Economic Model

This is a model, and does not represent today's costs............just a representation of a bussiness model. Lets say its 1925 for the nit pickers.

I own a Golf course, employing 25 caddies, in determining my fee's I decide on a green fee of $2.00. Breakdown of costs per round of golf breaks down to $.25 for all taxes, $.50 for maintenence, $.20 for mortgage, $.05 profit to me, and $1.00 per to labor costs (caddies).

I average 200 rounds of golf a day as a customer base. Caddies recieve $8.00 per day each in pay and benifits.

The Government come in and raises my labor cost to a minimum of $2.00 per hour for a living wage. I am now forced to raise my greens fee to $3.00 to maintain.

I now average 100 rounds of golf a day as the higher price forces customers to shop for cheaper greens fees elsewhere. Caddies still get $8.00 per day but my profit and cost repay is cut in half. I can not make mortgage or taxes.

A Union comes in and tells my caddies that they are worth $5.00 an hour, I am forced to agree to this new labor cost. My new greens fee is now $6.00 per round.

I now average only 25 rounds of golf per day as my costs have now forced my customers to find another cheaper course or another hobby.
Caddies get $5.00 and I the bussiness am on the verge of bankruptcy.

I finally sit down and try to save my bussiness, what is the only cost that I can control? Of course labor. I take out a small loan, purchase 25 golf carts and let go my caddies.

Now I am back to a $2.00 greens fee, my $.05 profit, and $1.00 to repay loan on golf carts and eventually an excess to either repay the debt I owe as a bussiness, expand the course or pocket another $.50 profit, and invest the other $.50.

Now comes the fun part, I am immediately called evil 'rich' because I exploited my workers and let them go, yet no blame goes to the government or unions that were the true cause of this.

"Here's something that is completely unrealistic and irrelevant to today.  I'm not going to make a point about it, but here is a scenario."

Maybe my competitors already had golf carts, as I tried to keep people employed.
Service industries and hobby industries are very competitive and the margines are way too close to be 'fair' to all emploees and still continue to operate. The batting cage/driving range here in the area announced they are totally done 15 Oct, and I wonder why? Not like there were two or three to chose from. The Soccer Hall of Fame is done, Cooperstown Baseball Camp took a massive loss this year since attendence was way down. Taxes are going up in NY, Labor costs too much, and Oneonta is turning into a ghost town, other than the Bars and Pizza joints supporting the students of the two colleges.

The point is anymore the only varible in the model that can be controled by the employer is labor costs. Taxes go up, nature of the beast.


Right now here in the NY area I am in a local bussiness that employed 500 layed off almost 200 and finds it cheaper to operate paying overtime than pay full pay and benifits to another set of 40hr employees. So 300 have survived so far 200 are out work, but for how long?

Businesses don't function like governments, and visa-versa. 

Edited by agentwhale007 - 01 October 2010 at 10:43pm

/thread

Lock and move on, anyone?

I'm sorry, where have you ever seen me ''demonize the rich'? On the contrary, I applaud those whose enterprise brings them success. Hell, my girlfriend's family own a small independent business, and have withstood large chain competitors. Western society is partly based on the success of such individuals. I simply don't extend pity where it's not due. Our system on incorporation, credit, and bankruptcy is set up to allow individuals to aim for success and to risk and absorb failure and have the chance to try again.

Do not think for a second that I bear I'll will to business or to wealth. Both drive our economy.