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Locked: Costs are going up as 2018 approaches?

  • Last Updated:
  • Dec 30th, 2017 7:16 pm
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[OP]
Deal Addict
Nov 22, 2009
2439 posts
453 upvotes
Toronto
playnicee1 wrote:
Dec 28th, 2017 12:27 pm
Sitting pretty at $11.60/hr is not the answer either.
You might have stronger legs to stand on if maybe you support a 12 something wage at least...but even then, what about costs that are going up regardless?
$14 is needed for living sake, (living wage) and the economy.
I'm saying there was a significant jump in prices recently because there was a significant jump in minimum wage. $14 only works if all the prices stays the same. A junior chicken from McD was 1.60 not too long ago, now it's $2.00, before it only goes up by like 10cents.
Deal Guru
Feb 9, 2012
14665 posts
2736 upvotes
Toronto
blitzforce wrote:
Dec 28th, 2017 1:02 pm
I'm saying there was a significant jump in prices recently because there was a significant jump in minimum wage. $14 only works if all the prices stays the same. A junior chicken from McD was 1.60 not too long ago, now it's $2.00, before it only goes up by like 10cents.
It was also only $1.39 not long ago also. McDonald's prices will probably go up, then fall right back down again, making a "special" of $1.99 look good, no doubt.
[OP]
Deal Addict
Nov 22, 2009
2439 posts
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Toronto
playnicee1 wrote:
Dec 28th, 2017 1:21 pm
It was also only $1.39 not long ago also. McDonald's prices will probably go up, then fall right back down again, making a "special" of $1.99 look good, no doubt.
When was it 1.39? I thought that was like minimum a year ago. But at least the increase isn't as big as this year.
Deal Expert
Aug 2, 2001
15950 posts
6133 upvotes
Retrodude wrote:
Dec 27th, 2017 10:46 pm
Lets ignore the multitude of scholarly articles from scholarly individuals who argue otherwise but sure anecdotal evidence proves it!
Lets have a real discussion about it then.

The OP is specifically citing McD's as an example. McDs would most likely be affected by minimum wage increases. If their labour cost goes up then the cost of the product either goes up or profit goes down. For simplicity let's assume the labour cost at McD's is 20% of sales. That means if they sell a $1 items they spend $0.20 in labour. Let's assume wage cost also goes up 20% (wage itself, EI/CPP, etc.).

To make up that same $0.80 difference McD's now needs to charge $1.04 for the product (as that $0.20 in labour now costs $0.24). However their labour cost is also no longer 20% (it is about 23%), so to maintain the same labour cost ratio we would now have to charge about $1.20 for that product (20% of $1.20 is $0.24).

Now perhaps my math is completely wrong - I have not taken math classes in awhile - but the above seems to accurately reflect what the cost of an item should increase in order to either:
a) Maintain the same amount of profit ($0.04 for every $1)
b) Maintain the same labour cost ratio ($0.20 for every $1)

Of course option (b) is high and makes the assumption other costs will also increase by similar amounts or the owner will make a lot more profit. So I'm going to go out on a limb and state that's not completely reasonable (even though if they interact with other minimum wage industries those prices increase as well), but that the range of price increase should be a minimum of 4% to maintain the same amount of profit.

I would suspect the scholarly articles you reference are more about cost of living as a whole where wage does not play as large of a factor as something like fast food (as fast food should not make up as large a percentage of your budget as rent). But if my math is correct, then it seems like industries that employ minimum wage labour will have to see a large increase just to maintain profit. This increase is obviously passed on to consumers, many of whom will not see their wages increase at the same rate.
Deal Expert
Jun 30, 2006
16917 posts
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Toronto
Pizza Hut has already put a notice that expect price increases January 2018 due to the wage increase. Prices will go up no doubt, just a question of how much.
Banned
Sep 22, 2009
691 posts
310 upvotes
Toronto
playnicee1 wrote:
Dec 28th, 2017 12:27 pm
Sitting pretty at $11.60/hr is not the answer either.
You might have stronger legs to stand on if maybe you support a 12 something wage at least...but even then, what about costs that are going up regardless?
$14 is needed for living sake, (living wage) and the economy.
Gee wrote:
Dec 28th, 2017 12:30 pm
If it makes you feel better, the next ON government will definitely be Blue

Every government will do things that someone will hate. Harris sold the 407 and Wynne sold Hydro
My god. Harris was like 20 years ago. Move on already. Given the endless references to Harris, i expect to be blaming mcguilty and Wynne for centuries.
Banned
Sep 22, 2009
691 posts
310 upvotes
Toronto
TrevorK wrote:
Dec 28th, 2017 3:14 pm
Lets have a real discussion about it then.

The OP is specifically citing McD's as an example. McDs would most likely be affected by minimum wage increases. If their labour cost goes up then the cost of the product either goes up or profit goes down. For simplicity let's assume the labour cost at McD's is 20% of sales. That means if they sell a $1 items they spend $0.20 in labour. Let's assume wage cost also goes up 20% (wage itself, EI/CPP, etc.).

To make up that same $0.80 difference McD's now needs to charge $1.04 for the product (as that $0.20 in labour now costs $0.24). However their labour cost is also no longer 20% (it is about 23%), so to maintain the same labour cost ratio we would now have to charge about $1.20 for that product (20% of $1.20 is $0.24).

