If minimum wage were raised ...

[itfitzme]

How can it cause inflation when prices are caped?

What prices are capped?

Post #249 '-Back down ALL costs, prices, fees, to January 1, 2009 levels and hold them for 10 years.'

Who said that?

 

[OnePercenter]

What prices are capped?

Post #249 '-Back down ALL costs, prices, fees, to January 1, 2009 levels and hold them for 10 years.'

Who said that?

Post #249. Read it.

 

[itfitzme]

Post #249 '-Back down ALL costs, prices, fees, to January 1, 2009 levels and hold them for 10 years.'

Who said that?

Post #249. Read it.

Why? Prices aren't capped. So I really don't care.

 

[OnePercenter]

Who said that?

Post #249. Read it.

Why? Prices aren't capped. So I really don't care.

You don't want to know how to fix the economy?

 

[itfitzme]

Here we go, elasticity of minimum wage.

Estimated minimum wage effects on employment from a meta-study of 64 studies showed insignificant employment effect (both practically and statistically) from minimum-wage raises supporting the Keynesian model. The most precise estimates were heavily clustered at or near zero employment effects (elasticity = 0).

The strongest evidence suggests that the most important channels of adjustment are: reductions in labor turnover; improvements in organizational efficiency; reductions in wages of higher earners ("wage compression"); and small price increases.
Given the relatively small cost to employers of modest increases in the minimum wage, these adjustment mechanisms appear to be more than sufficient to avoid employment losses, even for employers with a large share of low-wage workers.

Basically, little if any effect on employment or prices.

Schmitt, John (February 2013). "Why Does the Minimum Wage Have No Discernible Effect on Employment?". Center for Economic and Policy Research. Retrieved 2013-10-06.

http://www.cepr.net/documents/publications/min-wage-2013-02.pdf

Minimum wage in the United States - Wikipedia, the free encyclopedia

 

[asterism]

Here we go, elasticity of minimum wage.

Estimated minimum wage effects on employment from a meta-study of 64 studies showed insignificant employment effect (both practically and statistically) from minimum-wage raises supporting the Keynesian model. The most precise estimates were heavily clustered at or near zero employment effects (elasticity = 0).

The strongest evidence suggests that the most important channels of adjustment are: reductions in labor turnover; improvements in organizational efficiency; reductions in wages of higher earners ("wage compression"); and small price increases.
Given the relatively small cost to employers of modest increases in the minimum wage, these adjustment mechanisms appear to be more than sufficient to avoid employment losses, even for employers with a large share of low-wage workers.

Basically, little if any effect on employment or prices.

Schmitt, John (February 2013). "Why Does the Minimum Wage Have No Discernible Effect on Employment?". Center for Economic and Policy Research. Retrieved 2013-10-06.

http://www.cepr.net/documents/publications/min-wage-2013-02.pdf

Minimum wage in the United States - Wikipedia, the free encyclopedia

Union propaganda:

The Center for Economic and Policy Research is proud of the support that we receive. Approximately 80% of our funding comes from grants made by foundations. We are also supported by an ever-growing number of individuals who have made personal donations to our work. To join our ranks of individuals donors, click on Donate.

Support in 2012 includes:

American Federation of Government Employees (AFGE)
American Federation of State, County and Municipal Employees (AFSCME)
Arca Foundation
Atlantic Philanthropies
Ford Foundation
Moriah Foundation
National Association of Letter Carriers
National Bankers Foundation
Public Welfare Foundation
Rockefeller Brothers Fund
Russell Sage Foundation
Service Employees International Union (SEIU)
Sloan Foundation
Streisand Foundation
The Advocacy Fund
United Steelworkers

Our Funders

Now why would unions want an increase in the minimum wage?

The real reason is that some unions and their members directly benefit from minimum wage increases—even when nary a union member actually makes the minimum wage.

The Center for Union Facts analyzed collective-bargaining agreements obtained from the Department of Labor's Office of Labor-Management Standards. The data indicate that a number of unions in the service, retail and hospitality industries peg their base-line wages to the minimum wage.

The Labor Department's collective-bargaining agreements file has a limited number of contracts available, so we were unable to determine how widespread the practice is. But the United Food and Commercial Workers International Union says that pegging its wages to the federal minimum is commonplace. On its website, the UFCW notes that "oftentimes, union contracts are triggered to implement wage hikes in the case of minimum wage increases." Such increases, the UFCW says, are "one of the many advantages of being a union member."

Richard Berman: Why Unions Want a Higher Minimum Wage - WSJ.com

 

[itfitzme]

Here we go, elasticity of minimum wage.

