Wage, Minimum, Living, Cost, Jobs, Business

EDCskincare.com – Store Sale
There are four major pillars in a business – consumer cycle; businesses, cost of production, consumers and prices. Entrepreneurs start businesses for various reasons. The most basic are profit motivation and desire to earn a decent living. Sense of achievement, rewards, appreciation and status are other major motivators. All this is not possible unless you have a product which sells. Product that sells means it has a value for buyers. A value for them to pay enough for the product which must cover the cost and a decent profit. Otherwise one will never get into business. Even if someone gets into the business and the product is not at that level, he or she will fail.

So, entrepreneur or team of entrepreneurs must have the qualities imagination, creativity and innovation, risk taking capability, investment and hard work. Without these qualities and resources it is impossible to create a competitive product or service, and start and run a successful business. For most businesses, sooner or later, the entrepreneurs will need office space, equipment, supplies, Utilities (Electric power and Internet access, for example), raw material and work force. This is the cost of production. For a successful start-up this must not be more than sixty percent of net revenue generated because business still needs to make profits and pay taxes.

At some point every growing business needs to hire work force. This may require hiring of certain types of personnel like managers, professionals, accountants, support, researchers and unskilled personnel. Decisions like, how many and at what cost involve considerations like need, volume of work, quality assurance, customer service, tech support and competitive edge. Their compensation and wages are determined by different factors which include market value and price, skill level, education, experience, return on investment, and distinction and exclusiveness. People with distinctive and exclusive skills and qualities are usually paid highest while unskilled, uneducated and inexperienced people are paid least.

The most important factor in running a successful business is profit. It means always paying less then return or in other words return must always be higher than expense. Payment to an unskilled worker will be determined by minor difference that his or her services will create and the resultant burden on others and business, in the absence or lake of those services. It will also be determined by the fact, how easy, inexpensive and inconvenient is it to get those services replaced by machines and / or consumer self-service. Due to the basic principle of profit, businesses do not want to spend on a service more than the utility of that service.

If a business has to pay more than the utility of services provided, it is left with only four options. One, to not get those services at all or do not hire anyone at all. Two, keep paying higher and ultimately go out of business, resulting into even more jobs losses. Three, break the law and hire an illegal worker or something. You will find a direct correlation between powerful business lobbies opposing immigration reforms and minimum wage. Illegal immigrants provide a powerful tool to businesses in order to bypass the minimum wage laws. Net result is still the jobs loss for lawful citizens.

Forth option is to raise prices. Since minimum wage workers are mostly hired in restaurants, super markets, department stores, banks, real estate and education, the same very people who are supposed to be protected by minimum wage laws, get hurt the most. The cost of living goes up and quickly nullifies the most of gain made by lowest earners. Increased cost of production and prices also affect sales. Hence, overall, less people get hired which very much neutralizes the benefits of raised wages.

The biggest problem, right now, is unemployment. The people who are unemployed for months and years. First of all, this problem is making government and corporate media to raise ridiculous issues, in order to distract people from the real problem. Terrorism, political and economic problems in other countries, privacy related issues, immigration, obesity and president’s vacations are often the major topics of discussions on big media. I am not saying that these problems are not important. But, the presence of these issues does not change the fact that number one problem is unemployment and jobs. In his 2008 election campaign Obama cited this as the number one issue faced by Americans. This problem has not gone anywhere, yet.
Second of all, the unemployment problem seriously complicates the wages issue. There are just too many people unemployed and looking for jobs and there are not enough jobs available for them. So, as far as human resources are concerned, supply is far more than the demand. When supply gets abundant the prices go down. So, employers have no incentive to increase and offer better wages. They can always find someone ready to accept lower wages. This is why, media and government, and their bosses in big corporations and lobbies love bad economy.
You probably have heard a lot about the argument that government regulations increase the cost of doing business and kill jobs. You may have also heard that government regulations are bad for small businesses and favor big corporations. But, you may have never been able to fully understand that. Minimum wage laws are very good examples. If a law passes and businesses have to pay a higher minimum wage, it will not be very hard for big corporations like Walmart and McDonalds to be able to pay higher wages. It will hurt their business and jobs they provide. But, they can still pay and survive.
Who you think is going to hurt the most? Of course, the small businesses, and mom and pop stores in your town. It will be impossible for those to pay higher wages. They will either have to work with less number of employees and become less competitive compared to their bigger competitors or simply go out of business. In nut shell, big corporations will have even less competition and small businesses will start disappearing. Having better grip on markets, after that, big corporation can raise prices and / or cut wages. The only real solution is to get government out of our way and help create a business and jobs friendly environment. We will be much better off with businesses spending money on wages instead of paying taxes.
Living Shop