Minimum Wage Rises $1.05 an Hour, How Does That Cause $8 Coffees? Can Anyone Explain The Math on That

AustriaBargain on 18/06/2022 - 18:19

Been reading a lot about business owners complaining about the minimum wage increase. And I don't really understand how they can say it'll hurt them so bad or increase prices of products so much. I know other factors will increase prices, like war in Europe, supply chain, etc. but they specifically cite the minimum wage increase as the cause. If they charge $5 for a coffee now and would like to raise the price to $8 in response to the wage increase, then their workers would have to be making one coffee every three hours. The math just doesn't add up. $1.05 per hour divided by the number of coffees made on average per hour should add just a few cents to a cup. If paying just a few more dollars per hour for your staff breaks your business then you're already on the verge of bankruptcy. Plus if you're already paying minimum wage then it shows that you would like to pay your employees even less, if the law let you.

I saw one cafe owner who says he already pays his employees 20% above award claim that the minimum wage increase will somehow hurt him, despite being under no obligation to raise his employees pay because it's already nowhere near minimum wage.

Now I know some food businesses are actually very friendly and cruisey with their staff and let them work at a gentle pace, which I think is fantastic because a good work environment should be kinda relaxed imo, so the minimum pay increase will hurt them more than other businesses that drive their employees like work horses. But even then we're still talking just a few cents per item made/sold.

What does anyone else here think of it? Is anyone here making minimum wage or employee minimum wage employees?

Education & Work

Comments

  • pegaxs on 18/06/2022 - 20:37
    -6

    Because it takes some hipsters over an hour to order their coffee with all the wanky items they want in it and having to explain their whole life story to a barista that doesn’t give a shit.

    • Chandler on 18/06/2022 - 22:42
      +18

      I'm sure this is at least the second time I've heard you complain about hipster coffee orders… was there a particular incident that burnt you?

      • pegaxs on 20/06/2022 - 10:17
        +1

        So, out of some 12,782 comments as of this one and 10+ years on OzBargain, I have made 2 disparaging remarks about hipsters trying to out douche canoe each other with their coffee orders. Yep, I'm definitely "burnt" when 2 out of my 12,700+ comments over 10 years is about hipsters ordering their coffee.

        Also, to round it out to 3, hipsters, when ordering their coffee are just the male versions of basic bitches. :)

        • Chandler on 20/06/2022 - 12:12
          +2

          Well whilst I do appreciate a lot of your comments, I'm not comment-stalking you! Just after reading your initial comment here I thought I recalled one somewhere else where you commented on the ridiculousness of some hipster orders. Not being critical, just curious and tongue-in-cheek :)

          • pegaxs on 20/06/2022 - 16:08
            +1

            @Chandler: All good :) It now has me curious, as I am 100% sure I know the comment you are referring to and now I am going to have to go find it… Needle in a hay stack style.

            Also, yes, after doing a stint in hospitality as a drinks waiter with some time at the coffee face, hipsters are the worst. Maybe that is where I got "burnt". Ordering shit because it sounds cool, not because it's nice to drink or that is what they want, but more so to "sound" cool.

        • smartazz104 on 20/06/2022 - 12:23
          -1

          So you've made 2 remarks about a scenario that has never occurred in the history of the world.

    • ThithLord on 19/06/2022 - 16:37
      +3

      Something tells me you're a Ben Shapiro fan. It's just the vibe

  • djones145 on 18/06/2022 - 20:40
    +21

    my triple shot, extra hot, quarter almond, quarter soy, quarter skim, quarter coconut, extra large mocha, with 4 shots Caremel, 2 shots chocolate costs 8 bucks at my local in Baragaroo cafe

    • 82norm on 19/06/2022 - 07:53
      +2

      I didn’t know there was a MCAfe there.

    • nobro25 on 19/06/2022 - 08:37
      +2

      May as well ask for two shots of cream while you're at it.

      • djones145 on 19/06/2022 - 14:33
        +1

        only had 8 bucks. that would cost 10 bucks
        I'm not that rich

    • altomic on 19/06/2022 - 09:57
      +3

      no twist of lemon?

