Peter Schiff Explains The Harsh Reality Of Minimum Wage Hikes To The US Public

Tyler Durden's picture




 

We have tried a number of times (here, here, and here) to explain the simple math behind the populist call for a higher minimum wage (that appears to be founding the President's new class warfare) but in the following clip, we hope, Peter Schiff visits a local Wal-Mart in the hopes of explaining that magic money trees are not real.

 

Posing as representatives of "15 for 15," a make-believe organization advocating that Walmart raise prices by 15% and use the extra cash to pay its low-skilled workers $15 per hour (Schiff suggests that the surcharge be added to customer's bills at checkout, just like a gratuity at a restaurant).

Not surprisingly few shoppers supported his cause. Even those who felt Walmart workers should be paid more did not want to pay higher prices themselves to make it possible.

Perhaps, as Schiff notes, those demanding higher wages for Walmart's workers should consider the importance of low prices to Walmart's customers.

 

 

Those who advocate across the board wage increases assume that the company can meet the additional payroll by simply dipping into profits. But with just $6,600 profit per employee any significant raise in pay will largely cut into profits, greatly alter return on equity, and force dramatic changes in the company’s operations. In truth the kind of pay raises envisioned by the activists, must lead to price increases. Advocates assume that shoppers will gladly support higher prices if they lead to higher wages for workers not higher profit for shareholders. Mr. Schiff’s experiment shows this hope to be delusional. If Wal-Mart loses customers, it will invariably lose workers. Do progressives assume that workers earning no pay would be less of a burden on society than a worker earning low pay?

Mr. Schiff would certainly agree that it is increasingly difficult, if not impossible, to raise a family on entry level Wal-Mart pay. But he argues that such jobs were never intended to be careers, but simply stepping stones for low skilled workers to gain entry into the labor force. The fact that the economy is now providing no other stones on which to step is not the fault of Wal-Mart. Instead, the better paying jobs that used to form the backbone of the middle class have been strangled by an out of control government that strangles businesses with excessive taxation and regulation

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Wed, 12/18/2013 - 19:52 | 4259101 prains
prains's picture

NO! the middle class got fucked by a globalist wage arbitrage that .Gov supported corprofascist america to outsource to the rest of the world because they're 100% OWNED by the same corporations.

 

WRONG AGAIN PETER!

Wed, 12/18/2013 - 20:12 | 4259146 Dr. Engali
Dr. Engali's picture

While there is some truth to what you say, Peter is also right in his point about over regulated. You would not believe the amount of hoops we had to jump through in order to get our small firm up and running.

What is really shameful is to see how hard people will fight a business expressing interest in building around here. Most of the major employers have left, and these idiots will fight tooth and nail to prevent anything new from coming in. In the mean time crime rates are going up and the infrastructure going to shit.

Wed, 12/18/2013 - 20:14 | 4259156 kito
kito's picture

i deserve a sandwich

Wed, 12/18/2013 - 20:17 | 4259165 Dr. Engali
Dr. Engali's picture

Lol.... Not this time.

Wed, 12/18/2013 - 20:25 | 4259185 ACP
ACP's picture

Of course they don't have an extra 15% Peter, when they pay for their all their shit with EBT!

Wed, 12/18/2013 - 20:41 | 4259230 bunzbunzbunz
bunzbunzbunz's picture

Bitcoin is down, so free payouts of bitcoins are up at http://freebitco.in/?r=25727

Wed, 12/18/2013 - 21:23 | 4259314 Stackers
Stackers's picture

Peter Schiff has finally devolved into Mark Dice

Wed, 12/18/2013 - 21:42 | 4259369 Pure Evil
Pure Evil's picture

And yet, your average joe blow consumer has yet to evolve from the Cro-Magnon species.

 

But, who really thinks that even $15 an hour is a living wage in the new normal?

 

I doubt the vast majority of the people in the Schiff video were making anywhere near $15 an hour, or not much more than that.

Wed, 12/18/2013 - 22:18 | 4259415 BKbroiler
BKbroiler's picture

I stil can't understand how forcing the world's richest people to pay their employees enough to not need governmnet assistance is so evil.  My lowest paid employee makes $12.50/hr, because that's what he's worth.  For less than that, I get unreliable morons who don't show up on time or they steal.  If your business requires $7/hr employees to turn a profit, maybe you shouldn't be in business.  If you pay minimum wage and earn more than a million, you're fucking parasite on a decent society.  Honestly, do you want to live in China? India? Russia?  Is that our example?  Switzerland, Sweden, The Netherlands and many other countries have strict wage laws, less inequality, and as a result, an overall happier population.

