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#127 Dec 03 2012 at 9:18 PM Rating: Default
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trickybeck wrote:
Guenny wrote:
I'm glad I haven't read this thread, but I'll just throw in a bit of food for thought (HAR HAR). The way I see it, is that tip bottom line % is more based on the type of establishment you're visiting. If you're at Denny's or iHop, the average tip % at a place like that is probably 11-12%, obviously depending on many factors. A midscale place, like a Chili's or Applebees or a pub type place, I'd say servers probably expect and perform at the 15% range. The places I've worked more recently in my career (after almost 8 years of experience in my field), where you usually eat no less than 3 courses and your server constantly makes sure your wine glass is at its sweet spot of fullness, 18% should be the baseline.

I actually go the opposite way on this.

At a classy restaurant, the higher price of the food (and alcohol!) are inherently causing that 15% to be an appopriate amount for that experienced server. Yeah, 3 courses takes more work, but it's also adding to the bill that the tip is based on.

Whereas at Denny's, even if I just get an $8 grand slam, the server still has to make ~4 trips to the table, so tipping $1.20 is pretty shitty. Also, bumping up to 20% on an $8 bill is trivial. Also, a Denny's server is probably poor, so they get some guilt-tip from me.


Except for the "Denny's server is probably poor" part, I agree. I'm likely to tip less at a more expensive restaurant than I am at a cheaper place.
#128 Dec 03 2012 at 9:32 PM Rating: Decent
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Almalieque wrote:
Except for the "Denny's server is probably poor" part, I agree.


So you think a 40 year old woman working the night shift at a Dennys is doing so for extra spending cash on the side? Smiley: disappointed
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#129 Dec 03 2012 at 9:35 PM Rating: Good
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BrownDuck wrote:
Almalieque wrote:
Except for the "Denny's server is probably poor" part, I agree.


So you think a 40 year old woman working the night shift at a Dennys is doing so for extra spending cash on the side? Smiley: disappointed


Nope, they're just cougars on the prowl.
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#130Almalieque, Posted: Dec 03 2012 at 9:49 PM, Rating: Sub-Default, (Expand Post) No one mentioned 40 year ladies working night shift,. Unless every employee working at Denny's are 40 year old women on night shift, then you don't have a point. There exist one "40 year old woman working a crappy shift" for most jobs. Depending on how you define "poor", not EVERYONE working at a minimum wage job is poor.
#131 Dec 03 2012 at 10:24 PM Rating: Excellent
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Almalieque wrote:
Depending on how you define "poor", not EVERYONE working at a minimum wage job is poor.
Since full time at minimum wage puts one under the poverty line I think it's reasonable to call that person "poor".
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#132 Dec 04 2012 at 1:31 AM Rating: Decent
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Depending on how you define "poor", not EVERYONE working at a minimum wage job is poor.


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#133 Dec 04 2012 at 2:30 AM Rating: Good
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#134 Dec 04 2012 at 8:10 AM Rating: Good
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I've never left a tip at Denny's because I have taste and don't eat at that shithole.
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#135 Dec 04 2012 at 10:32 AM Rating: Excellent
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I have no idea where they get their numbers (payscale.com, whatever that's worth...) but this seemed relevant.

Quote:
Waiters and waitresses
Median hourly tips: $6.90
Median hourly income: $12.00
% of income from tips: 58%


Edited, Dec 4th 2012 8:33am by someproteinguy
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#136 Dec 04 2012 at 12:09 PM Rating: Good
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lolgaxe wrote:
I've never left a tip at Denny's because I have taste and don't eat at that shithole.


Unfortunately I am from a small town where Dennys and the Husky were the only options after 8 pm... sadface

I might have gone to the Husky but it was up the highway and I didn't drive. Also, it's a gas station.

BrownDuck wrote:

This is an obviously reocurring theme in the discussion, but it makes me wonder, for most of you, what kind of service puts the staff over the top, so to speak?


For me....Some combination of: telling us the specials without having to be asked, making sure our water/coffee/etc stays refilled, pleasant demeanor, getting our order right if we make special requests, knowing about the food (aka – whether the fish is farmed or wild, whether the lamb is local or imported, whether the prawns are spot prawns or tiger prawns, what kind of sauce that is, etc etc)

Basically, they need to show they are competent, be friendly, and be attentive. It's their job to take care of my table and take my order, they have to do extra to get extra.

