# How does the federal minimum wage rate effect all USA wage rates?

Discussion in 'Economy' started by Supposn, Jul 23, 2019.

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### SupposnVIP Member

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How does the federal minimum wage rate effect all USA wage rates?

If the theoretical indefinite U.S. markets' determined minimum wage rate is \$5/per Hr,
If X = \$5/per Hr; (\$7.25 -X)/per Hr. = is the difference between the federal and market's minimum rates.
Difference between the federal and market's minimum rates = \$2.25
What's now a \$20 per Hr rate was increased from \$17.75 indefinite market-determined rate.

If X = \$2/ per Hr., the indefinite minimum wage rate would be \$2/per Hr.
What's now a \$20 per Hr rate was increased from \$14.75 indefinite market-determined rate.

When the purchasing power of the federal minimum wage rate is increased, employers are not legally required to modify all other wage rates, but in aggregate they actually do so.

Due to the economic concept of wage differential, if an employer fails to update their other wage rates, they will have difficulties recruiting and retaining employees. Employers are generally compelled to react immediately in the cases of their lower-wage rates, and slower in cases of higher wage rates.

Although in reaction to the minimum rate increase, higher wage rates will generally receive greater extents of increases, the increases for lower-rates will actually be proportionally greater, and for higher wage rates proportionally lesser increases of their employees' wage rates.
The purchasing power of the federal minimum wage is of maximum benefit to the working poor, and of some, but extremely lesser benefit to higher wage rates.

The federal minimum wage rate reduces USA's incidences and extents of poverty among USA's working-poor.
Respectfully, Supposn

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### mudwhistleDiamond Member

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The Congressional Budget Office predicted that as many as 3.7 million jobs could be lost if they raise the MW to \$15/hr.
So Democrats start calling for it.
Any questions?

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### DeksterGold Member

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Cut hours and cut jobs, raise prices, or some combination thereof. All raising the minimum wage does is devalue the currency and take downward pressure off prices in the end. There is an upside to that, but we shouldn't pretend that THIS time, it will make a difference on poverty..

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### Mac1958Diamond Member

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It's complicated as hell, because the effects of low-end wage increases are not linear. It's mostly an industry-specific issue, because wages represent significantly different percentages of overall business expense, based on the type of business we're talking about.

PLUS, minimum wage increases would also necessarily increase the wages and associated costs of those above minimum wage job descriptions, so the domino effect would be most likely be another significant piece of this puzzle.

At the same time, we have forces pushing in the opposite direction: It's impossible to (honestly) justify paying government benefits to someone who also has a full time job. That's effectively a government subsidy to employers, incentivizing them to keep wages low. And more critical and timely is the increasing wealth disparities in this country, which are only making the job easier for those who want higher and higher minimum wages. And their constituents vote.

As usual, both ends of this issue are keeping their arguments at about a third-grade level because they absolutely refuse to acknowledge the complexities inherent in it. Until we can -- if we can, at this point -- demonstrate that we fully understand the big picture, we'll just keep flopping around like we are.
.

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### OddballUnobtanium MemberSupporting Member

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A lot of technocratic smoke, with the underlying supposition that the feds have any business setting prices for anything, up to and including labor.....They do not.

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### AzogtheDefilerThe Pale OrcGold Supporting MemberSupporting Member

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Min wage was NEVER intended to be a “living wage” it was intended for part timers, students, retirees, who needed extra cash.

Disrespectfully

Azog

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### SupposnVIP Member

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Dekster, the federal minimum wage rate of insufficient purchasing power is hindered from accomplishing its task.
Respectfully, Supposn

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### SupposnVIP Member

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Respectfully, Supposn

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### mudwhistleDiamond Member

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This works if you live in a high tax state.
Prices are intentionally inflated by goverent thru tax increases. Those on fixed incomes have to leave the state or file for government assistance. This is how blue states control voters. Raising the MW causes inflation. It's a never ending cycle.

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### DeksterGold Member

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But inflation reduces the burden of public debt which is why they really do it--it generates more tax revenue in terms of just less valuable dollars and therefore makes it easier to service past debt.

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