My former business partner was a creationist libertarian, and he loved to rail against the miniumum wage.  I never quite understood how he'd square that with his God, but he insisted the workers at the McDonalds would be better off without it.   After a few years I offered him to stay, on commission only, so he would only take home what he produced, and his income would be in line with his philosophy.  I like not having a partner anymore.

Wed, 12/18/2013 - 22:44 | 4259505 A Nanny Moose
A Nanny Moose's picture

Your employees can problably walk and chew gum at the same time. They might even have been able to spell their names correctly on their SATs.

I'm not sure some Walmarties even know how to spell SAT, or even dial 911.

Wed, 12/18/2013 - 22:58 | 4259542 BKbroiler
BKbroiler's picture

Your employees can problably walk and chew gum at the same time.

Well that is one of the qualifications, but it misses the point.   There is no housing available less than $500/month.  There is no grocery list that one person can survive on at less than $200/month.  There is no viable transportation below $100/month.  There is no health insurance at less than $300/month.  Even if you do nothing but eat, piss, breathe and work, your minium needs are $1100 per month and at $7/hr you need 40 hours a week just to stay alive, which most companies won't give you.  It's really damn hard at the bottom.  These are not the people we need to be punishing, and most of them are not lazy, or drug addicts, they are good people who want to move up in life.  Can we really convince ourselves that Lloyd Blankfein is worth a million times more to our society than a farmer or blacksmith?  

Even if your ideology is harsh enough to justify this, look at it practically.  When you don't pay someone enough to live, they steal, which puts them in jail, which costs your town 10K/month.  It's a bad deal for us all.

Wed, 12/18/2013 - 23:26 | 4259629 A Nanny Moose
A Nanny Moose's picture

What you describe are not the symptoms wages being too low. Rather they are the symptom of currency destruction. The natural tendency of prices is mildly deflationary. PERIOD!

"There is no housing available less than $500/month."

Horseshit. Creativity and lack of government regulations are all one needs to obtain shelter for <$20K. Creativity and .gov regulations are plentiful.

"There is no grocery list that one person can survive on at less than $200/month"

Horseshit. Beans and rice are still cheap, and last a long time. Dandelions are plentiful if you do not poison them with weed killer.

"There is no health insurance at less than $300/month"

Again.. this is a Dawt Gov intervention issue.

Wed, 12/18/2013 - 23:37 | 4259650 BKbroiler
BKbroiler's picture

right, so a person starting at the bottom should be creative in their living situation (not having a livable home) and eat nothing but beans and rice.  You've obviously done neither, or wouldn't write something like that.  

Wed, 12/18/2013 - 23:59 | 4259665 superflex
superflex's picture

I stil can't understand how forcing the world's richest people to pay their employees enough to not need governmnet assistance is so evil.

In 2012 the CEO of Walmart made $20.7 million. Walmart has about 2 million employees (as far as I can tell, this is only counting the employees in the American stores). So, if you divided the CEO’s entire pay among the employees they’d each get $10.35 more per year- that’s not quite 20 cents per week; a half a cent per hour for full time employees. Woohoo.

If you pay minimum wage and earn more than a million, you're fucking parasite on a decent society.

Look at a paystub of a WalMart employee and see how much the various governments” steal from every paycheck, and then tell me who the real parasite is.

Boy, that was easy.

Thu, 12/19/2013 - 01:57 | 4259856 PT
PT's picture

Was Schiff talking to minimum wage earners?  Perhaps he should have rephrased the question:  "If your wages doubled, would you really give a shit if prices went up by 15%?"

Now Schiff needs to survey some minimum-wage-paying employers:  "Would you mind doubling the wages of your minimum-wage employees if it would only result in a 15% price increase PLUS all of your minimum-wage-customers also got their pay doubled?"

Thu, 12/19/2013 - 02:16 | 4259887 PT
PT's picture

20 years ago the mortgage on a good house was half the minimum wage.  These days, the cheapest house in the cheapest suburb costs 100% of the minimum wage.

<sarc>
 "But that's okay because the fwee markits take care of everything!"  And high real estate prices don't affect demand or the economy at all, no sirree!  It's all them minimum wage earners causing the grief!

.