In some cases we don't really give them the chance to go over and above, but in those cases I don’t feel bad either. If all you have to do is take my regular order and put some eggs and toast in front of me, the usual 15 per cent should be enough.


Edited, Dec 4th 2012 10:18am by Olorinus
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#137 Dec 04 2012 at 4:38 PM Rating: Default
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Friar Bijou wrote:
Almalieque wrote:
Depending on how you define "poor", not EVERYONE working at a minimum wage job is poor.
Since full time at minimum wage puts one under the poverty line I think it's reasonable to call that person "poor".


Well, if you continue to be narrow minded, then of course.

If you're talking about a 50+ year old woman, it's possible that she's just working just to be active who already retired from a previous job and married to a 60+ year old husband who is working a similar job to stay active who also retired from a previous job.
#138 Dec 04 2012 at 7:03 PM Rating: Decent
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Almalieque wrote:
Friar Bijou wrote:
Almalieque wrote:
Depending on how you define "poor", not EVERYONE working at a minimum wage job is poor.
Since full time at minimum wage puts one under the poverty line I think it's reasonable to call that person "poor".


Well, if you continue to be narrow minded, then of course.

If you're talking about a 50+ year old woman, it's possible that she's just working just to be active who already retired from a previous job and married to a 60+ year old husband who is working a similar job to stay active who also retired from a previous job.

Or, it's a 50+ year old woman who's been waiting tables for thirty years at minimum+tips...some people do make a career out of it.
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#139 Dec 04 2012 at 7:34 PM Rating: Default
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Debalic wrote:
Almalieque wrote:
Friar Bijou wrote:
Almalieque wrote:
Depending on how you define "poor", not EVERYONE working at a minimum wage job is poor.
Since full time at minimum wage puts one under the poverty line I think it's reasonable to call that person "poor".


Well, if you continue to be narrow minded, then of course.

If you're talking about a 50+ year old woman, it's possible that she's just working just to be active who already retired from a previous job and married to a 60+ year old husband who is working a similar job to stay active who also retired from a previous job.

Or, it's a 50+ year old woman who's been waiting tables for thirty years at minimum+tips...some people do make a career out of it.


Of course, but you don't know that, hence my disagreement with the general assumption that she is poor just because she is working at Denny's.
#140 Dec 04 2012 at 7:49 PM Rating: Good
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Almalieque wrote:
Except for the "Denny's server is probably poor" part, I agree.
Almalieque wrote:
Depending on how you define "poor", not EVERYONE working at a minimum wage job is poor.

That mathematics degree shining through again. "Probably" =/= Everyone
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#141 Dec 04 2012 at 7:50 PM Rating: Default
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I will break your response in smaller posts...because I'm actually going to try to have a weekend... Just passed CISCO!


Grats! You'll be super and sub netting in no time. Smiley: smile


Quote:
Another fallacy. The amount of money you can afford to pay your employees is based on the amount of money that you earn.


Yes. Which is based directly on how much the consumers of your product/service are willing to pay for it. If the supply/demand calculation for your steak dinner says that you'll get the ideal return if the cost is $20 (including tip), it doesn't matter how that money is paid out. If it's a $15 meal with a $5 tip, or a $20 meal with no tip, it's the same cost to the consumer and has the same weight when it comes to purchasing decisions. That's why the choice to allow your employees to receive a tip must be balanced with the base salary you pay them.

Quote:
Although the price of goods play a key factor in that amount of money, it all comes down to the amount of sales. You can vary your prices, but if you're not making enough sales to make up for those differences, then you are losing money.


Yes. That's the supply/demand curve thing that most of us learned about relatively early in life. The less you charge for a single item, the less you make per sale, but the more sales you will have. Similarly, if you charge more, you'll make more money, but have fewer sales. By calculating both lines, you can find the point where they bisect and determine the ideal amount you should charge for a given item. Econ 101 here, right? Both sides matter.

Quote:
That's how businesses are able to get away with good deals, such as "buy one get one half off", etc. The sales prices are already marked up for profit, so if you are able to drastically increase the amount of sales with a discounted price, then you can make out with more profit. A major assumption is that people will spend MORE buying discounted stuff than what they would pay at retail price.


