Senate Immigration Bill

[S T]

Not good at this

Well I am glad you are back posting,

but I am not good at these types of discussions, so I am going to go back to my Capital Accounts, Outside Basis of Shareholders and Partners, etc

See the other thread, do not discuss Politics, Religion, etc.

No doubt, Veritas, Bart or Snags will pick up this discussion.

Sandy

[Black Bart]

Good manners, decent language, respect for women.

>>
That's not my point at all..

That's not my point either.

These are three of the "lost Victorian arts" that conservative columnist Paul Greenberg was longing for just a fews days ago -- and I know why.

To your credit, SurferMan, you don't cuss, but you're still kind of rusty on the other two. Everyone's had a "Mel Gibson moment" on occasion and you've apologized for "RIDICULOUS," but don't these barbed and blunt follow-ups -- "not my point at all" / "not my point either" -- seem rude and abrupt to you? They do to me and certainly, I imagine, to others. Perhaps keep in mind that Sandy is one of the most helpful and respected posters on this board. Accordingly, she deserves much, much better language and treatment than either of your two posts gave her. Remember those "ad-hominem" attacks you were taking Josh to task about the other day? It works both ways. Maybe write "I will not insult the other posters," 25 times or repeat this endlessly -- "The work of others is flawed rather than ridiculous." If nothing else, just diss the boys. Look, with a few exceptions, most people here (including yours truly) cannot even hope to approach your level of tax expertise. Could we have a tad of cordiality? After all, you too are one of the most helpful and respected posters on the board.

About that "uber-liberal incident": it's all a mistake. Sea-tax was temporarily knocked off balance (later recovering well) when I strayed from the "party line" on this issue (siding with you as a matter of fact) and he used that term in referring to me, not you. I merely described you as "the venal leftist." That was an unfortunate typo -- a "Freudian slip." I'm certain I meant to type "the virtuous leftist" rather than taking that scurrilous swipe at your good name. Please accept my humble apology for this enormously inappropriate and glaring error. I, along with Andrew Young, apologize to you and everybody in the world who may or may not have been offended. I'm off to detention room right this minute
.
"I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not......................"

[jainen]

Once again

Once again I have driven my friends away. I guess my guru is right. It is a sickness.

I just felt that as accountants we should not let naked political stands be clothed in numbers without challenging whether the numbers actually add up. Oh well, doesn't matter. Mine is a tale told by an idiot, full of sound and fury, signifying nothing. In the old accountant's paradox of substance over form, our culture is a giant, multi-legged 1031 exchange. Proper form trumps all.

So I'll take your pledge, sir, to make this form as genteel as you please. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters. I will not insult the other posters.

[jainen]

I'm sorry, Sandy

>>I am going to go back to my Capital Accounts, Outside Basis of Shareholders and Partners, etc<<

I didn't mean to be rude, and I take back all the hurtful things I said. Although I have a different viewpoint, you made excellent points about the role of a wage earner in any business, and especially about how the owner's perceptions can color business planning.

It's all too easy for me to put on airs about the cost of a Snickers bar. In truth, I don't know beans about Outside Basis. I've scheduled some CPE about small business this fall. Until them I will have to rely on your invaluable guidance.

[sea-tax]

>>
I'm trying to make the point that wages are but a small factor in total business expense. If you deny that, you are faced with the arithmetic truth that the minimum wage is HOLDING DOWN price increases.

Jainen are you seriously saying what I think you mean? I don't know about your clients but the ones I have wages are like the highest if not the second highest expense which they incur after COGS or Materials depending on the industry.

I am not sure about all this other hubub about the federal reserve and the blessed state of california, I just saw what you wrote about "wages are but a small factor in total business expense" and thought I need to hear some more explanation on that one. Becuase up hear in PNW I don't see that.

[jainen]

$13.56

Thank you for asking. Of course, this is just my opinion, and you may have a different experience.

The discussion was about increasing California minimum wage over the next three years, and whether that would cause the price of a candy bar to go from 79 to 89 cents. It seemed to me that could only be true if the price was mostly based on the wage. As you yourself point out, the wholesale Cost of Goods Sold is a bigger factor, and something else, perhaps rent, might also be greater. (I apologize if I'm not following your argument correctly.) Then of course the business owners and investors usually expect to earn more than the clerk, as well. So it seemed to me that the 13% price increase should probably be based on all these other issues which add up to so much more than the wage.

In my mind, this conclusion was supported by noticing that the officially published inflation rate is well over 14% since 2002, the last year minimum wage was raised in California, When the first 75 cents is added next January, it will represent an annual increase of less than 3%. Even after the final year it will still be only 3.8%, compared to the current inflation rate of 4.1%. I don't know how to explain such numbers except to observe that the minimum wage is not keeping up with inflation. It is holding back the price increases, so other expenses must be going up even faster.

Of course, that defies common sense, or at least common sensibility. We are not aware of all the hidden costs in the candy bar, like shipping and advertising and taxes and profits at every level. We just see that the clerk gets paid $8.00 an hour, so if it takes one minute to ring up the candy bar isn't that a labor cost of 13 cents? Such thinking is one reason why small businesses fail. We do our clients a disservice when we accept flawed assumptions in their bookkeeping. It is a political viewpoint disguised with faulty statistics. At least, that's the way I see it.

