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Cheat Sheet Q & A.
Business owner – wage inflation:
Bottom Line: Today question comes from a former business owner who had this to say with regard to the proposed minimum wage increase:
I am always frustrated that minimum wage discussions always miss the most disruptive and costly negative impact on a business. The Domino effect. Example, those who start at $7.75 in time move up to $8.50, then $9 - $10 - $11 and so on. Now change $7.75 to $9, the experienced worker at $9 must go to $10, the worker at $10 must go to $11 and so on! It is not just new hires that impact the company's wage cost, but the cumulative effect of the increases to almost all hourly workers. Result, a huge cost increase to do the same business volume.
His point is valid – hence why I choose to share it. Anytime you have mandates that require additional expense within a business operating environment you’ll always have adverse reactions. With the same amount of business taking place something has to give and often it’s a combination of:
- Fewer hours
- Slower or no raises for all other employees
- Slower or no hiring
- More difficulty retaining and attracting talent
I think the first three speak for themselves and were also touched on effectively on Friday’s Cheat Sheet with the message from the
Smaller businesses are at numerous disadvantages vs. their larger counterparts:
- Lower volume business equals higher costs of goods purchased for business use
- Marketing costs are completely shouldered by the local business
- Difficultly attracting and retaining talent
The first two are also rather self explanatory but the third I’ll elaborate on… Many small businesses will often offer starting salaries slightly higher than minimum wage in an effort to attract a higher quality entry level employee. If a minimum wage increase negates that effort it can make it even more difficult to attract and retain employees. Upward mobility is always an issue many small business battle with attracting and retaining talent and certainly the expense of benefit packages that many larger companies are often able to offer. Additionally, as the business owner pointed out – other employees often expect more money and may leave or become unhappy within the workplace if they don’t receive a raise that’s in proportion to the minimum wage increase.
If you have a question or topic you’d like me to address email me: brianmudd@clearchannel.com
Eat the rich & you’ll hold the bag:
Bottom Line: We all are familiar with the saying: “for every action there is an equal and opposite reaction”, so… If the wealthiest Americans pay a disproportionate share of the overall tax burden. What happens when their money leaves the country (and perhaps they along with their money). Don’t say I didn’t warn us.
As I frequently point out there are two sides to every story but one side to every fact. The facts are as follows:
- The top 1% pays 38% of all personal Federal income taxes
- The top 5% pays 58%
Taxes increased on 77% of Americans on January 1st but much more so for those top 1%er’s that are so frequently singled out. Taxes on them increased not just 2% but actually by 6.6% (the 2% Social Security tax increase plus the 4.6% income tax increase on those earning over $400,000 or households over $450,000). Those figures also don’t include the additional Medicare tax upper income earners have to pay as part of the “Affordable” Care Act that went into effect this year. So back to where I started with this entry. What’s the opposite reaction been?
According to the
http://finance.yahoo.com/news/should-you-renounce-your-citizenship-144048875.html
Facebook was hacked – what happened and what you need to know:
Bottom Line: Remember that pesky Java issue of a few weekends ago? The one in which Java was hacked and some Java enabled computers were completely co-opted by hackers. That fiasco led to a first of its kind warning that came from the dept. of homeland security. They actually warned that you should disable or delete Java from your computer, even after Oracle produced a patch. Now we know why.
The Facebook hack attack didn’t work its way into the backdoor of Facebook – instead it attached itself to Facebook. Attached to Facebook it attacked users who logged on from computers that had Java enabled on them. Reportedly no one was seriously compromised in this attack but the warning regarding Java, if you haven’t deleted it already, should be adhered to at this point. I’ve cleared Java from all of my computers.
http://allthingsd.com/20130215/facebook-hacked-claims-no-evidence-of-user-data-compromised/
Tax ID fraud is twice what was first reported & ground zero is
Bottom Line: A few weeks ago we received information from the
There were 1.2 million Tax ID theft / fraud cases in 2012, literally twice the original estimate. Worse still – the worst state in the country for theft & fraud –
http://www.cnbc.com/id/100466513
It’s not beef, energy or currency – where inflation’s highest:
Bottom Line: It’s Ammo. We know the back story here so I’ll jump right to the point. The average cost of ammo is up about 70% from the same time last year. Shortages are still the norm for many retailers and production still isn’t keeping up with demand and the result – these dramatically higher prices.
http://www.cnbc.com/id/100466526
Makers Mark 180 & lessons learned:
Bottom Line: So Makers Mark is right back where they were, minus a lot of negative publicity and angry customers.
Last week Markers Mark indicated they were replacing 3% of the alcohol in their product with water but not to worry because the taste wasn’t affected. Well not surprisingly that didn’t go over well. After a week of backlash Makers Mark, starting today, is going back to the original formula. Sound familiar?
Makers Mark isn’t the first to take their signature, highly successful product, and change it. They also aren’t the first to quickly do a 180. New Coke anyone? Instead of becoming New Coke 2.0 they should have taken a page instead from others in the alcohol industry.
When Budweiser first released Bud light or Miller with Miller light, it’s highly unlikely they envisioned the light products outselling the main but they have and for years. Importantly they didn’t change or eliminate the original products in the mean time. If Maker’s Mark wants to introduce a product with less alcohol – dedicate a certain amount of your production to that cause and market the product under a different label, a la Makers Mark light.
This should serve as reminders for all business people not to change the product that made you successful. Innovate around that product.
http://www.usatoday.com/story/news/nation/2013/02/17/makers-mark-restore-proof/1926081/