Sure. I think you're going off on a tangent here though. We're not talking about how promotional pricing may affect business, but whether paying waitstaff a full salary plus tip will result in higher priced meals for the consumers that if you pay lower salary plus tip. Everything else staying the same, it does. It's not like the materials cost for the meal is lower if the person serving it is paid $8/hour plus tips versus being paid $3/hour plus tips. But that extra $5/hour must come from somewhere, right?

Quote:
Reference my previous post. Tips are extra, i.e. not obligatory. If you're at a place where tipping is customary, then you'll have money to spend for a tip. You're not going into a restaurant with EXACTLY $20 to your name. The amount of money I'm willing to spend on food is 100% based on the food and the food alone. If I decide to tip someone, it is from a completely different equation. I'm not going to pass up a good steak so I can tip you. If I have to go to a atm and come back to tip you, I would. However, your tip is not calculated on how much I will spend to eat.


You are the rare (and perhaps foolish) exception then. Or you're one of those cheapskates who skip out on the tip when it comes time to pay. Most sane people absolutely calculate the likely additional cost of tipping when deciding where to go to eat. You may not sit and do actual math, but you absolutely know that the cost difference between eating at Chilis versus Ruth's Cris is going to include the tip. No one goes in thinking that if one meal is $20 more than the other that it'll just cost them $20 more dollars. They know that it'll cost them that much plus the additional tax plus the higher total tip.

Furthermore, people absolutely make cost decisions based on that when ordering. If you're deciding whether the steak is worth the price on the menu, you are fully aware that there's a tip involved as well. You might absolutely make a different choice if you knew there was no tip involved. And when deciding to go out to eat at all, you're considering the full price of the meal when making that decision as well. No one in their right mind thinks that since the average price on the menu is $50, it'll just cost them $200 dollars to feed four people at said restaurant and think "I can afford $200 bucks for a nice night out for my wife and parents". They think "The entrees are $50. Drinks are $10. We'll probably get that $15 appetizer my folks love. And my wife will probably order a desert for another $15. Dad will order an extra drink too. And after the inevitable questions about why there are no grand kids, I'll order an extra one as well. So that's $290, plus another $25 for tax, plus another $50 for tip, I'd better plan for $400 to cover the price of the meal".

It's not about how much you can afford, or how much is in your pocket at any given moment. It's whether what you are paying for is worth the cost. And most people learn really quickly to estimate the full cost of something when making such decisions. Your argument is essentially that people will pay any amount for something as long as they can physically afford it. But that's absolutely not true. Even though I can afford several different varieties of something, I'm going to look at the cost versus benefit when making my choice. If that wasn't true then Denny's would charge $50 for their breakfast. They don't because their breakfast isn't good enough for people to be willing to pay that much even if they could afford $50. People make choices based on relative costs and quality.

Quote:
Gbaji wrote:
And if the customer decides that the work was worth it, he'll pay that much more. If it wasn't, then it still wouldn't be even if you paid the waitstaff $10 as salary and required no tips from the customers for the service. The tip cost would be included in the meal or whatever up front in that case. Either way, the customer will decide if the total cost was worth what he got.


What? Under your assumption, the waiter could just do $2.50 worth a work and be ok. Well, $2.50 worth of work will not give you a tip big enough to earn those desired wages. Not only that, you would be fired. You have to put in $10 worth a work to get that kind of tip and that tip is NOT guaranteed. You are now working precariously on the kindness of the customers, yet employed by the employer. As the employer, even if you get shut down, you are still being paid salary.


You're not getting what I'm saying. The meal is worth X dollars to the consumer. Period. Assuming all other costs related to putting that meal on the table in front of the customer remains unchanged, then anything that pushes the cost of the meal over X (which may vary by consumer of course) will cost you all profits (and salaries) associated with the sale. If right now you get Y sales per month at the current cost structure (which includes a $3 base salary plus tips for the waitstaff), then paying the waitstaff a higher base salary, without changing the tip structure will result in less than Y sales (unless you were already grossly undercharging for the meals of course).

I'm not sure why I have to explain this. It's basic economic rules understood by pretty much everyone. I'm not talking at all about whether any specific waiter is being underpaid or taken advantage of. I'm saying that it's wrong to simply assume that a lower than minimum wage base pay plus tips is somehow an unfair deal for waitstaff. And given that you seem to agree that waiting is one of the best paying jobs you can get for the skill level involved, I'm not sure what you're really arguing about either.