Actually, I believe that the fuss over minimum wage is a distraction from serious economic problems. It just doesn't affect that many people. In Santa Cruz, minimum wage is ignored except for the teenagers serving corndogs at the amusement park. Kids don't have to pay housing, but for an adult it is literally not possible to work full time at $6.75 and rent an apartment. I may be just a venal leftist, but one must follow the law of the land. Where I live the law is $13.56.

[veritas]

Heres some more fuel for the fire...

If you want to do day labor here in P town you hang out in well know area and wait. The going rate a couple of years ago was $10.00 per hour since the illegals organized from what I have read. I don't think we are talking reportable income. How can they possibly get by on such miserly wages?

[S T]

Same in Calif

But if you do the calculations, someone that is on W-2 income and earns $10 per hour takes home without factoring Fed and State withholding about $9.15 per hour in Calif. Probably will qualify for EIC on their tax returns. Then you have to factor that they probably have gas expense, lunch expense and maybe uniforms or some clothing expense, probably also child care in some instances. Health care, who knows probably not but will qualify for the State Medical program and would qualify for Unemployment and or Calif State Disability (not sure about Oregon programs). So I am thinking that they take home less or have less spendable than an undocumented worker.

Most of the undocumented will receive transportation and lunch at no cost in addition to their $10 per hour. However, in fairness also they will not receive overtime if they work past 8 hours and have no health care, but I do believe here in Calif they receive some health care at minimal to no cost. Here in Calif, there are "groups" that house the undocumented (usually some missionary or church group, probably some others as well) The laborer pays a small amount to that group for housing and food.

The other side, from what I have heard is that most of the undocumented wage earners do not spend much money here in the States, most goes back to Mexico or Guatemala to their families.

It is difficult at best whether legal or illegal workers to earn $10 or less per hour and try to pay for housing, auto expenses, and food particularly in Calif. That would equate to approx $400 per week. It would seem that there would be not much left over at the end of each pay period or month. That is assuming for one adult. I don't think I want to think about it if there is a child/children involved.

S

[S T]

Wages % of

J-

Just for reference,

I went to the 2 Retail clients I have here in So Calif and pulled some statistics. These clients hire in at minimum wage and increase above minimum wage incrementally at approx $.25 per hour after the probation period. 24 hour operation, 3 shifts.

While you think maybe that the cost of employees is not meaningful, it does equate with the cost of the wages, payroll taxes, work comp, etc to be approximately 28-30% of their net gross income (sales less COG). Seems to be the highest factor next to their Royalty Fee which is about 12%, Rent is approx 10%, advertising about 8%, utilities 5%

Sandy

[jainen]

Good numbers

Good numbers, Sandy, thanks for bringing them in. There's one missing, which is gross sales. I believe it's common to have a retail mark-up of 100% or more. If so, then his gross income is half of that, and his wages are 1/3 of 1/2, which is a sixth. A 20% increase in wages is 1/30. In other words, the prospective wage hike is only 3% of sales, but his prospective price hike is more than four times that!

Now remember that the wage hike hasn't even happened yet. Since the last one, inflation has already spiked the average price of EVERYTHING by over 14%. So we would expect the candy bar to cost a dime more even if wages never changed at all.

In these calculations I'm rounding generously. His true wages are less than 1/3 and the real increase is less than 20%. You said some of his workers earn more than minimum wage, which makes their pay raises even smaller percentages. My point is still true if I'm off by more than 400% (actually up to 500%).

You've got numbers and I've got numbers and some numbers are missing. But the fundamental fact is that minimum wage is not keeping up with inflation. Therefore something ELSE is driving the higher prices. The more you look at minimum wage, the less you can see what those other things might be. A lot of politicians don't want you to look at those other things.

[S T]

Numbers

Hi J,

I am getting back into a conversation that I probably don't do well at. So remember what BB posted earlier. Be nice, please!

We all know you can gather (numbers) statistics depending on how you wish them presented for a particular issue. I think you like statistics and economic numbers, but there is a trickle down effect no matter how you look at it. It is just not from the anticipated minimum wage increase in Calif but many other cost factors as well. Gas costs for example have already passed through to retail products. Have you been to the grocery store lately??

So wages of gross sales is what you want, not of the "net gross sales after COG but before Operating Expenses", I'll look those up for you as a point of reference. Remember that I am only using some figures and examples from one sector of the Retail Market, which might not be providing the proper averages. These could be higher or lower! And the employment costs would still be a higher % than other operational costs. The business owner is still going to try to maintain his net gross profit percentage of sales less COG to maintain his net overall profit.

It is hard to give you a markup figure on a gas/convenience store, as you have the store products which is at one markup rate and the gas markup rate which is another figure. Then within the store you also have the lotto/lottery which that markup is almost nothing. So giving you even a blended rate would not be accurate.

No, not at all is the "minimum wage" keeping up with inflation. That we all know to be true! Maybe "Arnold" is wrong and it should be tied to "CPI". If the Calif Minimum Wage Bill is put into effect though, it will hurt a lot of "small" business people. And they just might leave Calif and go to one of those other States that don't have a Minimum Wage Law in effect.

