Does Minimum Wage Increase Help Or Hurt The Appraisal Business?

[J Grant]

So ... if they can't pay the prevailing minimum wage because the their revenue is falling, why do you suppose they laid off minimum wage workers?

What do you think will happen to those minimum wage workers? There is a new supply to hit the market so if they want a job at minimum wage, they surely will find one.

Amazon pays above min wage in its fulfillment centers. The reason many retailers closed is the costs of staying open, rent, insurance, utilities etc . It's not just the wages of the people on the floor. I happened to catch a show the other day about dollar general and their closings had to do with over competition from other dollar stores including their own other brand in that line, they never mentioned the wages as the cause. Remember employees of an establishment the minute they get off work become the consumers for another establishment, so with more income they spend more and put the money back into the economy. I doubt they will park the money outside US economy in offshore accounts and overseas investments

Funny thing is some online marketers are now buying retail companies ( amazon, whole foods etc) as they realize consumers still want some local places to shop and doing that gives them a brand identity, otherwise no one retailer online differentiates themselves if they all offer the same products at roughly the same prices and delivery terms.

 

[Randolph Kinney]

"The ball is now in Smith’s court to apply the next round of pressure — Dollar Tree dropped its ball a while ago."


https://finance.yahoo.com/news/why-dollar-tree-should-be-ashamed-of-itself-163212721.html

Unless I missed it....
The Yahoo article didn't mention employee hourly wages....

I don't see why you seem to intimate $15/hour Family Dollar was the reason for store closings....

From the article:

To many low-income shoppers, Family Dollar is still seen as being too expensive.

Family Dollar gross profit margins was down 400 basis points year-over-year in the most recent quarter. Store traffic was under pressure, too.

The primary reason of the store closings and layoffs is not enough low income shoppers. Say what? Store employees don't make enough to shop there?

It is not about $15 an hour wage. Family Dollar Stores Inc pays its employees an average of $9.92 an hour. Google that.

So, raising prices can't cover a cost of a minimum wage at almost $10 an hour, how about raising the minimum wage to $15 an hour?

Do you see any connection with labor cost and profitability and what happens when labor cost go up? Do you see what happens when the company takes on too much debt?

 

[ucbruin]

From the article:

To many low-income shoppers, Family Dollar is still seen as being too expensive.

Family Dollar gross profit margins was down 400 basis points year-over-year in the most recent quarter. Store traffic was under pressure, too.

The primary reason of the store closings and layoffs is not enough low income shoppers. Say what? Store employees don't make enough to shop there?

It is not about $15 an hour wage. Family Dollar Stores Inc pays its employees an average of $9.92 an hour. Google that.

So, raising prices can't cover a cost of a minimum wage at almost $10 an hour, how about raising the minimum wage to $15 an hour?

Do you see any connection with labor cost and profitability and what happens when labor cost go up? Do you see what happens when the company takes on too much debt?

The Yahoo article clearly points the finger at poor corporate management....

 

[Randolph Kinney]

The Yahoo article clearly points the finger at poor corporate management....

From the article:

Dollar Tree didn’t spend $9 billion to buy Family Dollar to get in there and close stores.

Figure it out. The solution was to close stores and layoff workers. Why? Poor management. Not that wages had anything to do with solving the problem.

 

[ucbruin]

From the article:

Dollar Tree didn’t spend $9 billion to buy Family Dollar to get in there and close stores.

Figure it out. The solution was to close stores and layoff workers. Why? Poor management. Not that wages had anything to do with solving the problem.

"Figure it out."

Regarding the Yahoo article....
Seems to me that JG and I have "figured it out"....

 

[Randolph Kinney]

• More than 5,300 stores are expected to close in 2019.
• Family Dollar, Abercrombie & Fitch, and Chico's announced nearly 800 store closures on Wednesday.
• Gap, JCPenney, and Victoria's Secret announced more than 300 store closures over the course of 24 hours last week.
• Payless has said it plans to close all of its 2,500 stores in what could be the largest retail liquidation in history.

The staggering rate of store closures that has rocked the retail industry over the last couple of years is expected to continue in 2019, with roughly the same level of closures expected this year.

https://www.businessinsider.com/stores-closing-in-2019-list-2019-3#nordstrom-3-stores-22

• Moody's Investors Service identified 17 retailers with the highest risk of defaulting or filing for bankruptcy protection.
• The list includes PetSmart, Neiman Marcus, and J.Crew.
• Two months into 2019, four retailers have already filed for bankruptcy protection: Payless ShoeSource, Charlotte Russe,Gymboree, and FullBeauty Brands.

"As the US retail industry emerges from one of its worst multi-year default cycles yet, companies are getting ready for a second, though less virulent round among smaller, weaker names," analysts for Moody's Investors Service wrote in a report on Thursday.