.

.

</sarc>  (because I know certain ZHers won't realize without the tag) 

Thu, 12/19/2013 - 03:27 | 4259961 boogerbently
boogerbently's picture

All those protestors out front are union schills, NOT WalMart employees.

The WalMart employees have voted down unions every time.

Sun, 12/22/2013 - 02:39 | 4267926 PT
PT's picture

I never went to uni protests because I was too busy studying.  Doesn't mean I disagreed with the protesters.

People tend to worry about where their next meal is coming from.  It can stop them from doing what's best for the long term. 

Thu, 12/19/2013 - 00:36 | 4259754 A Nanny Moose
A Nanny Moose's picture

You've obviously done neither, or wouldn't write something like that. 

Evidence please? You are arguing from emotion, and engaging in personal attacks. You and the rest of the commie red arrow free shyt fucking brigade. Argue the points please.

...and yes I have fucking lived off been and rice, while putting myself through school. I also had roomates so that rent was cheaper.

fucking NEXT.

Wed, 12/18/2013 - 23:47 | 4259677 BKbroiler
BKbroiler's picture

Dandelions are plentiful if you do not poison them with weed killer.

So poor people should have to eat dandelions to survive?  You are beyond cruel, I hope no one in your family every struggles.

Thu, 12/19/2013 - 00:40 | 4259758 A Nanny Moose
A Nanny Moose's picture

Why do you not like dandelions? Have you ever looked at their nutritional value compared to the average fare available via WIC or EBT?

No? Didn't think so. Get back to me when you have.

Thu, 12/19/2013 - 00:48 | 4259772 DanDaley
DanDaley's picture

Extraordinarily high in vitamin A (beta carotine), as is lambs quarter...hell I eat 'em, possum, too.

Thu, 12/19/2013 - 01:37 | 4259831 TheMeatTrapper
TheMeatTrapper's picture

So poor people should have to eat dandelions to survive?  You are beyond cruel, I hope no one in your family every struggles.

Funny. I make a six figure income and I trap and eat beaver to feed my family. It's free, great tasting, readily available, steroid and hormone free. 

I offer a $1.99 "Learn to Trap" video on my website. Any man that is willing to work can feed his family. 

If I can make six figures and feed my family with what I catch, why can't others? 

Why should an employer be forced to provide for the existence of an employee when it is the government that has made existence so difficult?

Thu, 12/19/2013 - 03:27 | 4259958 AldousHuxley
AldousHuxley's picture

struggle is when you do everything right and still can't get ahead.

 

are walmart workers did/doing everything right?

 

illegal mexicans get $15/hour CASH for manual labor.

 

Thu, 12/19/2013 - 02:14 | 4259886 jballz
jballz's picture

 

 

 

 

^^^^

Who let this fucking moron off its leash?

Thu, 12/19/2013 - 00:42 | 4259763 StychoKiller
StychoKiller's picture

So, WHY are govt-run schools producing citizens with so little value in the workplace?

Thu, 12/19/2013 - 03:33 | 4259966 AldousHuxley
AldousHuxley's picture

because wage slavery requires ignorance.

 

and workplace doesn't reward smarts but sociopaths.

 

you think Walmart wants to hire smart ZH readers or high school drop out just smart enough to shelf some boxes all day and be happy?

Thu, 12/19/2013 - 01:28 | 4259823 NidStyles
NidStyles's picture

Your emotional platitudes do not change the laws of economics. They also do not alter the simple fact that you want to use the same mechanism to punish those people whom made their wealth by abusing that same mechanism.All you are doing is perpetuating the same damn cycle and giving someone else the political leverage to enrich themselves at the expense of someone else.

 

You are not fixing theproblem, you are merely playing musical chairs until the music stops. Not sure why your ideology will not let you understand this, but I do know that my brain tell's me very clearly that reality never works out the way you intend it, and you seem to be incapable of seeng or understanding it. That means it's more likely that you are the idealist here rather than any of the Libertarians...

