Monitor your costs to determine how you can improve your bottom line.
By Judi Smith
The dollar’s value changes with the economy. The fuel surcharges companies add during oil crises cause an inclusive price increase, and not only in paint, vinyl and other oil-based products vital to the sign industry. In the 1950s, when I was a child, bread cost 10 cents a loaf. Its current $1.30 cost shows a 1,300% growth over 50 years. The cost of health insurance can rise more than 30% in one year. A price increase or decrease in any product or service affects our prices.
The original minimum wage was established in 1938 to ensure a livable wage. Proponents of the pursuant Fair Labor Standards Act contended the increase in available spending money would benefit the general economy. Today, minimum-wage hikes may or may not drive inflation, or perhaps inflation drives minimum-wage standards. The government benefits through higher sales and income taxes.
While businesses that serve the minimum-wage employee may perceive an immediate benefit, the signshop customer is the businessman who has less money to spend. Regardless of direction, this will level out over time.
Since its inception 68 years ago, minimum wage has increased from 25 cents to $5.15 per hour. In terms of current dollar values, 1938’s 25 cents correlates to $3.85. In 1968, the buying power of the $1.60 minimum wage reached its peak at $8.98; since then, it’s been eroded by soaring prices that cover additional costs. Minimum-wage increases have been surpassed by the dollar’s loss of buying power.
Minimum-wage increases affect your business, even if you don’t employ minimum-wage employees — or don’t employ anyone. Minimum-wage hikes increase stock clerks’ wages, which increase the cost of bread, the cost of living and the cost of signs.
A current proposal offers to raise the Colorado minimum wage from the $5.15 federal standard to $6.85 per hour. My granddaughter is thrilled because, even though she makes more than the current minimum, the proposed level would heartily increase her wages. However, every product’s price will also jump.
If this bill passes, a short window of increased prosperity will open before every business has raised its prices, and, even though more dollars will be exchanged, the cost of bread will also rise.
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