Quote:
Not only that, determining if the food was worth it has nothing to do with the waiter, but the chef and we're not tipping the chef. Obviously the chef probably gets paid more, but the point is that the factors that drive us to pay for specific food have little to do with the actual work that we acknowledge from the waiters.


Um... Because we're talking about pay for wait staff? As you say, the chef gets paid more already. The question is whether it's unfair to pay less than minimum wage for waitstaff who earn tips. My opinion is that it's not inherently unfair at all. Any system that works is acceptable, but to suggest that it ought to be a violation of some kind of human wage rights or something to be paid this way is a bit over the top. If it's so terribly bad, why do so many people choose that type of work over a host of other jobs requiring similar skill? They choose it because they get tips, and the tips vastly more than make up for the less than minimum wage base salary.

At the end of the day, that's really the only thing that matters, isn't it?
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#142 Dec 04 2012 at 9:11 PM Rating: Default
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trickybeck wrote:
Almalieque wrote:
Except for the "Denny's server is probably poor" part, I agree.
Almalieque wrote:
Depending on how you define "poor", not EVERYONE working at a minimum wage job is poor.

That mathematics degree shining through again. "Probably" =/= Everyone


I hate to burst your bubble, but that was a failure of "English" not math. In any case, my statement still stands on the generalization of that person being poor.
#143 Dec 04 2012 at 9:47 PM Rating: Default
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Just so you don't think I'm ignoring questions.. I just wasn't going to continue responding if you weren't.

Gbaji wrote:

Sigh. As I said earlier, this applies to everyone in the market though. If you could earn twice your current salary by changing jobs to another employer, with everything else staying the same, would you? Of course you would. Because you are greedy. If you could buy something from store A for half the price as the same thing from store B, would you? Of course you would. Because you are greedy. To insist that employers must make less money than they could while you insist on making as much money for yourself as possible, and buying things for as little as you possibly can, is completely hypocritical. You're blaming them for doing the same things you do yourself.


No, you're simply arguing in circles. My point is that everyone is greedy. So therefore, Mc Donald's employers will never pay their employees 100k as you stated. Likewise, employers will not pay their waiters more than a few dollars and cents if they know that their employees will be satisfied with tips.

The problem that you seem to be overlooking is that employers shouldn't be allowed to pay ANYONE below the national min wage. Tips are EXTRA and are not necessary, guaranteed or consistent.

Gbaji wrote:
And it's doubly silly because all of these things interact in the market. As long as you want to buy things for as little as possible, you help drive the need for producers of those goods to find the cheapest way to do so possible. As I said earlier, the correct answer isn't to "blame greed", but to find ways to make greed work. Make it attractive to businesses to do business in the US, and they will. And btw, this is a bit off topic because I can tell you that the idea that businesses do this for labor reasons alone is a fallacy. There are a host of reasons for businesses to move their operations. Cost is a factor, but labor costs are rarely the biggest ones. It's usually regulations and/or taxes (or other costs/benefits) on the businesses that drive this, not labor costs.


Nope. It's all about the money. You can't have it both ways. You can't say everyone is greedy and operate off of greed and then turn around and say that CEO's don't move their operations overseas because of money. No matter how you cut it, it boils down to money. Customer satisfaction? More efficiency? Unless you're giving it away for free, it boils down to money.
#144 Dec 05 2012 at 9:32 AM Rating: Decent
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And it's doubly silly because all of these things interact in the market. As long as you want to buy things for as little as possible, you help drive the need for producers of those goods to find the cheapest way to do so possible. As I said earlier, the correct answer isn't to "blame greed", but to find ways to make greed work. Make it attractive to businesses to do business in the US, and they will. And btw, this is a bit off topic because I can tell you that the idea that businesses do this for labor reasons alone is a fallacy. There are a host of reasons for businesses to move their operations. Cost is a factor, but labor costs are rarely the biggest ones. It's usually regulations and/or taxes (or other costs/benefits) on the businesses that drive this, not labor costs.

