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‘If the Minimum Wage is Increased to $15’
‘What Would Happen in the Retail Food Business?’: A Man Question from Patrick
Traditional retail food outlets profit at year’s end, 50 cents to $2 of every $100 they ring on the register, excluding sales taxes. As many as half of all chain stores do not generate any profit, often losing money. Essentially, supermarkets are penny businesses that manage to do little more than support one low six-figure salary for a director, a dozen lower middleclass employees, and as many as a hundred-and-twenty poverty line employees living from check to check. The slim profits are generally needed to cover slip and fall law suits, equipment replacement and software upgrades.
Wholesalers do better.
Manufacturers make the lion’s share.
Most supermarkets are now owned by wholesalers, who make little or no profit as retail outlets but serve as outlets for wholesale merchandise.
In the Baltimore area the typical grocer employees 100 clerks of various types.
Of this 100, 20 are full time employees, who are “leads” making between $12-16 per hour, with few toping $14 an hour. These people do 80% of the work. They make it happen.
80 of the 100 employees are part timers making between 8 and 11 per an hour, and rarely worth that. These 80 people only do 20% of the work, which is something the liberal mind cannot wrap its head around until it has been put to work with its hands. Primarily, these people are there for customer service—getting your order checked out—and trying to take some of the burden off of the real producers, who are the only ones that move significant merchandise.
If the $15 minimum wage hit, and I was running a market, raising prices would put me out of business, because the big outfits would hold out on the old price line and eat the loss to wait for smaller outfits to go under, and then makeup for their diminished profit by acquiring this extra market share and by raising prices after acquiring that market share.
So, regional, local and marginal chains [which describes most food retailers]—if they wanted to ride it out until Walmart and Wegemens and Safeway jacked their prices up, would:
-lay off half of the part-time staff
-put wage caps on full time employees, including a ban on overtime
-to pay for the unemployment insurance bill part-timers who remained would all be cut to the minimum legal hours, down to 4, 8 or 16 per week depending on state and contract.
-stock levels would be reduced by roughly 50 percent
-retailers would begin selling more space to DSD outfits, such as soda and potato chip companies, who merchandise their own goods.
-For the long haul there would be a hiring freeze and further staff reductions as the labor intensive shelf set was dismantled and converted to box display. My eventual goal would look like an Aldi’s employing five to ten employees instead of a hundred. The additional workload on the demoralized leads, knowing that they would never receive a pay increase, and that every consumer good was now going to cost them more, would enable me to achieve this through attrition as they became “sick,” made disability claims based on the aches and pains they are already plagued with and which would be exasperated by the increased workload, would enable a much leaner operation, that would hopefully be able to survive in the changing marketplace.
Actually, Patrick, I hope this does happen. Because I will be laid off and be able to collect unemployment as I write!
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