Estimated minimum wage effects on employment from a meta-study of 64 studies showed insignificant employment effect (both practically and statistically) from minimum-wage raises supporting the Keynesian model. The most precise estimates were heavily clustered at or near zero employment effects (elasticity = 0).

Basically, little if any effect on employment or prices.

Schmitt, John (February 2013). "Why Does the Minimum Wage Have No Discernible Effect on Employment?". Center for Economic and Policy Research. Retrieved 2013-10-06.

http://www.cepr.net/documents/publications/min-wage-2013-02.pdf

Minimum wage in the United States - Wikipedia, the free encyclopedia

Union propaganda:

The Center for Economic and Policy Research is proud of the support that we receive. Approximately 80% of our funding comes from grants made by foundations. We are also supported by an ever-growing number of individuals who have made personal donations to our work. To join our ranks of individuals donors, click on Donate.

Support in 2012 includes:

American Federation of Government Employees (AFGE)
American Federation of State, County and Municipal Employees (AFSCME)
Arca Foundation
Atlantic Philanthropies
Ford Foundation
Moriah Foundation
National Association of Letter Carriers
National Bankers Foundation
Public Welfare Foundation
Rockefeller Brothers Fund
Russell Sage Foundation
Service Employees International Union (SEIU)
Sloan Foundation
Streisand Foundation
The Advocacy Fund
United Steelworkers

Our Funders

Now why would unions want an increase in the minimum wage?

The real reason is that some unions and their members directly benefit from minimum wage increases—even when nary a union member actually makes the minimum wage.

The Center for Union Facts analyzed collective-bargaining agreements obtained from the Department of Labor's Office of Labor-Management Standards. The data indicate that a number of unions in the service, retail and hospitality industries peg their base-line wages to the minimum wage.

The Labor Department's collective-bargaining agreements file has a limited number of contracts available, so we were unable to determine how widespread the practice is. But the United Food and Commercial Workers International Union says that pegging its wages to the federal minimum is commonplace. On its website, the UFCW notes that "oftentimes, union contracts are triggered to implement wage hikes in the case of minimum wage increases." Such increases, the UFCW says, are "one of the many advantages of being a union member."

Richard Berman: Why Unions Want a Higher Minimum Wage - WSJ.com

Everyone understands that you are not capable of objective scientific reasoning but that doesn't mean anyone else isn't. Empirical evidence is empirical evidence whether you like tbe answers or not. And so far, all I've seen is a complete lack of any remote reasoning to support the idea that raising min wage necessarily causes increases in price or declines in employment. And, empirical evidence fails to support it as well.

Your opinion about the motives behimd the study mean nothing except as testimony to your own biases.

Why, for instance, would a drug company bother studying a drug that they didn't believe worked. Why would compamy bother marketing a product it didn't expect to sell?

You're point is meaningless.

 

[oldfart]

Richard Berman: Why Unions Want a Higher Minimum Wage - WSJ.com

Your links make no effort to provide any evidence against the study. This usually means that your sources have no evidence or reasoning to support their position and so they resort to attacks on the source. Please give a full citation to any actual economic studies you are relying upon. I'm pretty sure you have none.

 

[asterism]

Here we go, elasticity of minimum wage.

Basically, little if any effect on employment or prices.

Schmitt, John (February 2013). "Why Does the Minimum Wage Have No Discernible Effect on Employment?". Center for Economic and Policy Research. Retrieved 2013-10-06.

http://www.cepr.net/documents/publications/min-wage-2013-02.pdf

Minimum wage in the United States - Wikipedia, the free encyclopedia

Union propaganda:



Our Funders

Now why would unions want an increase in the minimum wage?

The real reason is that some unions and their members directly benefit from minimum wage increases—even when nary a union member actually makes the minimum wage.

The Center for Union Facts analyzed collective-bargaining agreements obtained from the Department of Labor's Office of Labor-Management Standards. The data indicate that a number of unions in the service, retail and hospitality industries peg their base-line wages to the minimum wage.

The Labor Department's collective-bargaining agreements file has a limited number of contracts available, so we were unable to determine how widespread the practice is. But the United Food and Commercial Workers International Union says that pegging its wages to the federal minimum is commonplace. On its website, the UFCW notes that "oftentimes, union contracts are triggered to implement wage hikes in the case of minimum wage increases." Such increases, the UFCW says, are "one of the many advantages of being a union member."

