Secret Chief
Degrow!
So what do you mean by "can't afford" since as you agree, they obviously can remain in business. Economically speaking, "slave labour" and in-work poverty are successful and popular business models.
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Why the Price of Lattes (and Everything Else) Has Gone Up
- Thread starter Left Coast
- Start date
I'd like to add. I've just been into Sarlat this morning for a bit of retail therapy.
The café i frequent for my morning coffee and pain au raisin also sells tea...
Ranging from €7.50 for basic run of the mill Darjeeling etc up to €9.95 for Christmas tea (whatever that is).
Ill stick to coffee ;-)
PureX
Veteran Member
That's not true. The labor involved in production is nearly always a small fraction of the cost. And where are you seeing wages going up significantly?
Why your $7 latte is $7
That Pumpkin Spice Latte from Starbucks is going to cost you more than it used to, thanks to inflation and higher wages for workers, among other factors.www.vox.com
The money to pay people increased wages, better benefits, etc. comes from somewhere. Namely you, dear consumer.
Thoughts?
The increased cost is due to increased greed. Every time the investor class squeezes a little more profit out of some corner of commerce it costs everyone else. And because the investors have all the control in a capitalist system, they never give up any increase in profit. So as the markets ebb and flow, the investors take the flow, but make everyone else cover the ebb. And as a result the cost of everything to everyone just keeps increasing. As do the profits to the investors.
The rich just keep getting richer, while everyone else just keeps paying more and more and more. Ther rich will never blame this excess cost on their own bottomless greed, however, so instead they blame it on the cost of labor.
The reasonsWhy your $7 latte is $7
That Pumpkin Spice Latte from Starbucks is going to cost you more than it used to, thanks to inflation and higher wages for workers, among other factors.
The money to pay people increased wages, better benefits, etc. comes from somewhere. Namely you, dear consumer.
Thoughts?
Inflation Is Still High. What’s Driving It Has Changed.
It's more complicated than you think
wellwisher
Well-Known Member
Say we increase the wages of some. The cost of their product, may need to go up, to maintain the business bottom line. This then makes the buying power, of all consumers, go down, giving everyone an affective wage decrease. To make ends meets, others will ask for a wage increase, to offset the extra costs, due to the wage increase of the first group, whose product they need to buy. This increases the costs of the new goods, and takes away the wage increase of the first group, and sort of gives it back to the second group. Everyone has more money, on paper, but we now all have same buying power, as when we started. It is sort of smoke and mirrors.Why your $7 latte is $7
That Pumpkin Spice Latte from Starbucks is going to cost you more than it used to, thanks to inflation and higher wages for workers, among other factors.
The money to pay people increased wages, better benefits, etc. comes from somewhere. Namely you, dear consumer.
Thoughts?
How could someone get by with $1.60/hour in 1970? Adjusted for inflation and cost of living, that small amount went 40% further back then.
Wage increase without increase in productivity or better economies of scale; cheaper raw materials or more automation, becomes a zero sum game, where some will win in the short term, while all pay the price, until all win and all pay, for a wash; cost of living increases. Wage numbers mean less than buying power.
The average price of a new car in 1970, was about $3500. In 2023 the average price is about $43,000. The price of cars has gone up about 12X. If we multiply $1.60 X 12 = $19/hour car buying power for 1970's minimum wage.
An experiment is being done in California, where fast food workers are now required to be paid a minimum wage of $20/hour. It will interesting to see what happens, but it is predictable. It is likely, the price of fast food in California will go up, increasing the cost to the consumers. Unlike big government, businesses cannot operate in the red for very long before collection agencies visit them.
Some consumers will now have to cut back on their fast or food, or go elsewhere where food is cheaper. Since the demand will go down, the fast food restaurants may need to lay off employees, which means a pay cut, for some, back to $0/hour. The employees who are left, will now may need to work harder and become more productive, to make up for the daily work load, with fewer employees. This will make their $20/hour make more economic sense; worth that wage. Since we now back in balance, will prices come down? Maybe not. The prices may stay higher to make up for the initial lost revenue; too many employees at $20/hour, and to see if consumers will get use to the new price structure; cost of living increases for all. We all may have to ask for a cost of living increase from the boss, who then has to raise price, again.
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It's certainly true that multiple factors drive inflation. And the pandemic and the war in Ukraine contributed to price increases. But the NYT article actually reiterates the point made by the Vox article re: labor costs.
With California passing a bill paying fast food workers $20, those fast food prices will most surely rise right along with it.
"On September 28, 2023, California Governor Gavin Newsom signed Assembly Bill (AB) No. 1228 into law, repealing the FAST Food Accountability and Standards Recovery Act (FAST Recovery Act) (AB 257) and replacing it with a $20-per-hour minimum wage for fast food workers, among other provisions"
California Governor Signs Fast Food Industry Minimum Wage Law
On September 28, 2023, California Governor Gavin Newsom signed Assembly Bill (AB) No. 1228 into law, repealing the FAST Food Accountability and Standards Recovery Act (FAST Recovery Act) (AB 257) and replacing it with a $20-per-hour minimum wage for fast food workers, among other provisions.ogletree.com
You're right. And of course low-income folks will disproportionately pay the price for that.
