“My biggest frustration is when people say, ‘If you raise wages 30%, the price of everything goes up 30%!’ That is very much not how it works.”
“As a highly simplified example, say a restaurant makes $5,000 revenue a month with expenses being $1,000 for rent, $2,000 for supplies/food, and $1,000 for salaries, leaving $1,000 profit. If salaries go up 30% to $1,300, and the restaurant still wants to make $1,000 profit, they need to bring in $5,300 revenue. That’s not a 30% increase, but a 6% increase ($300/$5000).
Now that I’ve been taking business/accounting courses, it’s become increasingly obvious that the actual cost of labor is a much smaller element of most companies’ expenses than we believe.”