    • iminabrons on 19/06/2022 - 11:56

      That's what they taught me when I went to school. With my hand on my head.

    • superuser on 19/06/2022 - 21:00

      How'd you differentiate hot and extra hot, skim or full milk? Lol

      • djones145 on 19/06/2022 - 21:38

        milk ain't milk, you know what I mean

    • Tleyx on 20/06/2022 - 11:38

      These stupid orders take a lot of time. They should have a discount for ordering off menu if wages are so onerous

    • smartazz104 on 20/06/2022 - 12:24

      That's not a coffee…

    • goldiep on 20/06/2022 - 19:25

      Now this sounds like a separate deal post on Ozbargain! Other similar deals would increase my self righteousness and cause me to spend money on crocs, vinyl and a typewriter to accommodate my new hipster lifestyle!

    • TerryJustTerry on 21/06/2022 - 10:34

      What a Bargain!… if only there were a site to post such deals…. maybe specifically for people that live in OZ …. hmmmm

  • orangetrain on 18/06/2022 - 20:45
    +36

    Rent is a huge cost. The owners are okay to sit on empty shops for decades until a naive entrepreneur thinks they can make a profit despite the huge rent.

    You will barely hear this in news because media shareholders also invest in property portfolios.

    Demand vacancy tax from Labor. Any owners not making any income will want to quickly lower rent otherwise they sell TOXIC assets.

    • jizmo on 18/06/2022 - 21:44
      +1

      That's typical world wide not only OZ

    • AustriaBargain on 19/06/2022 - 01:06
      +5

      And when that entrepreneur does do a good job and starts attracting a lot of customers, suddenly the rent goes up..

      • Slippery Otter on 19/06/2022 - 18:47
        +1

        Umm most tenants sign 5+5+5 year leases to avoid unexpected rent rises.

        • AustriaBargain on 19/06/2022 - 18:56

          Which is fine if you only plan on being in business for five years, or willing to commit to 15 years of being in business.

  • Eeples on 18/06/2022 - 22:12
    +11

    Corporate profits also grew, surging ahead by 13 per cent in 2021 according to ABS.

  • TheMindsetTraveller on 18/06/2022 - 22:15
    +12

    I work in hospitality, earning award wage, and a 5.2% increase (from October) in crap hourly wage, is still crap wage overall.

    You would never be able to buy a house in Sydney on an sole award wage.

    • AdosHouse on 18/06/2022 - 23:57
      +1

      Just checked what you typed. Yep HIGA and Registered Clubs award increase delayed until October. F U FWA, that is the 3rd year in a row we have been boned by these delayed increases. Because COVID wasn't shit on Hospo staff at all, we should get shafted up the A again.

    • [Deactivated] on 19/06/2022 - 00:12
      -8

      If minimum wage let you buy a house, who would even bother going to uni. I have some really bright kids in my senior methods and even they're saying they're just going to go into constructing because they can make a lot of money really quickly.

      • AustriaBargain on 19/06/2022 - 01:05
        +15

        Are you suggesting that only degree holders should own houses and investment properties, and that the rest of the working class should all rent those investment properties? Won't that just increase house prices if you turn more of them into investment instruments rather than, I dunno, homes.

          • brendanm on 19/06/2022 - 10:30
            +12

            @Bargain-er:

            Imho, uni/getting a degree teach ppl more than just academic but also life lessons

            You are incredibly out of touch.

            • Bargain-er on 19/06/2022 - 10:53

              @brendanm: Yeah? Why? U suggest drop off HS?

              • brendanm on 19/06/2022 - 11:23
                +8

                @Bargain-er: I suggest people do what works best for them. Uni does not reach life skills. Half the people on here who have done university can't speel or construct a sentence, or speak in SMS speak. University is useful if you want to go into a field that needs a degree.

                My wife is currently completing a degree, in a field she is already working in, and has been for years. There is a massive disconnect between what is being taught in university, and what happens in real life. More than half the people doing the degree won't even be able to work in the field, because even though they may have a piece of paper that says they are capable, they can't emotionally deal with the work being done.

