The economy

**keepngoal** · 10-22-2007, 04:23 PM

Originally Posted by Stormin

I own a business. I pay wages. The minimum wage does not affect me. I pay much higher than minimum wage. Only a fool would say that if a small increase in wages occurs that he will close his doors. If I was operating on a profit margin that thin, I just as well close up anyway. By closing up the doors, he has LOST ALL PROFIT. And he doesn't even have a viable business to sell (in other words, No Blue Sky for a potential buyer).

i agree... but, we are looking at a 41% increase that is no where near small, no where ... I must pay more in wages to keep the type of ppl i need. and I don't think my margin is that tight. After I am paid (and my perks, small business ya know) there is a 10-12% profit each year. And guess what.. it is very close to the increase I must pay to keep my valued employees versus the new minimum wage.

Why must i get sucked in .....

**CyBobby** · 10-22-2007, 05:09 PM

Originally Posted by Cyclonepride

I'm really starting to wonder how the economy is doing. The media is screaming recession, housing bubble bursting, and doom and gloom (with an election looming). Common sense tells me that inflation should be higher than reported because of oil prices/ transportation costs, plus corn, beans and wheat prices going up and up. All this, and the DOW keeps on trucking? The company I work for is having a pretty good year too, and it is construction related. Any opinions on this?

Having been in the construction industry for over 33 years ... I can tell you from experience....IT'S NOT RECESSION-PROOF...in other words good luck!!

**Cyclonepride** · 10-22-2007, 05:15 PM

Originally Posted by CyBobby

Having been in the construction industry for over 33 years ... I can tell you from experience....IT'S NOT RECESSION-PROOF...in other words good luck!!

Yeah, 13 years here, and it's pretty obvious that the boom over that time period had no chance of lasting forever, and would likely step backwards a ways. However, the economic outlook in the Iowa housing market is nowhere near as volatile as the metro areas on the coasts. Housing values are up slightly, but might be down slightly once they release the new stats.

**Cyclonepride** · 11-05-2007, 04:39 PM

The Fed digs us a deeper hole - MSN Money

Scary but probably accurate

**alaskaguy** · 11-05-2007, 05:46 PM

I've becoming ever so more concerned about the longer term economic outlook. I don't understand how all this rate cutting will help the homeowners who shouldn't have gotten loans in the first place. However, I do understand that the fed appears to be setting the stage for a weak dollar and inflation.

**Cyclonepride** · 11-05-2007, 05:54 PM

Originally Posted by alaskaguy

I've becoming ever so more concerned about the longer term economic outlook. I don't understand how all this rate cutting will help the homeowners who shouldn't have gotten loans in the first place. However, I do understand that the fed appears to be setting the stage for a weak dollar and inflation.

I'm just hoping for a slow descent for the economy at this point. I have a feeling we might not be so lucky.

**harty83** · 11-05-2007, 09:25 PM

Regarding the minimum wage, no meaningful legislation will ever "fix" the minimum wage. It's too easy for politicians to use it to pimp for votes. Not only does in make it seem like they support the "little guy", but also many union contracts stipulate their wages as X times the minimum wage. Who do you think holds more sway with politicians? Minimum wage earners or union members?

There could be conditional minimum wages like age (e.g. under 16 or under 18) or experience (e.g. get a bump after you've been on the job 90, 180, 365 days), or, the easiest answer would be to find an appropriate level (subjective, I know) and peg it to inflation. None of these will ever happen.

**jdoggivjc** · 11-06-2007, 07:09 AM

Originally Posted by alaskaguy

I've becoming ever so more concerned about the longer term economic outlook. I don't understand how all this rate cutting will help the homeowners who shouldn't have gotten loans in the first place. However, I do understand that the fed appears to be setting the stage for a weak dollar and inflation.

It's not so much homeowners shouldn't have gotten a loan - it's that they shouldn't have gotten a $400k loan when all they can realistically afford is a $200k loan. As someone who's in the process of buying his first home, I've been warned of the mistakes - people taking bad advice about how they can afford a house that's 3-4 times the combined annual household salary when what they should really be going for is 2-2.5 times the largest of the two salaries. Realistically, I'd be stupid to go for a $200,000 home at this point in my life - by the guidelines that people who are wiser than I have said I should follow, I'm probably capped at about $125,000. Fortunately, my wife and I found a really great condo for $91,000 (there are other reasons factoring into the decision to buy a condo instead of actual property at this point in my life).