Now perhaps my math is completely wrong - I have not taken math classes in awhile - but the above seems to accurately reflect what the cost of an item should increase in order to either:
a) Maintain the same amount of profit ($0.04 for every $1)
b) Maintain the same labour cost ratio ($0.20 for every $1)

Of course option (b) is high and makes the assumption other costs will also increase by similar amounts or the owner will make a lot more profit. So I'm going to go out on a limb and state that's not completely reasonable (even though if they interact with other minimum wage industries those prices increase as well), but that the range of price increase should be a minimum of 4% to maintain the same amount of profit.

I would suspect the scholarly articles you reference are more about cost of living as a whole where wage does not play as large of a factor as something like fast food (as fast food should not make up as large a percentage of your budget as rent). But if my math is correct, then it seems like industries that employ minimum wage labour will have to see a large increase just to maintain profit. This increase is obviously passed on to consumers, many of whom will not see their wages increase at the same rate.
Absolutely correct. The REAL buying power of minimum wage consumers will go DOWN as a result of this vote-pandering initiative. Sadly, the elected officials don't care about results - just soundbites and most of the people receiving the increase don't understand simple economics.

Smoke and mirrors while your wallet gets picked. Oldest trick in the book and seems to work everytime for the sheep in ontario.
Deal Guru
Feb 9, 2012
14665 posts
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Toronto
theguru wrote:
Dec 28th, 2017 3:37 pm
My god. Harris was like 20 years ago. Move on already. Given the endless references to Harris, i expect to be blaming mcguilty and Wynne for centuries.
It's not something you move on about. It's where the NDP did right. The 407 would have been paid for and profitable for the province by now but it was sold instead for an eternity of private profit, giving Ontario nothing in return.
There is NEVER good news when it comes to an (overall) Ontario Conservative government...unless you own a bank or oil company. (and I DO mean actual bank, not just a branch...)
Conservatives are NOT the way to go. People who think so should really give their head a shake.
Jr. Member
Jul 28, 2017
136 posts
253 upvotes
TrevorK wrote:
Dec 28th, 2017 3:14 pm
Lets have a real discussion about it then.
So, more anecdotal nonsense that affects individuals on a very tiny scale. If worse comes to worse, less people will buy their 3 burgers and pop a day and be a little healthier. Canada's health care rejoices.

The point remains, that in areas who have implemented such changes, that the economy as a whole tends to be okay, and in ways, be more than okay. Raising min wage so that it matches basic living costs will not destroy the economy by any means.

If you want to point fingers, look at the reduction of the true, middle income class, and the old adage of the "rich get richer and the poor get poorer."

But hey, as others are doing in this thread, lets continue to divide ourselves between "red and blue" and throw out insults that make 6 year olds proud rather than actually lobbying for more from our "elected leaders."
Deal Addict
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Jan 27, 2014
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One of the barbershops I used to visit charged $16 for a haircut and now beginning Jan 2018 he will be charging $21. A $5 increase! And he doesn't even have any workers he has to pay. Unbelievable.
Banned
Sep 22, 2009
691 posts
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Toronto
Retrodude wrote:
Dec 28th, 2017 4:12 pm
So, more anecdotal nonsense that affects individuals on a very tiny scale. If worse comes to worse, less people will buy their 3 burgers and pop a day and be a little healthier. Canada's health care rejoices.

The point remains, that in areas who have implemented such changes, that the economy as a whole tends to be okay, and in ways, be more than okay. Raising min wage so that it matches basic living costs will not destroy the economy by any means.

If you want to point fingers, look at the reduction of the true, middle income class, and the old adage of the "rich get richer and the poor get poorer."

But hey, as others are doing in this thread, lets continue to divide ourselves between "red and blue" and throw out insults that make 6 year olds proud rather than actually lobbying for more from our "elected leaders."
2 things:

1. Middle class in Canada is a misnomer. Ain't no such thing and the way it's going under drama queen, will soon cease to exist in only memories

2. Research what happened in Seattle as a result of their social engineering minimum wage experiment. But hey, sheep like soundbites.
Deal Expert
Aug 2, 2001
15950 posts
6133 upvotes
Retrodude wrote:
Dec 28th, 2017 4:12 pm
So, more anecdotal nonsense that affects individuals on a very tiny scale. If worse comes to worse, less people will buy their 3 burgers and pop a day and be a little healthier. Canada's health care rejoices.

The point remains, that in areas who have implemented such changes, that the economy as a whole tends to be okay, and in ways, be more than okay. Raising min wage so that it matches basic living costs will not destroy the economy by any means.

If you want to point fingers, look at the reduction of the true, middle income class, and the old adage of the "rich get richer and the poor get poorer."

But hey, as others are doing in this thread, lets continue to divide ourselves between "red and blue" and throw out insults that make 6 year olds proud rather than actually lobbying for more from our "elected leaders."
I get it - you have nothing to back your point other than generalizations. It's fine - if you do not want a discussion that's great. I was more than polite in my reply to you. But don't dismiss anecdotal information when all you can provide is anecdotal information yourself. I believe that would label you a hypocrite.

But hey, continue acting like the 6 year old you reference.
Deal Expert
Aug 2, 2004
30497 posts
5037 upvotes
East Gwillimbury
theguru wrote:
Dec 28th, 2017 3:37 pm
My god. Harris was like 20 years ago. Move on already. Given the endless references to Harris, i expect to be blaming mcguilty and Wynne for centuries.
I'm not picking on Harris. If you follow the discussion, we are talking about political parties. Currently it is Liberals, previous to that, it was Conservative.
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Oct 22, 2007
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Prices always go up. This week we're blaming the minimum wage, in the summer we were blaming electricity costs, before that we were blaming taxes and before that government red tape and fees, before that the smoking law was going to close half the bars and before that...

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