 

 

 

Thu, 12/19/2013 - 08:54 | 4260202 kralizec
kralizec's picture

One major flaw in your logic.  In principle I know what you are saying and my small business experience says it is true, but the big flaw is GOVERNMENT.  You are competing with government and you cannot win, not in the environment the progressives in politics and the bureaucracy have set up with their cronies in Big Business and Wall Street.  The more you pay an employee the more they collect, the more they collect the larger government gets, the larger government gets the bigger its apetite gets...and the apetite is so huge that our earnings are not enough, the have to augment with massive amounts of debt, which stakes an additional claim on every taxpayer.  You cannot out-bid the government.  The entire game is rigged in their favor.  You may feel you and your employees are doing well, but your not doing as well as you should and nobody will be doing very well soon.  The answer isn't to keep pace with them, it is to break their pace, starve them and make them fall.  Not the answer you want to hear but there it is.

Thu, 12/19/2013 - 02:06 | 4259848 PT
PT's picture

When 300 people line up for 20 jobs, there is NO excuse for hiring deadbeats.  In fact, low wages encourages hiring deadbeats because you don't lose too much money by keeping them.

Plenty of unemployed out there.  Why wouldn't the best potential employees get the job?

Thu, 12/19/2013 - 03:27 | 4259956 Riprake
Riprake's picture

What makes you think they don't? The problem is, the 280 people who didn't get one of those 20 jobs don't take very well to your calling them deadbeats.

Also, some of them would be able to get a job, albeit for much lower pay, if not for the minimum wage having outlawed that kind of job. Some of them go ahead and encourage employers to break the law so they can get themselves some of those lower-paying jobs anyway. These black market employees are also known as illegal immigrants.

Wed, 12/18/2013 - 23:07 | 4259579 Harbanger
Harbanger's picture

Yes, the only way to force the Worlds richest to pay their fair share, is Global governace, and the only way to do that is by creating a NWO.  That will save the World from the looming disaster.  Fuck any local politicians, they dont abide by our Laws and they're all the same anyhow.  What we need is much bigger.

Wed, 12/18/2013 - 23:22 | 4259614 Harbanger
Harbanger's picture

Onward Soldiers, on to Victory!

Wed, 12/18/2013 - 23:24 | 4259627 bidaskspread
bidaskspread's picture

So, if everyone raises to $12.50, won't you have to hire the idiots you don't want? You will need to pay more to get that talent you currently have. If you have that ability, why aren't you paying them that amount now? The three countries you named are happier because unlike the dollar the purchasing power has remained relatively flat.

Wed, 12/18/2013 - 23:43 | 4259661 BKbroiler
BKbroiler's picture

So, if everyone raises to $12.50, won't you have to hire the idiots you don't want?

No, I would just have a larger pool to hire from.

Thu, 12/19/2013 - 10:58 | 4260579 bidaskspread
bidaskspread's picture

How would you have a larger pool to hire from? You should have the ability to hire anyone at 12.50 and below currently. I would make the case that you're pool would actually shrink without a wage increase on your end. If I was your competition, I might be closer to where some of your workers live. So to save gas, they take my job over yours since we are both paying 12.50. Or how about the guys that were paying $8.00. They see your guys and offer $13.00. The guys that were getting $20 an hour now see a less experienced worker getting close to the same pay and then they demand more. The guy making 40 an hour sees the 20 an hour around the same and demand more. Up and up it goes until someone says, " how can we expect someone to live off $12.50 an hour". It's purchasing power of your currency. If you could buy a steak,2 cocktails and a piece of pie for a dollar there would not be any arguments against 7.5 an hour being too low.

Thu, 12/19/2013 - 01:10 | 4259806 Borrow Owl
Borrow Owl's picture

"My former business partner was a creationist libertarian.."

Holy shit.

Ignorant enough to buy into Bronze Age mythology, yet perceptive enough to understand the basic concepts of liberty.

That boy must be a whirling dervish of cognitive dissonance.

 

 

Thu, 12/19/2013 - 04:57 | 4260034 Riprake
Riprake's picture

Speak for yourself. Seems to me, evolutionists who want price controls must have some serious cognitive dissonance to believe in both survival of the fittest and in enforcing a "living wage" for those who aren't economically "fit" enough to earn one.

Thu, 12/19/2013 - 09:24 | 4260258 Borrow Owl
Borrow Owl's picture

How predictable.

Start off with 'evolutionist' in a failed attempt to slander those who prefer reality to fantasy, then offer up a distraction in the form of a one-legged strawman from out of left field.

 

Thu, 12/19/2013 - 13:07 | 4260994 Riprake
Riprake's picture

You seem to be taking reality rather badly.

And might I remind you: slander is spoken. In print, it's libel.

Thu, 12/19/2013 - 20:06 | 4262252 Borrow Owl
Borrow Owl's picture

You, sir, are seriously delusional- in more ways than one.