Nope, almost exclusively labor costs. Labor and trade are extensive fields of study in Economics, how they work is largely fairly well understood. Other things matter, as well, of course, but the impacts are tiny compared to labor costs when looked at as a whole. Fella by the name of Friedman who your talking points creators virtually ******* regularly did a fair bit of work on it.
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#145 Dec 05 2012 at 2:34 PM Rating: Default
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Gbaji wrote:
Ok. Then why doesn't every McDonalds charge the same high price? Clearly, there is some force that prevents the cost of a big mac from increasing without end. That force is the willingness of the customers to pay for it. And that absolutely has to do with cost of living and relative wages in a given area. If people get paid more, they're more willing to pay more for a big mac, and the costs will go up (not to mention, the need to make more to pay for the higher wages themselves). If cost of living is lower, wages tend to be lower, but the price of a big mac will be lower as well.

If this was not true, then big macs would cost a thousand bucks. They don't. They don't because people wont pay a thousand bucks for a big mac. But if you raised the minimum hourly wage to $2000/hour, they would be willing to pay that much for a big mac. Why? Because it's still relatively the same price as it is right now (about half the price of the minimum wage). Prices for goods are relative to things like wages. The greed factor cancels itself out. All sides are greedy. the problem is that some people don't seem to get this and think that they can play games with the values and somehow improve things. But at the end of the day, someone will decide if the price of a big mac relative to their hourly wage is worth it. Thus, the price of said big mac will tend to stay somewhat constant relative to average wages in an area. It has to if the business wants to stay in business.


I'm going to assume that you didn't read what I said, since you just restated what I said in more words. You seem to be confused on where we disagree.

Gbaji wrote:

Similarly, the relative wages of the people who make the big mac is somewhat constant as well. You can cry and insist that big mac assemblers should make more. And you can even pass a law making it so. But the market will always react to that and adjust that relative cost/value. Same deal with wait staff. It's not how hard you work, or how good you are (or think you are). It's how the customer perceives the value of what you do relative to how much he gets paid for his own labor. You can't get around that fact no matter how hard you try.


Read above..
#146 Dec 05 2012 at 6:42 PM Rating: Default
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Smasharoo wrote:
And it's doubly silly because all of these things interact in the market. As long as you want to buy things for as little as possible, you help drive the need for producers of those goods to find the cheapest way to do so possible. As I said earlier, the correct answer isn't to "blame greed", but to find ways to make greed work. Make it attractive to businesses to do business in the US, and they will. And btw, this is a bit off topic because I can tell you that the idea that businesses do this for labor reasons alone is a fallacy. There are a host of reasons for businesses to move their operations. Cost is a factor, but labor costs are rarely the biggest ones. It's usually regulations and/or taxes (or other costs/benefits) on the businesses that drive this, not labor costs.

Nope, almost exclusively labor costs.


If that were true, there would be zero manufacturing jobs in the US Smash. Labor costs are a factor, but they really aren't the biggest one. Silly things like power, transportation, and communication infrastructure tend to offset the value of cheap labor in other countries. Paying 10 cents on the dollar for labor isn't worth doing if it costs you twice as much to ship in materials and ship out finished product and costs twice as much to build and maintain power and communications to your factory. When you're dealing with equipment which costs 10s of millions of dollars per year to maintain/lease/license/whatever, the costs of the people operating the machines becomes a side note.

Quote:
Labor and trade are extensive fields of study in Economics, how they work is largely fairly well understood. Other things matter, as well, of course, but the impacts are tiny compared to labor costs when looked at as a whole. Fella by the name of Friedman who your talking points creators virtually ******* regularly did a fair bit of work on it.


There's a reason why the term "academic" exists Smash. If you take someone's academic work where all they are considering is labor costs, with all other factors assumed to stay the same, you'd be correct. Meaningless, but correct. In the real world though, in most fields, other costs of business are massively greater than the cost of labor. Labor costs are a major factor only when the work is extremely labor intensive (should be obvious, but there you go). So if you're hand constructing toys, it makes sense to put your toy factory in Malaysia for example. But if you're doing anything which requires expensive equipment and power, it's going to make a lot less sense. I've personally been involved in speccing out costs for building sites at various locations around the globe. I can absolutely tell you that labor cost is rarely even in the top 10 considerations. To be fair, the industry I work in is more likely to require advanced resources than most, but the general trend is still present.