                • SBOB on 19/06/2022 - 12:16
                  +4

                  @brendanm:

                  can't speel

                  Hope that was sarcastically on purpose ;)

                  • brendanm on 19/06/2022 - 12:21
                    +1

                    @SBOB: I wish it was, what an embarrassment, typing on phone while at an extremely boring kids party, so no excuse.

                    • mishrael on 19/06/2022 - 19:20
                      +1

                      @brendanm: I like to think the universe was conspiring to help make the point.

            • ozbjunkie on 19/06/2022 - 19:49

              @brendanm: If go as far as to say bargainer didn't go to uni, at least, not in the last 20 years.

      • jellykingdom on 20/06/2022 - 12:53
        +1

        I kinda agree with bkhm. I'm probably going to get flamed here, but here we go:

        It isn't necessarily everyone's god-given right to buy a house. I shouldn't expect someone working on minimum wage to be able to afford to buy a house in Sydney. That's just a fact. It doesn't mean you aren't entitled to a roof over your head without it costing a kidney, that's a different discussion obviously, about rental affordability, long-term leasing, etc.

    • 82norm on 19/06/2022 - 07:54

      Unfortunately, it’s always been the case in hospitality.

    • menocheapsk8 on 19/06/2022 - 08:55
      +3

      This is unfortunately why a large percentage of staff leave the hospitality industry once they hit about 30 (myself included).

      Seems you need to either transition to owning your own business or coming to terms with a pretty weak wage. It sucks, but labour costs are such a large percentage of overheads and restaurant pricing follows a fairly elastic demand curve.

      Best of luck and hope you manage to get your foot onto the property ladder one day!

      • spackbace on 19/06/2022 - 17:16

        This is unfortunately why a large percentage of staff leave the hospitality industry once they hit about 30 (myself included).

        Agreed, I was out and in more of a career by 25yo.

        Know someone who owns and runs a cafe and sounds damn stressful for the income

      • ankor on 20/06/2022 - 20:45

        Agreed. Left hospo, became white collar, almost tripled my wages.

    • pompompom on 22/06/2022 - 09:34

      I think you are thinking about a socialist economy. Capitalism doesn't work that way. You earn according to your skill and demand and your buying power depends on how much you earn. It wont ever be easy for low wage earners to afford a house even after minimum wage protection. Heck it's not easy for high wage earners either in the Australia we live in. But you can still buy in remote areas or rent in more densely pop areas.
      Unfortunately housing market has been largely consumed/exhausted by baby boomers and their interests are protected heavily by the govt which benifits in keeping the prices up while it's us who are left fighting over the scraps for ridiculous prices.

  • SF3 on 18/06/2022 - 22:54
    +1

    Coffee has always been priced at that price point. /s

    Emmet buying coffee at $37 and it’s awesome.

  • DemocracyManifest on 18/06/2022 - 23:01
    +1

    They won't lol, I've never paid more than $6 for a coffee ever and that's when they slam you with 50c-$2 extra for non diary milk despite using UHT lol.

  • netjock on 19/06/2022 - 00:00
    +4

    Minimum wage rises $1.05 an hour, how does that cause $8 coffees? Can anyone explain the math

    It is barista math. If cafe owners were any good at math they'd be traders working at an investment bank and making half to a million bucks a year instead of trying to make ends meet running a cafe.

    Lot of them don't get the margin and volume. If you can make a good product, keep prices lower than competitors and get the word out you'll probably make slightly less margin but make it up with volume if you have the capacity to deliver more coffees but what do I know. I know about math and like to drink a good coffee. That is why I don't run a cafe.

    • poboy on 19/06/2022 - 08:48
      +14

      Why are you both saying 'math'?

      • grr1701 on 19/06/2022 - 09:51
        +10

        I agree. It shows the depth of the US influence on Australia. It’s MATHS.

      • netjock on 19/06/2022 - 19:08

        "Actually it is basic arithmetic", we used to correct when people use "maths". Mathematics makes it sound harder than it really is.

        If you think it is even more than a simple single sum then you can call it mathematics to make it sound harder than it really is.

    • Mr Haj on 20/06/2022 - 09:16

      If cafe owners were any good at math they'd be traders working at an investment bank and making half to a million bucks a year

      I'm pretty good at maths. Are you saying I could be making half a million bucks a year? Or does that just apply to cafe owners?