Father Heathen
Veteran Member
My thoughts are that those basking in the profits could stand to have one less yacht in their fleet, but given how things are, consumers do have options, such as making their own coffee at a fraction of the price.Why your $7 latte is $7
That Pumpkin Spice Latte from Starbucks is going to cost you more than it used to, thanks to inflation and higher wages for workers, among other factors.
The money to pay people increased wages, better benefits, etc. comes from somewhere. Namely you, dear consumer.
Thoughts?
But of course they need at least 2 yatchs, one for each foot.
Sorry childish humour slipped in there
Father Heathen
Veteran Member
That is their mentality, though. When they're already tapdancing atop the economic stratosphere, they can survive taking in slightly less profits in order to pay their employees a living wage rather than hiking prices for the consumer.
PureX
Veteran Member
First, how does the war in Ukraine effect the cost of a latte? Except that the CEO of the coffee chain used it as an excuse to raise the price and bilk the public out of even more money.
Second, how much labor is involved in making a latte? C'mon, get real.
But by all means take the word of people paid to justify the corporate greed of their sponsors. Surely they wouldn't be lying!
Russian supplied fuel to Europe has stopped, Europe looks elsewhere for its fuel driving fuel costs up worldwide
And coffee needs to be transported
Latte needs:-
Milk from cows.
Coffee from Coffee beans
Sugar from sugarcane
Electrical components of a coffee maker
Electricity
People making them.
In US coffee is imported from tropical countries. If the coffee production supply chain has been affected (higher transport costs, lower production compared to demand, higher fertilizer cost, lesser workers available) then coffee costs will rise.
Some for sugar production from sugarcane.
Electrical goods may have also become costly as most of these are manufactured overseas and we know that international transport chain has been severely affected by covid slowdown and then sudden rise in demand.
Further much of the shops were shut down during covid and had to be refurbished and reopened after the pandemic. The workers, who were laid off during the covid may have gone on to other jobs and new hiring and capital costs of repair and refurbishments must also be recuperated.
It is also possible that many companies are indeed going for higher profit margins as they try to recuperate the losses made during covid times.
Overall the government stimulus during covid has also increased inflation as there is more money floating in the system but no concomitant increase in goods to match it.
Twilight Hue
Twilight, not bright nor dark, good nor bad.
Even though profits will handle the increase, they won't do it. Instead they will kick up prices to get the higher wages back as if nothing ever happened leaving people back at square one.
I didn't say it did. It mainly affects the price of oil and natural gas.
If you own a coffee shop with multiple employees, quite a lot, actually.
Have you ever looked at an actual business or corporate budget? It might enlighten you.
I agree. Latte is a luxury item. I do not think we should be much concerned with latte costs or restaurant costs.
The minimum wage could be tied dynamically with the cost of basics...basic staples, electricity, gasoline, education, basic lower end homes rental costs and basic healthcare insurance costs. We could create a "basic living price index" based on these and tag the minimum wage on them. That way we could dispense with political brinkmanships and have data driven automated system that tells each company what their lowest rung workers are to be paid every month.
But no worries. Too many partisan interests are at stake. So such easy solutions will never be implemented.
PureX
Veteran Member
So, a few pennies per pound of coffee? I doubt very much that it's even that much.
PureX
Veteran Member
None of those costs matter in the least. If they did, no one would be selling lattes.
ALL that matters is maximizing the profits returned on the capital invested. Nothing else. So the price will be as high as the seller can get away with, regardless of what it cost him to produce what he sells. If he can sell you a box of NOTHING, and get you to pay every cent you have for it, that would be the ideal trade according to the capital investors that RUN ALL OUR COMMERCIAL BUSINESSES. So they will bemoan having to put ANYTHING of value in the box. And they will try to put as little value in it as they can get away with, while they are charging us as much for it as they can possibly get us to give them.
The point here is that the price of the latte is not being determined by the cost of producing it. It's being determined by what people are willing to pay for it. And that's all about the public's perception of what it costs to make it, not the actual cost of it. Which is why the capitalists lie about the cost of making things all the time. And why they lie about how world events are raising those costs. Because they know that if we buyers realized they're all just going to price-gouge us for every penny they can get, on everything, we might get angry and decide to forgo buying their lattes and whatever else they sell, out of spite. As no one likes to be deliberately price-gouged.
The truth is that the cost of production is not the buyers problem. If the cost really is too high, then the seller should stop making and selling whatever it is we're making that costs too much to make. But that isn't what's happening. What's happening is that they are using current events as an excuse to lie about the costs of production, so they can raise the prices without the consumers realizing that they are being deliberately gouged, yet again, for the sake of maximum profit to the capitalists.
The reason there's a Starbucks on every other corner is because it costs next to nothing to produce their products, and they're making a killing profit-wise at their price point. But whatever they are already taking in, it's never going to be enough. So they are always looking for excuses to jack those prices up just a little more. So they can keep them as high as possible before people finally decide it's just too much. THAT'S what is really determining the prices of things.
And of course everyone else is doing the same things. So the prices just keep in increasing, as the desire for more profit (greed) never ends.
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What I mean is that I think any business that can't pay its employees living wages shouldn't be in business. I know that what is and what ought to be are sometimes quite different in this case, unfortunately.