Interestingly enough, the major drive for offshoring in my industry (beyond just what the company I work for does) is software licensing for operating equipment and computer software. If you've got a computer driving a piece of equipment that costs you a million dollars a year to own and operate, you want to make use of it for as many hours of the day possible. Global communications allows you to hire engineers staggered 8 hours or so around the globe, allowing for the equipment to be used 24 hours a day while each engineer is working during a normal daytime shift. Obviously, this is focused more towards skilled labor, but the point is that it's not about labor costs at all, but operating costs unrelated to labor. Same deal applies to purely design based work. You license some expensive design software, which allows X number of people to run it at a time. You can either hire people to work 3 shifts a day around the clock in the US, or you open offices around the globe and hire people to run it remotely to your compute farm (which can kinda be anywhere).

I really think that the academics need to get out of their classrooms and look at how the real world operates sometimes. We just don't do things today like we did back in the 1950s, but most economists continue to follow models which assume that we do.
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#147 Dec 05 2012 at 6:46 PM Rating: Excellent
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If that were true, there would be zero manufacturing jobs in the US Smash.

Smiley: um
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#148 Dec 05 2012 at 7:14 PM Rating: Default
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Almalieque wrote:
No, you're simply arguing in circles. My point is that everyone is greedy.


Actually, that was my point. What's interesting is that you agree with this, but then disagree with the result that this causes. If everyone is greedy, then the forces of their greed will result in an agreed upon price for goods, and wage levels. Stepping in from the side and insisting that someone's pay is unfair when those working the job are perfectly willing to accept that pay is meaningless. Which is what I've been saying all along.

Quote:
So therefore, Mc Donald's employers will never pay their employees 100k as you stated.


If they knew they could always pass the cost on to consumers without affecting sales volume? Of course they would. Because... wait for it.. the employees are greedy too. Thus, the employees will demand higher salaries, or they'll go across the street to their competition and work there. You can't sell big macs for infinite amounts of dollars if you have no employees to make them for you. Thus, as the cost people are willing to pay for the big mac increases, the pressure to raise wages in proportion increases as well.

Quote:
Likewise, employers will not pay their waiters more than a few dollars and cents if they know that their employees will be satisfied with tips.


That's the key point though. What's strange is that you have no problem assuming that the employer will never be satisfied with a given amount of profit if he believes he can make more, but you can't seem to grasp that this applies to the employee as well. The employee will not be satisfied with a small wage if he believes he can make more. That's the factor that will drive wages up if there's potential for them to increase. This is why wages are driven by profits, which in turn are driven by price (that whole supply/demand thing I talked about earlier).

In the case of a waiter earning tips, their wage is based directly on the cost of the goods sold (cause it's a percentage of the cost of a meal). Thus, instead of him having to constantly assess whether his employer is making enough money off his labor that he can justify asking for a raise, his wage automatically goes up based on the "value" of the goods/services he's providing. That's why he's less likely to care about the base wage level, and why it's ok to have that base wage level lower than the standard minimum wage.

Quote:
The problem that you seem to be overlooking is that employers shouldn't be allowed to pay ANYONE below the national min wage.


I get that you keep saying this, but you've yet to give a good argument for why that is the case. If waiters are satisfied with their total wages, then that's a fair wage. Passing arbitrary rules to force them to be higher is unnecessary.

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Tips are EXTRA and are not necessary, guaranteed or consistent.


Again, you keep saying this, but haven't supported your claim. Tips are part of the total cost of a meal at a restaurant. The fact that customers are expected to tip absolutely affects the amount that the employer can charge for the meal. People don't just throw away money. Once again, you start out agreeing that everyone is greedy, but then refuse to apply that fact to any situation other than employers. The customer is also greedy. Thus, he's going to want to get the best meal for the lowest price. The cost of a tip absolutely plays into that calculation. Why would you assume it doesn't?


Quote:
Gbaji wrote:
And it's doubly silly because all of these things interact in the market. As long as you want to buy things for as little as possible, you help drive the need for producers of those goods to find the cheapest way to do so possible. As I said earlier, the correct answer isn't to "blame greed", but to find ways to make greed work. Make it attractive to businesses to do business in the US, and they will. And btw, this is a bit off topic because I can tell you that the idea that businesses do this for labor reasons alone is a fallacy. There are a host of reasons for businesses to move their operations. Cost is a factor, but labor costs are rarely the biggest ones. It's usually regulations and/or taxes (or other costs/benefits) on the businesses that drive this, not labor costs.