      • netjock on 20/06/2022 - 09:22

        Are you saying I could be making half a million bucks a year?

        Isn't crypto just really advanced mathematical problems. Even an advanced rug pull just needs a simple coin.

        Plus since it is unregulated you are likely to go get away with it.

        Luna, Terra, Celcius, 3AC, Babel (apparently) in 2022 is like Lehmans, Bear Sterns, Merrill Lynch of 2009.

        • Mr Haj on 20/06/2022 - 09:35

          Weren't there a bunch of investment firms that lost an astounding amount of money because their "cash" was earning 20% thanks to UST?

          I don't consider programming the same as maths.

          • netjock on 20/06/2022 - 10:14

            @Mr Haj:

            I don't consider programming the same as maths

            If you did advanced maths then you'd probably be a cryptographer rather than a run of the mill programmer. Don't hold programmers in too high of a regard.

    • AustriaBargain on 19/06/2022 - 01:03
      +18

      If anything the government should have cut minimum wage by a few dollars per hour to supercharge the economy, protect the working class, and bolster share prices - News Ltd readers probably

    • Typical16-bitEnjoyer on 19/06/2022 - 10:19
      +5

      The market will now decide if a heap of these shitty small businesses have viable models.

      • brendanm on 19/06/2022 - 10:32
        +2

        Then when they collapse, the minimum wage people go from $21.70, to $0.

    • McSquintus on 20/06/2022 - 09:36
      +1

      If you oppose a raise to the minimum wage, you should be vocal against what caused it in the first place which is inflation. Due to inflation and to protect low income earners, a raise seems to be needed. Be angry at what is causing inflation or how we could mitigate such a huge increase.

    • smartazz104 on 20/06/2022 - 12:27

      So what causes inflation when the minimum wage doesn't go up?

  • solidussnake on 19/06/2022 - 07:17

    I suppose it adds up if you have 5-10 members to increase wages then I assume you have to pay slightly more super also ? Cost of beans/shipping would be going up and wouldn't be pleasant to own and run a cafe I feel

  • 82norm on 19/06/2022 - 08:10

    We lost out in manufacturing because some bright spark in Canberra decided to sign up all these FTA with up and coming countries like China. Clothing, materials, machinery became cheap to buy, with shite quality fro the better part of the first decade. We could no longer compete competitively due to our ever demand for higher wages. Fast forward to now and we’re completely, utterly screwed.

    Increasing wages sounds like a good idea, but does nothing in the end. Albanese may have an economics degree, but wouldn’t have a clue about running a business. If anything reduce tax across the board, hold Google, Apple more accountable. You lower taxes, then it gives companies incentives to increase their footprint into the country, this leads to more jobs, more jobs leads to more taxes to the government, at a higher volume.

    • grr1701 on 19/06/2022 - 09:47
      +6

      Heard something similar to this from a business owner in the US. He said that Trump’s passing of tax cuts for the rich enabled him to employ more staff and, therefore increase profits. Great result except for the fact that both old and new staff were getting paid peanuts, and continued to be paid peanuts. NO benefit for the workers.

    • tonka on 19/06/2022 - 10:56

      We need some ballsey leadership. Maybe start messing with gst instead of interest rates if they need to put brakes on prices. Seems to make a lot more sense if you want to slow discretionary spending to increase the gst on discretionary spending items. Not increase interest rates where the impact is on one group of people only. And put the universal tax in place for corporations now. No more big business tax dodging, right now, plus an urgent review on mining royalties.

    • faithdealer on 19/06/2022 - 14:56

      Cutting corporate taxes, what a revolutionary idea.

    • leiiv on 20/06/2022 - 09:04
      +1

      That's true. What needs to be done is re-architecting everything so that the gap between the rich and the poor decreases instead of increases.

  • Geoff01 on 19/06/2022 - 08:48
    +2

    Inflation is being fueled by demand for services in short supply. Average wages are also very high sitting around 95k across most states so greed to charge more creeps in because so many can now afford to pay. Hopefully it will settle down again back to normal with tradies not thinking there god…lol

  • greatlamp on 19/06/2022 - 09:15
    +6

    1. Begin with wages being 35% of business costs in hospitality.

    2. Inflation - price of energy, rent, food/ingredients- increases. Wages of anyone connected to the construction industry increases due to housing boom and labour shortages.

