Why the $15 minimum wage will not work?

It is very easy for folks working in minimum wage positions to simply cry out that they want a minimum wage of fifteen dollars per hour. Wouldn't that be nice if that could happen? As a former business owner, I have some thoughts on the matter that might dispel the myth that some of these supporters are delusional about. The first thing is, that small business owners are not millionaires they have an investment of their own money into the infrastructure of their business that the employee did not have any part of. When a person decides to open their own business, their motivation, and goal, is to be able to provide for themselves, and their family, with a suitable income to survive. When their business is opened, they may not be able to handle the customer volume and to supply an answer to the demand for their products and services, they hire "HELP". Hense the term Hired Help. The employee is there to help the owner become a success in their endeavor. The employer/owner has to determine what amount of funds that are available to pay for this help. The employer/owner usually has expenses that he must meet to make his investment pay off. The normal breakdown is keeping your labor costs within reason, along with their overhead and cost of goods. Usually, this is a breakdown of 30% for each category. If the owner can maintain those, the business might be a success. Using a restaurant as an example, the owner has to take care of his fixed costs. What this means is that he has expenses that will be constant and have to be paid no matter what. One of those might be the rent, a loan payment for the equipment, or utility costs such as gas, phone and electric. And then there are the variable costs, such as food costs, labor costs, paper goods, theft, breakage, etc. If an employer sells a hamburger for 4.25 each and pays an employee $15 an hour, how many burgers must he sell just to pay the employee? But there are hidden costs that the employee does not see or take into consideration because of lack of knowledge or understanding. Some of these are unemployment insurance, Social Security benefits, etc. We usually refer to the employee as a "head count". There are two types of head counts. There is a loaded headcount and a non-loaded headcount. The loaded headcount is the total hourly cost of the employees wages plus the employers contribution, i.e. SS, and Unemployment insurance etc. The non-loaded headcount is the $15.00 per hour, where the loaded headcount comes to more like $20.00 per hour. So knowing that how many burgers does the business owner now have to sell per hour, about four? Well not really, because you forgot to take into account the overhead costs, and the food costs. That burger probably cost $2.00 for the food, so that leaves you with a $2.25 profit on the burger, but wait! Did we forget about the fixed costs, to make that burger? So another 30% deduction off of that "profit" or another appx .62 cents. Now we are down to $1.60. So what's that now, about 10 burgers per hour? Nope not yet...... Did you forget that the owner needs to make some money too? So take another 30% for the owner. Why should the owner get 30% you might ask? Well, he has taken all the risk in starting the business, invested HIS own money, to build the business, and he is the one putting in way more hours than any one of his employees. So that leaves us now with about $1.10. The owner now has to sell 15 burgers an hour to pay for that $15.00 per hour wage. What will owners do in order to ensure they can sustain their profitability? First thing is they'll cut staff. They'll require the staff to provide more productivity to answer the customer demand. They'll seek out new technologies to reduce staff. McDonalds has started to do just that. Where you previously walked up to the counter and were greeted by a staff person, you now are greeted by a machine. You use the touch screen and place your order, swipe your credit card or put your cash into the slot and those four people who used to be at the counter are now gone, replaced by four machines and one person to serve you your food. How long do you think it will take to automate the server too? Take another instance that is in place at Walmart. We have the self-serve cashier stations. Where what once was four to six cashiers are not four to six stations and one attendant. Management is purposely letting those lines get long and wait just so you will get frustrated as a customer and go to the self-serve stations. They are at Home Depot and many other retailers. Fifteen dollar and hour cart people to go out into the parking lot and retrieve carts. Well, ALDIs has solved that problem by making you pay a quarter to even get a cart. When you bring the cart back, then and only then will you get your quarter back. Don't feel like bringing the cart back, there are people who actually will bring it back for you, just so they can collect all the quarters, and they ARE NOT employees either. The bottom line here is that by forcing excessive minimum wage levels on an employer, you are likely to lose jobs more than create them. And, we have not even talked about the small business owner who will just say "Screw it!" and close his business permanently and move on to something else more productive, and with less headaches. Innovation and solving problems is what Americans do, and the small business persons are no different.