Nope. It's all about the money. You can't have it both ways. You can't say everyone is greedy and operate off of greed and then turn around and say that CEO's don't move their operations overseas because of money.


Where the **** did I say that? Of course it's about money. My point is that labor costs alone are not always the biggest factor (I would argue they are rarely the biggest factor). Regulations and taxes affect the amount of money you can make. Other cost factors (like infrastructure, construction, power, etc) all affect the bottom line as well. All of those are about money. You're not paying attention to what I'm writing. Nothing in the paragraph you quoted suggested that money isn't the biggest factor.

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No matter how you cut it, it boils down to money. Customer satisfaction? More efficiency? Unless you're giving it away for free, it boils down to money.


Yes. But do you get that many things affect how much money you can make. Customer satisfaction affects how much money you make. Efficiency of your operations affects how much money you make. Electricity costs and downtime percentage affect how much money you make. Transportation and shipping costs affect how much money you make. Licensing costs affect how much money you make. Tax rates and tariffs affect how much money you make.

Trying to simplify this whole thing down to employers always attempting to decrease labor costs no matter what ignores a whole host of factors, many of which can (and often are) much larger than those labor costs. As I explained to Smash, if all other factors are the same, then decreasing labor costs will always increase profits. But in the real world, those other factors are never the same. There's a reason why it costs less for labor in some countries than others, and those reasons often (almost always in fact) result in higher costs for other factors involved in your bottom line.

If you are the CEO of a company and you have the following two choices, which would you make? Keep in mind that your objective is to maximize profits:

1. Operate your plant in Country A, where your 500 employees will earn an average of $50k/year, and total other operating costs (shipping to/from, power, amortized construction/leasing, raw materials, etc) runs you $20M/year.

2. Operate your plant in Country B, where your 500 employees will earn an average of $10k/year, and total other operating costs runs you $50M/year.


Guess what? Total cost including labor will be $45M/year in Country A, and $55M/year in Country B. You should build your plant in Country B. Doing anything else will violate the rule we all agree on that the employer is greedy and will always attempt to maximize profits. Obviously, I contrived this scenario, but the point is to try to get you to realize that labor costs alone are not the only factor. The one and only means to maximize profits is not just to minimize pay. There are a host of other factors to consider.
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#149 Dec 05 2012 at 7:20 PM Rating: Good
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If that were true, there would be zero manufacturing jobs in the US Smash. Labor costs are a factor, but they really aren't the biggest one. Silly things like power, transportation, and communication infrastructure tend to offset the value of cheap labor in other countries.

Right, that's why you guys fab Snapdragon in Texas. What? Taiwan? Really? They must have a FANTASTIC power grid there.

There's a reason TSMC doesn't stand for Tennessee Semiconductor Manufacturing Company. I'll give you a hint, it's not transportation nor is it the communication infrastructure. That's an example of a fairly complex process where the point you're failing to make might matter at all. One I'd assume you're at least vaguely familiar with. When you start talking about stuff like textiles/apparel/injection molded plastic junk, it's even sillier. Virtually non of that stuff is manufactured here any more.

I had a client a few years back who manufactures a line of sneakers in the US. It probably won't take long to figure out who it is, since they're the only corporation still doing so. The primary thing I did for them was develop more efficient algorithms for sourcing parts from china, when to order to meet factory demand, the best way to load containers from various ports, that sort of thing. It was significantly more complex, but you get the idea. When I asked about the "parts" out of curiosity, it turned out they were completed uppers and soles of shoes, and the only "manufacturing" done at the plants in Maine was basically gluing them together. The cost of the source parts was about $6. The cost of the completed shoe (many of the lines for the company aren't made in the US) was about $7.50. The cost of the assembled shoe made in the us was $14. The *only* reason they continue to operate here is the marketing win. Which is the sort of thing that has value to basically one player in that market as a niche value.
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To make a long story short, I don't take any responsibility for anything I post here. It's not news, it's not truth, it's not serious. It's parody. It's satire. It's bitter. It's angsty. Your mother's a *****. You like to jack off dogs. That's right, you heard me. You like to grab that dog by the bone and rub it like a ski pole. Your dad? ***. Your priest? Straight. **** off and let me post. It's not true, it's all in good fun. Now go away.