In 2017, PetSmart — the largest US pet retailer, with more than 1,600 pet stores in the US, Canada, and Puerto Rico — purchased Chewy.com for $3.4 billion in what was the largest e-commerce acquisition at the time. Since then, the company has been struggling to pay down roughly $8 billion in debt amid growing competition online from Walmart, Amazon, Target, and others.

https://www.businessinsider.com/retail-bankruptcies-expected-this-year-2019-2#petsmart-1

Anyone see what is causing retailers to close stores and layoff people? Anyone really believe that raising the minimum wage to $15 an hour will solve the problem?

 

[Randolph Kinney]

"Figure it out."

Regarding the Yahoo article....
Seems to me that JG and I have "figured it out"....

Yes you have. Now how many companies have poor management? All those that close stores and lay off workers, and who file for bankruptcy. Guess what? New supply of workers.

 

[J Grant]

From the article:

To many low-income shoppers, Family Dollar is still seen as being too expensive.

Family Dollar gross profit margins was down 400 basis points year-over-year in the most recent quarter. Store traffic was under pressure, too.
The primary reason of the store closings and layoffs is not enough low income shoppers. Say what? Store employees don't make enough to shop there?
It is not about $15 an hour wage. Family Dollar Stores Inc pays its employees an average of $9.92 an hour. Google that.
So, raising prices can't cover a cost of a minimum wage at almost $10 an hour, how about raising the minimum wage to $15 an hour?
Do you see any connection with labor cost and profitability and what happens when labor cost go up? Do you see what happens when the company takes on too much debt?

Your own article does not mention wages lol..of course wages are a cost but wtf does that have to with debit? Paying wages is an operating cost as is keeping the lights on. Debut is borrowing to buy the business franchise or other reasons for the borrowing. Some of it is corprate greed..ever think the management and owner taking hube salaries and bonuses are the cause of a bad balance sheet? Your mind is made up the sole cause of a business closing is the wages. Of course I recognize that yes wages as a component can get too high. I have mixed feelings about the $15 as goal , apparently that is based on a min standard of living cost

The working poor survive on payday loans, pawn shops, buy here pay here car lots and sect 8 if they can get it. Who owns those car dealerships, payday loan companies and pawn shops and car lots? Section 8 housing, it does not just benefit the poor, it benefits landlords by making rents higher than they would be otherwise. It is not a trickle down, it is a trickle up economy. The USA can manage to pay 30k a year to house a prisoner but wont; invest $ when that person is young for social services or education to break the incarceration cycle-, because we have a punishment mentality rather than a prevention and invest in citizens mentality.

Does not take a genius to figure out if base wages are so low some folks turn to crime as a better pay option. I might in their shoes-, most of us are not geniuses or moral beacons,, we were just lucky to be born into middle class or professional class or solid working class parents who (mostly ) were drug addicts or incarcerated or desperately poor themselves.

Besides our foreign wars that cost trillions and won nothing look at our endless failing domestic policies presented in battle terms- .The war on crime the war on drugs the war on poverty- never won because it is not about war rather than a positive solution . And endless wars are very profitable to some parties..The GOP should declare " A war on minimum wages" to ensure that problem is never solved either.

 

[Randolph Kinney]

No solution to the retail apocalypse? How about raising the minimum wage to $15 an hour?

 

[Randolph Kinney]

The retail apocalypse is the closing of a large number of North American brick-and-mortar retail stores, especially those of large chains, starting in 2010 and continuing onward. Over 12,000 physical stores have been closed, due to factors such as over-expansion of malls, rising rents, bankruptcies of leveraged buyouts, low quarterly profits outside holiday binge spending, delayed effects of the Great Recession, and changes in spending habits. North American consumers have shifted their purchasing habits due to various factors, including experience-spending versus material goods and homes, casual fashion in relaxed dress codes, as well as the rise of e-commerce, mostly in the form of competition from juggernaut companies such as Amazon.com and Walmart.

The retail apocalypse phenomenon is related to the middle-class squeeze, in which consumers experience a decrease in income while costs increase for education, healthcare, and housing. Bloomberg stated that the cause of the retail apocalypse "isn't as simple as Amazon.com Inc. taking market share or twenty-somethings spending more on experiences than things. The root cause is that many of these long-standing chains are overloaded with debt.

https://en.wikipedia.org/wiki/Retail_apocalypse

Middle class squeeze and cheap debt which is now more expensive to refinance and service. All that "free" money from the federal reserve, zero percent interest rates and quantitative easing of $4 trillion is coming home to roost.

After a few months of wild swings, in January US consumer credit normalized rising by $17 billion, in line with expectations, following December's $15.4 billion increase. The continued increase in borrowings saw total credit storm above $4 trillion, and hitting a new all time high of $4.034 trillion on the back of a America's ongoing love affair with auto and student loans, and of course credit cards.