. How does this magical "minimum wage" not destroy the economy in smaller communities?

 

That is 2, yes, TWO stores. LOL! Who gives a damn!!!

That is why they said 25% instead of 2 out of 8.

Yeah, food delivery is going to wipe out push-cart stores.

 

I took a look at the OP's link. Wow! It's dated February 1, so this isn't even news. But that aside, oh look, I was 100% right in my guess:

"As a result of the City of Long Beach’s decision to pass an ordinance mandating Extra Pay for grocery workers, we have made the difficult decision to permanently close long-struggling store locations in Long Beach," said a company spokesperson. "This misguided action by the Long Beach City Council oversteps the traditional bargaining process and applies to some, but not all, grocery workers in the city."​

They used this ordinance as an excuse to close stores that were already doing poorly.

 

LOL!! This gets better and better.

Fox News... LOL!

 

Did you notice that the original post was dated February 2nd?

 

Any reports of Long Beach residents storming the stores for food since these two stores closed?

 

Nope.

Who necroed this silly thread and why? Report back to me at your leisure.

 

Are you familiar with the chain? These are megastores, much larger than most grocery stores. Where as a common store is around 40k square feet, these stores typically come in at 60-80k square feet. That means each one to a neighborhood is like losing 2 regular sized stores. And because they tend to serve the lower demographic area, they instead have to go to more expensive stores instead.

And no, food delivery is not going to wipe out grocery stores. Many have integrated in-store pickup, but that is still a minor amount compared to those that shop in store. Even including store pickup, it still amounts to less than 2% of their business. In fact, one thing that has been noticed is that many will order a pickup at the store of things they commonly use, but will still select themselves things like produce and meat themselves.

I remember the exact same thing being said 20 years ago, and we all know how that turned out. Webvan, Pets.Com, Kozmo, HomeGrocer.Com, or when many were thinking that Pink Dot would be the wave of the future? Well, over 20 years later almost all of those are gone, and it has still never taken more than a tiny percent of the market.

 

If particular businesses are barely making it, the last thing they need is more expense. Forcing higher labor rates increases expenses. Expenses are offset by revenue. Revenue must be increased to offset higher expenses...meaning higher prices to the consumer...inflation. If the consumer won't pay the higher prices, and applicable profits cannot be realized...then close the doors. There ARE NO CORPORATE CONSPIRACIES here! It is simple math! REVENUE minus EXPENSES must equal acceptable PROFIT.

 

So why is it not required of all businesses then? Only those with over 300 employees? You did read the article right?

Why is that not the minimum wage for the whole state and why is it called "hero pay"?

 

How can one argue with a term like "hero pay"?

There are other terms used as well like "income inequality" (who is against any type of equality)
"fair share" (who doesn't think a fair share shouldn't be the norm)

the issue is those terms have very evil meanings and there is nothing heroic, fair or equal about any of it

 

Wow, no more grocery stores for you. Only someone that has no clue about business should not be showing it so blatantly.