What is driving inflation??? Fed's expanding supply of money and credit, supply of goods and demand and who controls that? Oh dear back to the Federal Reserve, again

J- I know you are trying to make a point here, so would you like to give a few more clues? Your posts are not just about the minimum wage issue, the topic could have been from business owners increases due to gas costs or utility costs.

Sandy

[S T]

Thank you

BB,

Thanks

Sandy

[jainen]

The point I'm trying to make

>>I know you are trying to make a point here, so would you like to give a few more clues?<<

The point I'm trying to make is about this statement: "If the Calif Minimum Wage Bill is put into effect though, it will hurt a lot of "small" business people."

Although I appreciate the effort you are putting into understanding it, this is not a true statement. I'm trying to point out that it is political rhetoric and is not supported with real data.

Retail wages are a significant but far from primary element of the price of goods. In your own example they are only about 1/6, and minimum wage is even less than that, and the increase in minimum wage is way down the list. As you mention, the price of gas and a whole lot of other factors count for much more.

We see from inflation rates that even with this belated pay raise, the minimum wage is actually going DOWN in terms of purchasing power. The shopkeeper is raising his prices and NOT passing the extra income on to his employees. In a sense he is exploiting his workers by using the pay raise as an excuse for a much larger price increase! So how he is he hurt by the minimum wage?

[Black Bart]

Dear Virtuous Leftist - Re: stats 'n' studies

This is an article I recently wrote and published on-line regarding the minimum wage. A full and honest debate requires facts. REally, how many people do you know working for minimum wage?

As regular as the summer heat there is the annual push to raise the federal minimum wage. Despite the fact that hardly anyone works for minimum wage, only about 3% of full time employees earn only the minimum wage, the proposed increase is again being touted as a means to help the working poor. After all, we are told, a family of three with a single wager earner working full time at minimum wage would only earn $10,712 per year. Now I know that the three-member household being portrayed here is not a married couple with a single child but instead a single mother raising two children on her own. So I will confine my analysis to that situation.

So it begs the question then, what is the true minimum wage? Let’s move past the issue of wage for a moment and instead focus on income. That is after all, how the poverty level is determined, not by wage but by income. According to the data published in the Feb. 2006 Federal Register the 2006 HHS poverty guideline is $16,090 in annual income for a family of three. So at first look the full time minimum wager earner would fall short, but remember we are looking at income not wage.

At $10,712 annual income a family of three would qualify for $399 per month in food stamps for an extra $4,788 per year. Upon filing her tax return she would receive an additional $4,290 from the federal earned income tax credit (EITC) for a total annual income of $19,790, or an average hourly income of $9.51. Well above the HHS poverty guideline.

The proposed increase to $7.25, assuming full time work would result in an annual income of $15,080. The family would still qualify for an annual allotment of food stamps of $4,788. The $4,290 of EITC would still be there, added to by $650 in refundable child tax credit for total annual income of $24,808, or an average hourly income of $11.93.

A study by Richard V. Burkhauser from Cornell University and Joseph J. Sabia of the University of Georgia estimate that an increase in the Federal minimum wage will cost American business 18.26 billion dollars. They further find that only 3.8% of that money will find its way to Families headed by single women and that only 12.7% of the increase would go to poor families at all. Remember students and persons otherwise working full time seeking a little extra money hold many minimum wage jobs. The same study also found the median wage of the top wage earner in a poor family was $9.25 per hour, well above the proposed minimum wage. A focus on income rather than wage is the only way to target poverty relief to those who actually live in poverty.

If the fact that an increase in the minimum wage will do little to help those in poverty and will actually hurt the least employable workers the most does not convince you, consider this. We have barely been able to dent the flow of illegal immigrants into this country seeking low wage employment. What do you think will happen when we increase the minimum wage by 40%?

If you''re not speakin', what about just declaring that you're sick and tired of my tedious and tiresome cornpone, hogwash, and cracker-barrel philosophy; then maybe we'll be somewhere near even? By the way -- regarding your reply to sea-tax: "Thank you for asking. Of course, this is just my opinion, and you may have a different experience" -- do you think maybe you're layin' it on a bit thick? Anyhow, this MW debate needs a little more hashing and I'm wondering why you haven't confronted DaveO and his "What is the true minimum wage?" post. All I had to offer was the "pore folks" angle and he's got me licked with his statistics and studies ("Yes, yes -- ...that black...why...why...it's really not black at all...it's...it's white, isn't it -- now it's clear -- they only think they need money like other people"), but you seemed to know whereof you speak, so what about it? He's apparently against it (MW) and you're for it, so is there a fly in the above intellectual soup-serving?

Aren't you saying that MW is an immaterial part of the overall factors affecting retail prices -- that it's being demonized and used as a red-herring political ploy to excuse unjustified and excessive retail price increases?

[S T]

Where does your post go

BB,

I am a little confused, your post reply ended up under Dave O, is that where it is suppose to be or somewhere else??

This thread is really getting toooooo long!

Sandy