I'm a California restaurant operator preparing for the $20-an-hour fast-food wage by trimming hours, eliminating employee vacation, and raising menu prices
The increase was $4. The article kept using percentages to make it seem like some big scary change, but the increase is 1 meal per hour per worker. I'm pretty sure any half decent restaurant can handle that extra $4 per worker hourly.
But no, the solution is clearly to just nuke your vacation policy so you can save $1000 per worker per year. Yeah okay.
American notions of profit and loss are fucked up.
It doesn't matter if you're profitable. Let me say that again. It does not matter if you're profitable.
You have to be making MORE profit than you did same time last year, last quarter, last month.
If you don't keep making more profit, you are somehow "losing money". Money that's "rightfully owed" to you. Money that should and would have otherwise been yours.
And if you're a publicly held company and you miss that profit goal, the stock market will PUNISH you.
Hell, you could make more profit and STILL get punished if you didn't "beat expectations".
That's because investors only make money when the value goes up. The pressure to always make more money than before is baked into the public ownership system we created. I think we should make all companies employee owned instead of investor owned and then you'd fix the broken incentive structure.
You bring up a great point. Once I applied for a mortgage and showed that I had a part time job and a small business. I had made some changes in my financial structure so it looked like on paper that year my company was failing even tho personally I made more money consistently over the years. Didn't matter, my loan got rejected cuz technically the business was making less money.
I think this is neat.
I prompted chatGPT-4 with your question about the above comment. This was the result:
Your perspective on the issues with the current focus on continual profit growth in American businesses is indeed echoed in various discussions and criticisms in the business and academic world.
A significant point of critique is the heavy emphasis on shareholder value, often at the expense of other stakeholders. This shareholder-centric view has been dominant for some time, with the primary objective seen as maximizing profits for shareholders. However, this perspective often disregards the broader responsibilities and long-term vision of companies. Recently, there has been a shift towards "stakeholder capitalism," where companies are increasingly recognizing the importance of considering the interests of all stakeholders, including society at large, and not just focusing on short-term financial performance. This approach aims to foster a more sustainable balance between short-term pressures and long-term value creation, and helps restore trust in companies as vital contributors to society [❞].
The pursuit of continual growth and the pressure to exceed previous profit margins has also been critiqued for leading to other detrimental effects. For instance, unchecked business growth can result in increased workload, higher competition, a deviation from the original business vision, lower-quality customer relationships, and faster team member turnover. These factors can contribute to a loss of the unique qualities that made a business successful in the first place and may ultimately lead to less success in the long term [❞].
Furthermore, in the realm of stock prices and corporate valuation, the relationship between growth expectations and stock performance is more complex than often portrayed. Research suggests that growth expectations might have less impact on asset prices than traditional models suggest. This indicates that the market's demand doesn't react strongly to changes in expected returns, challenging the common belief that consistently higher profits directly lead to higher stock prices [❞].
These critiques highlight the complexities and potential pitfalls of the current American business model, which prioritizes constant profit growth and shareholder value, often at the expense of broader, long-term goals and responsibilities.
Could? Yeah. Will? Unlikely. If other restaurants are getting away with a certain level of exploitation then there's not a significant monetary incentive for a newcomer to exploit less.
That's part of the issue.
The only incentive that apparently matters to most people is monetary.
If other restaurants are getting away with a certain level of exploitation then there's not a significant monetary incentive for a newcomer to exploit less
Of course there is! The less money the owner takes, the more is available for dropping prices and hiring more easily. Dropping prices brings more business, and paying workers more means better, happier workers.
Businesses compete for business. Improving their offering compared to their competition results in more business going to them.
I don’t know how you can say there’s no incentive here. Do you not see a marketplace as a place of competition, which generates incentives to improve one’s offering?
Why do so many fast food places only pay minimum wage and throw a hissy fit whenever someone proposes raising it? Why don't they simply pay their workers more?
Cause the workers are expendable and their exploitation has been normalized to the point that there is no monetary incentive to pay more. Yes, there are restaurants that do pay more, but it's often driven from some other ideology, not just trying to make the most money, and most consumers honestly don't care. The same consumer will sometimes visit McDonald's, Chik fil a, or In n Out regardless of workers pay, hell I even know a few gay people that turn a blind eye to owner politics when visiting restaurants. 'Cause at the end of the day people are turning up for convenience or to satiate a particular craving, not because one company pays more.
There's a difference between economic theory and economic reality. People aren't exactly rational when it comes to emotional things like "I'm earning less right now." Even if the end result could be more income later, they refuse to accept that and say "well they're charging x and paying y so I can get away with that too! Leaving money on the table is stupid!"
I think a not insignificant portion of business owners/CEOs all fail the marshmallow test.