**Stormin** · 11-06-2007, 07:18 AM

Originally Posted by harty83

Regarding the minimum wage, no meaningful legislation will ever "fix" the minimum wage. It's too easy for politicians to use it to pimp for votes. Not only does in make it seem like they support the "little guy", but also many union contracts stipulate their wages as X times the minimum wage. Who do you think holds more sway with politicians? Minimum wage earners or union members?

There could be conditional minimum wages like age (e.g. under 16 or under 18) or experience (e.g. get a bump after you've been on the job 90, 180, 365 days), or, the easiest answer would be to find an appropriate level (subjective, I know) and peg it to inflation. None of these will ever happen.

If you put conditions on the minimums then employers will tend to hire those who they can get for less money. And there hadn't been a minimum wage increase in 10 years. I figure if an employer can't pay the new minimum, he is free to do the work himself or he can have a family member do it. Personally, I don't know how you can expect to pay people less than $6 per hour and have them drive to work paying $3 per gallon for gas.

**alaskaguy** · 11-06-2007, 09:19 AM

Originally Posted by jdoggivjc

It's not so much homeowners shouldn't have gotten a loan - it's that they shouldn't have gotten a $400k loan when all they can realistically afford is a $200k loan. As someone who's in the process of buying his first home, I've been warned of the mistakes - people taking bad advice about how they can afford a house that's 3-4 times the combined annual household salary when what they should really be going for is 2-2.5 times the largest of the two salaries. Realistically, I'd be stupid to go for a $200,000 home at this point in my life - by the guidelines that people who are wiser than I have said I should follow, I'm probably capped at about $125,000. Fortunately, my wife and I found a really great condo for $91,000 (there are other reasons factoring into the decision to buy a condo instead of actual property at this point in my life).

There is a combination of factors involved here. Some people qualified for much larger loans than they could afford by creative loan products (teaser rates and such). Other borrowers with crappy credit qualified for loans when financial institutions relaxed their credit standards. In Southern California, Nevada, Arizona, loans were being made where the lenders were not verifying the income information and not even doing credit checks. This is where the name "Subprime" lending originated.

**alaskaguy** · 11-06-2007, 09:53 AM

Originally Posted by Stormin

If you put conditions on the minimums then employers will tend to hire those who they can get for less money. And there hadn't been a minimum wage increase in 10 years. I figure if an employer can't pay the new minimum, he is free to do the work himself or he can have a family member do it. Personally, I don't know how you can expect to pay people less than $6 per hour and have them drive to work paying $3 per gallon for gas.

Perhaps the guy being paid $6 per hour is a high school student who is living at home with his parents?

**harty83** · 11-06-2007, 10:17 AM

Originally Posted by alaskaguy

Perhaps the guy being paid $6 per hour is a high school student who is living at home with his parents?

Exactly. And in the other case, employers aren't going to keep firing people every 90 days (unless they are particularly bad employees) because no one would come work for them, there would be too much recruitment and training costs, etc.

**Cyclonepride** · 11-07-2007, 04:13 PM

Are we headed for an epic bear market? - MSN Money

**Stormin** · 11-08-2007, 06:36 AM

Originally Posted by alaskaguy

Perhaps the guy being paid $6 per hour is a high school student who is living at home with his parents?

He still has to pay $3 per gallon for gas to flip burgers for a couple of hours. Perhaps the owner of that McDonalds franchise can flip the burgers and save himself a few bucks. Like I said, if you think the minimum wage is too high, then do the work yourself or close up. Just quit whining about it. The fuel prices have a Far Bigger impact on costs and profitability than raising the minimum wage. Fuel prices affect EVERYTHING.

**herbiedoobie** · 11-08-2007, 09:13 AM

So, Stormin, you think that higher fuel means everyone can automatically afford higher wages??? The high school kid, in most occasions, isn't as affected by the $3 gas as you'd think. He can still afford the $200 shoes and the $100 IPOD, so $3 gas is nothing. If it is, he probably can use mass-transit or walk.

Higher gas prices plus higher wages will affect more than just the marginally profitable businesses.

Personally, mandated wage rates is gov't meddling, pure and simple. Political theft. But I'm sure when that marginal business closes it's doors, you'll enjoy paying the higher taxes to support the unemployed.

I live in Germany, where everyone is guaranteed a living wage. Unfortunately, the prices are high as h*ll, and everyone then has to give their "living wage" directly back to the gov't in taxes, so the economy is slowly crumbling. I'm sure the EU will just bring in another expanding economy to make it look better than it is, though.

The whole "living wage" thing is a political perpetual motion machine. You can fake people into believing it works, but in the end, some jobs are only worth $5 an hour, and the whole system slowly slumps into the former Soviet Union.

But I'll be dead by then.