    3. Wages are now 25% of business costs in hospitality.

    4. Government increases the minimum wage by $1 - which doesn't even cover the relative loss in purchasing power.

    5. "Stupid Government causing Inflation!! We should let the free market set wages - you know, the one that would pay desperate people $10/hour, force them to work unpaid before and after their shift, work irregular hours, and be fired at any time. I want to live in a third world country where mugging people in the carpark is more lucrative than working in a cafe. It's called personal responsibility!!!"

    • brendanm on 19/06/2022 - 10:35
      +3

      "Stupid Government causing Inflation!! We should let the free market set wages - you know, the one that would pay desperate people $10/hour, force them to work unpaid before and after their shift, work irregular hours, and be fired at any time. I want to live in a third world country where mugging people in the carpark is more lucrative than working in a cafe. It's called personal responsibility!!!"

      Sounds a lot like uber eats/door dash etc, that everyone here seems quite happy to use.

  • grr1701 on 19/06/2022 - 09:41
    +2

    Unfortunately, if businesses need to make profits for the owner by underpaying their workers (ie not being prepared to pay a wage that almost catches up to inflation), then maybe they should become part of the large percentage of businesses that close down. A business that can only remain viable by underpaying their workers means that it is not viable at all. Then we could talk about wage theft by big businesses…

  • morse on 19/06/2022 - 09:56
    +4

    It’s about price rises across the board. Increase in wages, increase in super, increase in costs (ingredients coffee, milk), interest on business loan payments etc. So no, alone staff wage increases won’t lead to prices but together with everything else they might. The business owner then needs to decide a price point that is still competitive and/or offers value (quality of product) to stay profitable. I do agree though when I read articles about stuff like this they focus on one issue and it makes the cafe owners sound ridiculous, but they don’t give the full context. Also I’d say most cafes have only put up prices by 20-50c per coffee.

  • RocketSwitch on 19/06/2022 - 10:42
    +1

    They pass on the cost to consumers. My Chinese takeaway, same order was $52 last month. Now it's $73.

    • AustriaBargain on 19/06/2022 - 12:39
      -3

      Is it taking them an extra 21 hours to make your order? If the increase was just due to the wage rise then I'd love to see the math on that one. 21 hour Chinese food, is that like the three day chocolate cake you see on YouTube?

      • brendanm on 19/06/2022 - 17:05
        +1

        What is a supply chain?

      • RocketSwitch on 19/06/2022 - 17:06

        They had a sign that said prices increased due to the cost of living.

    • cashews on 21/06/2022 - 14:23

      That doesn't mean that it was the minimum wage causing that effect though. Take into account the stupidly high rents, cost of oil, supply chain shortages.

    • inasero on 22/06/2022 - 09:22

      Gee what are you ordering that your order came to $73? And was that pick-up, or delivered?

      • RocketSwitch on 22/06/2022 - 14:25

        Pick up. Family of 4 mate.

  • tonka on 19/06/2022 - 10:46
    +1

    For businesses owners busting their arses and having a go working alongside the workers I can feel for them. For the ones that are sitting all day drinking the coffee while their minimum wage employees run their business, they can go broke.

  • jacross on 19/06/2022 - 10:58

    The reasoning outlined by business may or may not be legitimate but wage increases leading to runaway infaltion is a real problem. It's called a price/wage spiral. Investopedia provides a pretty accessible overview of the concept. As with most things in economics, it's actually really goddamn complicated to execute a macroeconomic response with a lot of potential flow on consequences that can get away from you.

  • DarkOz on 19/06/2022 - 11:14
    +6

    $8 coffees? What, is the barista holding a gun to your head? It's stupid to charge $8 for a coffee and it's stupid to pay $8 for a coffee.

    • Mr Haj on 20/06/2022 - 09:41
      +1

      It's only stupid to charge $8 for a coffee if people aren't stupid enough to spend $8 on a coffee.

