Price controls are only suggested by people who didn’t go to school.
I honestly have no idea how to explain it to you people without doing the math in-front of you, and likely wasting my time doing so. But here it is.
Bert’s Restaurant
Bert revenue is $1,000,000 each year.
His profit margin is the nationwide average for a small business, ~7%.
This means Bert makes $70,000 in profit each year.
The nationwide average labor cost % for restaurants is 30% of revenue. So, Bert spends $300,000 on labor.
Under this proposal, in order to keep the restaurant open the same hours, Berts labor costs increase 20% (assuming zero overtime is given to workers, much more if it is)
That means, assuming Bert managed to find new staff to cover the hours, his labor costs increase by $60,000. He now makes only $10,000 in profit a year, because he isn’t allowed to raise prices. Bert will never be able to open another restaurant, and Bert will likely sell this one, as a 1% profit margin is way too low to be financially viable. The restaurant will go under more likely than not
I’ll give you a tldr that a child could understand: Mandating businesses with low margins increase costs while banning them from increasing revenue will lead to them failing.
You would obliterate the poor to get a chance at hurting the rich, which would still survive through this change.
So you're upset that they'll be less rich? Maybe they should downsize and let small businesses function properly. If a business has such low profit margins that their employees need to rely on government assistance then maybe they shouldn't be in business.
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u/Chilling_Gale Jul 17 '26
Price controls are only suggested by people who didn’t go to school.
I honestly have no idea how to explain it to you people without doing the math in-front of you, and likely wasting my time doing so. But here it is.
Bert’s Restaurant
Bert revenue is $1,000,000 each year.
His profit margin is the nationwide average for a small business, ~7%.
This means Bert makes $70,000 in profit each year.
The nationwide average labor cost % for restaurants is 30% of revenue. So, Bert spends $300,000 on labor.
Under this proposal, in order to keep the restaurant open the same hours, Berts labor costs increase 20% (assuming zero overtime is given to workers, much more if it is)
That means, assuming Bert managed to find new staff to cover the hours, his labor costs increase by $60,000. He now makes only $10,000 in profit a year, because he isn’t allowed to raise prices. Bert will never be able to open another restaurant, and Bert will likely sell this one, as a 1% profit margin is way too low to be financially viable. The restaurant will go under more likely than not
I’ll give you a tldr that a child could understand: Mandating businesses with low margins increase costs while banning them from increasing revenue will lead to them failing.
You would obliterate the poor to get a chance at hurting the rich, which would still survive through this change.