Quote:
Originally Posted by Perfectlap
...and do little as far as raising prices for these large corporations, they can easily absorb marginal wage increases without losing very much in earnings.
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I agreed 110% up until the very last sentence!
Labor typically comprises 70-85% of the price of a good. Raw materials are cheap!
This is why going offshore pays such huge dvidends (typically 1/6 the cost of US labor).
Increase the cost of labor and the price has to increase by almost the same amount.
There is no way for a company to absorb an 25% increase in labor cost without completely wiping out profits (assuming nothing else changes).
So how do we fix this? Well, SOMETHING ELSE has to change and that something is the
overhead costs . OH costs for most companies are out of control and need to be substantially reduced. This is the part of the cost that no one sees. Once this is accomplished, then companies can afford to pay low wage earners more without impacting profits.