  • FlyingMiffy on 19/06/2022 - 11:38
    -3

    We have a minimum wage problem, or more specifically, an entitlement problem. Minimum wage is meant to be for work that requires minimum skill - the wage reflects the supply and demand.

    Choosing to do that type of work comes with challenges, and expecting to do minimum skill work while matching the standard of living of everyone else is bound to have issues. If you don't like it, choose to invest in your skills to do something else don't expect the minimum wage to just increase so you can continue to do minimum skill work and live the life you want. Once upon a time, minimum skill work used to be a stepping stone to collect work experience before you move onto something else - what happened to that? And before the cavalry arrives, nobody is saying that choice is easy, but what I am saying is that you make.

    We all consume stuff and all products and services comprises of simplex components that make up the complex parts, lift the cost If the simplex and expect the complex to rise as well. Pick your poison.

    • tonka on 19/06/2022 - 12:27
      +1

      The problem with the supply and demand equation is supply is being manipulated with excessive immigration, conditional visas and propping up the universities. All at the behest of big business who wants a consistent exploitable oversupply of labor. Business wants a quick return to a market where people with degrees and experience are fighting over jobs packing shelves.

      • FlyingMiffy on 19/06/2022 - 13:24

        U might want to check those stats on immigration. The jobs that no aussies want to do are done by immigrants - who by the way are doing that work as a stepping stone to better things.

        • tonka on 19/06/2022 - 13:40
          +4

          The reason no aussie wants to do them is because they are hard work for minimum wage or less. Which is my point, immigration enables that situation, it interferes with your supply and demand theory. You can't have it both ways saying price is set by supply and demand when supply propped up and supplemented with visas etc.

    • Jolakot on 20/06/2022 - 02:16

      What standard of living should someone working full time on minimum wage expect?

      • leiiv on 20/06/2022 - 14:12
        +2

        At least nutritious and healthy meals 3 times a day, cheap clothing from Kmart etc, and being able to own a unit of at least 30m2 in the same town (of their working place).

  • Dack Smith on 19/06/2022 - 12:22
    -5

    We must embrace a high minimum wage, no one should be paid hundreds of times more than the average worker.

    They are not God.

    They are only greedy fat people that serve no purpose to society at large.

    Taxation must increase greatly for those who earn more than $150,000 a year, despite their fake pleas and false arguments that in doing so - it will be ?harmful? lol harm to the selfish.

    With Labor in power now is the chance to bring about new socialism and a chance for equality.

    I’m sure unless people are dumb and braindead, they would not want CEOs caring for their parents in hospital, COOs attending to your fires, and CFOs administering drugs in a financially responsible manner to your loved ones.

    Wake up!

    • Mechz on 19/06/2022 - 13:24
      +2

      If only we could drag all the fat cats from their homes and shoot them on the front lawns… /s

      • FlyingMiffy on 19/06/2022 - 13:28
        +2

        Yeap and take their homes while we're at it! Oh and those doctors on about 500K a year need to take 150K and be happy while saving lives. Get with the program!

        • tonka on 19/06/2022 - 17:16
          +2

          Likely the Doctors on $500K gave up saving lives a while ago and just boss around the doctors who do.

    • brendanm on 19/06/2022 - 17:13
      +1

      Why are communists always so dense? You don't want equality, that's what you have now. You want equity, where regardless of skill, or work ethic, everyone gets the same outcome.

      • tonka on 20/06/2022 - 12:17

        It would be nice if skill and work ethic did drive outcome. Is there a name for a society where narcissism and deceit drives the outcome?

    • PopCounty on 19/06/2022 - 22:00

      Or maybe skill up and get fat cheque?
      Be an entrepreneur and try your luck?
      Aim….and be superstar? An iconic sportsperson? A great musician?

      There's a lot to hate. But there's more to gain. Thing is, which side are you on?

      • Jolakot on 20/06/2022 - 02:27

        The year is 2024, every Australian saw your comment and took it to heart, and is now living the dream as an entrepreneur/sportsperson/musician/superstar/professional

        Who's cleans the toilets? Picks trash off the streets? Picks the fruit off of trees under the blazing sun?

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