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Minimum Wage Hike Leads To High Prices

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RUSH: This is a great story: "California State Minimum Wage Increase to Drive Up Prices; California Raises Wage for First Time in Five Years."
"Stockton - Enjoy the sales this holiday season, because starting Jan. 1, California businesses that pay minimum wages or thereabouts say they have no choice but to raise prices on everything from pepperoni pizza to dry cleaning to a sack of potting soil. For the first time in five years, California's minimum hourly wage will increase... [by] rise 75 cents an hour to $7.50, an 11.1 percent increase. 'We have to raise prices,' East Stockton dry cleaner Nubia Vargas said. 'My customers, I don't think they will understand. They think it's already expensive,' said Vargas, owner of Snow White Cleaners at 3408 E. Main St."
Of course they won't understand it, Ms. Vargas. They're idiots! It's just like we had this brilliant guy call last week, "Well, they should just cut costs." Ms. Vargas, you can't pass these price increases on; you've got to cut costs! You have to understand that these people you're talking about who won't understand think that you are filthy rich. You are own a business, and they think that that means you have stashes and stashes of money in the back room or in the bank and that you're very cheap paying your employees but you keep a lot for yourself; you will not modernize your equipment because you want to drive around in your fancy-shmancy car and live in your mansion.
This is what people think of anybody who owns a business!
How many of you small business owners have encountered people who think that your life is one of immense wealth and leisure and that you do not pay your employees well enough and that you are hiding most of what you earn and any time some things come along that cause you to raise prices, they think you're just flitty and cheap, that you won't use those stash reserves that they know you've got? Because of the success of class envy as a political weapon over the last 50, 60 years -- I guess it's always been around terms human nature, but people who have never run a business, who have never run a payroll, who haven't the slightest idea, because they've never been taught about it properly either invariably have this attitude that anybody who owns a business is rich, immensely so.
So here comes the minimum wage increase. When you run a business, and your labor costs in one day are going to go up 11%, uh, that's serious, because there's no other expense that outdoes labor in terms of size. It's the #1 expense that all businesses have and they have to make budget somehow. They raise prices, reduce services. What most people say is, "Just cut back the extravagance," and most small business people say, "There isn't any extravagance!" It's a shame that there is such a misunderstanding of the whole concept of business, but people in California are about to be stunned. This story here as you will of it people are going to have to raise their prices because of this, just exactly as I told you last week.

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