 

 

Thu, 12/19/2013 - 12:24 | 4260859 dock3511
dock3511's picture

It is not the business of Walmart or anyone else to pay a so-called living wage. Your linkage between a man's religion and his worker pay is illogical. 

Wed, 12/18/2013 - 21:07 | 4259274 CognacAndMencken
CognacAndMencken's picture

 

 

Numerous studies (recent: Ruetschlin and Traub) have proven that if WalMart were to forego their recent stock buybacks, it could afford to pay its workers $5.83 more per hour, putting them near $15/hour. Of course, Schiff is pretending that the only option is to pass the expense to the WMT consumer forcing them to pay more, which he knows won't fly since many of WMT's shoppers are reliant on those cheap items. He never once considers any other options. In fact though, there is another option: redirecting the $7.6B used this past year for a stock buyback, which was part of a larger $15B stock buyback program ok'd by the WMT board in June 2013 - these buybacks are ok'd and enacted yearly. There's nothing wrong with stock buybacks, but it would be nice is some money actually tricked down to the workers occasionally.   

I'm not sure how much money the WalMart family wants in their own coffers (currently at $100B+), but they might consider giving just a little more to their workers. With all the Fed's fungible liquidity finding every corner of the stock market, there's plenty of momentum to keep the WMT shareholders happy. It might be nice if some people at the bottom finally got a little drop of what the 1% have been bathing in.  

There are alternatives, Schiff!

 

Wed, 12/18/2013 - 21:53 | 4259396 Pure Evil
Pure Evil's picture

Of course workers are all at the mercy of heartless corporations.

Who doesn't want to pay a high school graduate or GED equivalent with no real skills $30 an hour to stock shelves and run a cash register, which by the way can easily be replaced with self checkout stations or RFID readers.

Let's find a way to impoverish a whole new class of workers by replacing them with technology that can do most of their jobs.

Better yet, since the corpofascists have the ear of Congress maybe they can petition the District of Criminals to create a whole new set of worker visas so they can import more cheap labor from 3rd world hell holes that won't complain about being paid minimum wage.

Thu, 12/19/2013 - 02:54 | 4259933 PT
PT's picture

Even with pitifully low minimum wages, that technology is already here anyway.

I'm sure the lazy horses really regret being so slack now that they have been replaced by the car.  Perhaps we could ban trucks and pay people two cents per week to carry stuff on their backs.  Jobs for all!!!  "And if you don't want to do it then you're just too lazy!"

Wed, 12/18/2013 - 22:21 | 4259455 Spitzer
Spitzer's picture

You.......

 

Are an idiot

Wed, 12/18/2013 - 22:39 | 4259486 BKbroiler
BKbroiler's picture

No, he makes a damn good point.  Is your thinking and ethical standard so corrupted by your ideology that you don't think that sacrificing a stock buyback for the good of the lowest paid workers in the country is a good thing?  This is not the 1950's.  These are not 15 year old kids working at the local gas station for summer cash.  It's grandma and grandpa, greeting people at Wal-Mart, trying to supplement their SS after their 401K got robbed by Blankfein and Co.  It's the guy working in the gun section that used to have his own store before they came to town.  It's your friends and neighbors, and it's a big chunk of the population.  Grow up.

Thu, 12/19/2013 - 01:40 | 4259836 NidStyles
NidStyles's picture

You don't get it do you? You are advocating tyranny. You are telling everyone that the stock holder's have to do something, and that the markets can not operate.

 

You are just as bad as the assholes in Wall Street

 

Thu, 12/19/2013 - 04:38 | 4260025 Golden_Rule
Golden_Rule's picture

Yes sirrr.  "Force" was the initial word he used.  You know what doesn't take force?  Opening your own damn store to compete with wally-world where the employees make better money.  100% I agree walmart employees are getting shit on, but force is never the answer.

Thu, 12/19/2013 - 10:06 | 4260364 Reference Variable
Reference Variable's picture

You are being mindfucked. By choosing not to tariff, rather manage the economy solely through currency devaluation American manufacturing has been destroyed. A solid manufacturing base was and is the only solution for an acceptable standard of living for most people. You're right, this isn't the 1950s!  Direct your emotions at the real rapists, the banksters and their political enablers. These fuckers.

By advocating Walmart can possibly solve this you only carry their water my man. It's going to take blood.

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