#150 Dec 05 2012 at 7:28 PM Rating: Default
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Smasharoo wrote:
If that were true, there would be zero manufacturing jobs in the US Smash. Labor costs are a factor, but they really aren't the biggest one. Silly things like power, transportation, and communication infrastructure tend to offset the value of cheap labor in other countries.

Right, that's why you guys fab Snapdragon in Texas. What? Taiwan? Really? They must have a FANTASTIC power grid there.


Actually, they do. Also, labor costs was not even remotely the biggest factor. Do you know how expensive it costs to build and operate a fab in the US? There's a reason why there's only a handful of them left in the US Smash. And it's not the cost to pay the employees. Welcome to my point about taxes and regulation and licensing costs.

Quote:
There's a reason TSMC doesn't stand for Tennessee Semiconductor Manufacturing Company. I'll give you a hint, it's not transportation nor is it the communication infrastructure. That's an example of a fairly complex process where the point you're failing to make might matter at all. One I'd assume you're at least vaguely familiar with. When you start talking about stuff like textiles/apparel/injection molded plastic junk, it's even sillier. Virtually non of that stuff is manufactured here any more.


And once again, the labor costs are not even remotely the top reason why.

Quote:
I had a client a few years back who manufactures a line of sneakers in the US. It probably won't take long to figure out who it is, since they're the only corporation still doing so. The primary thing I did for them was develop more efficient algorithms for sourcing parts from china, when to order to meet factory demand, the best way to load containers from various ports, that sort of thing. It was significantly more complex, but you get the idea. When I asked about the "parts" out of curiosity, it turned out they were completed uppers and soles of shoes, and the only "manufacturing" done at the plants in Maine was basically gluing them together. The cost of the source parts was about $6. The cost of the completed shoe (many of the lines for the company aren't made in the US) was about $7.50. The cost of the assembled shoe made in the us was $14. The *only* reason they continue to operate here is the marketing win. Which is the sort of thing that has value to basically one player in that market as a niche value.


And the breakdown of that cost difference to assemble the shoe parts was that it was mostly labor costs? Kinda missing that part Smash. I'm not arguing that it's not more expensive to manufacture (or even to assemble) things in the US. I'm arguing that labor costs are not always (or even often) the biggest reason for that.

Edited, Dec 5th 2012 5:40pm by gbaji
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#151 Dec 06 2012 at 6:39 AM Rating: Excellent
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Also, labor costs was not even remotely the biggest factor. Do you know how expensive it costs to build and operate a fab in the US? There's a reason why there's only a handful of them left in the US Smash. And it's not the cost to pay the employees. Welcome to my point about taxes and regulation and licensing costs.

I know exactly how much it costs, in fact. I also know what the largest difference is between doing it here and doing in Taiwan. Labor. The loaded labor rate pert FTE employee in the US is about $19 for semiconductor fab. It's $8 for TSMC. That's the deciding factor. Nothing else comes even vaguely close. It's also the reason fab is gradually moving away from places like Japan, and as the rate gets higher in Taiwan it'll move away from there to Zhengzhou. It's a race to the bottom, it's not complicated. As cheaper markets of sufficiently educated workers open up, manufacturing moves to where they are. That's what capitalism is. If you want to have manufacturing in the US, you have to have import tariffs.



And the breakdown of that cost difference to assemble the shoe parts was that it was mostly labor costs? Kinda missing that part Smash. I'm not arguing that it's not more expensive to manufacture (or even to assemble) things in the US. I'm arguing that labor costs are not always (or even often) the biggest reason for that.

Yes, I understand. You're just completely wrong, which can be trivially established by typing "global trade labor cost" into Google Scholar and reading any of the first 900000 papers returned.
____________________________
Disclaimer:

To make a long story short, I don't take any responsibility for anything I post here. It's not news, it's not truth, it's not serious. It's parody. It's satire. It's bitter. It's angsty. Your mother's a *****. You like to jack off dogs. That's right, you heard me. You like to grab that dog by the bone and rub it like a ski pole. Your dad? ***. Your priest? Straight. **** off and let me post. It's not true, it's all in good fun. Now go away.

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