Richard Berman: Why Unions Want a Higher Minimum Wage - WSJ.com

Everyone understands that you are not capable of objective scientific reasoning but that doesn't mean anyone else isn't. Empirical evidence is empirical evidence whether you like tbe answers or not. And so far, all I've seen is a complete lack of any remote reasoning to support the idea that raising min wage necessarily causes increases in price or declines in employment. And, empirical evidence fails to support it as well.

Your opinion about the motives behimd the study mean nothing except as testimony to your own biases.

Why, for instance, would a drug company bother studying a drug that they didn't believe worked. Why would compamy bother marketing a product it didn't expect to sell?

You're point is meaningless.

Richard Berman: Why Unions Want a Higher Minimum Wage - WSJ.com

Your links make no effort to provide any evidence against the study. This usually means that your sources have no evidence or reasoning to support their position and so they resort to attacks on the source. Please give a full citation to any actual economic studies you are relying upon. I'm pretty sure you have none.

Show me evidence that either of you have given oil company studies on CO2 any consideration at all.

 

[BillyZane]

Union propaganda:



Our Funders

Now why would unions want an increase in the minimum wage?



Richard Berman: Why Unions Want a Higher Minimum Wage - WSJ.com

Everyone understands that you are not capable of objective scientific reasoning but that doesn't mean anyone else isn't. Empirical evidence is empirical evidence whether you like tbe answers or not. And so far, all I've seen is a complete lack of any remote reasoning to support the idea that raising min wage necessarily causes increases in price or declines in employment. And, empirical evidence fails to support it as well.

Your opinion about the motives behimd the study mean nothing except as testimony to your own biases.

Why, for instance, would a drug company bother studying a drug that they didn't believe worked. Why would compamy bother marketing a product it didn't expect to sell?

You're point is meaningless.

Richard Berman: Why Unions Want a Higher Minimum Wage - WSJ.com

Your links make no effort to provide any evidence against the study. This usually means that your sources have no evidence or reasoning to support their position and so they resort to attacks on the source. Please give a full citation to any actual economic studies you are relying upon. I'm pretty sure you have none.

Show me evidence that either of you have given oil company studies on CO2 any consideration at all.

What does that have to do with anything?


The fact is that we can actually look at you know history and use the figures to see that reasonable minimum wage increases have little impact on employment numbers OR prices.

Shouldn't a clean debate section mean not allowing people to ignore facts?

 

[Dragonlady]

I've seen it posted here that if minimum wages were raised 20%, then fast food prices would have to be raised by 20% to pay for the increase, and prices on other goods and services would also have to rise by 20% and the minimum wage workers would be no better off. Posters further said that liberals were too stupid to understand this basic premise.

Well, I'm a liberal and the idea that raising minimum wages by 20% would cause fast food prices, or prices on anything would have to rise by 20% is so completely inaccurate, I question the intelligence of anyone who believes this and I can explaiin why. The cost of the labour to make the burger is not the ONLY cost which is factored into the price of the burger. In fact, it's only a small fraction of the price of the burger. There's the cost of the ingredients, the capital costs of the equipment, furniture and fixtures in the store, the costs of mortgage/rent and utilities for the store, franchise fees and profit - none of which is affected by the wage increase given to the staff cooking and serving the burgers.

This is not just true of the fast food industry, but of any business which employs people at minimum wage. Wages are just one component of the costs of goods and services sold, so that raises in wages may increase the cost of producing the item, but they're not the ONLY cost involved. This is a detailed study which says that raising the minimum wage to $10.50 per hour would lead to a price increase of only 2.7%, which is a far more realistic figure than 20%.

http://www.peri.umass.edu/fileadmin/pdf/research_brief/PERI_fast_food_wages.pdf

MacDonalds and Walmart are two of the most profitable corporations in the world. Both do business in countries where the minimum wage is much higher than in the US, and both are very profitable in those jurisdictions. If Walmart can be very profitable in Canada, where minimum wages are over $10 an hour, taxes are higher, and costs generally are higher, why can't they pay decent wages in the US? Why are American taxpayers subsidizing Walmart employees with food stamps, and Medicaid while Walmart is the 2nd most profitable company in the US, and why do right wingers think this is a GOOD thing?

Shouldn't Walmart and MacDonalds (another of the most profitable corporations in the US whose employees heavily rely on government programs) be required to pay their employees enough in wages to keep their employees off public assistance?

 

[itfitzme]

I've seen it posted here that if minimum wages were raised 20%, then fast food prices would have to be raised by 20% to pay for the increase, and prices on other goods and services would also have to rise by 20% and the minimum wage workers would be no better off. Posters further said that liberals were too stupid to understand this basic premise.

Well, I'm a liberal and the idea that raising minimum wages by 20% would cause fast food prices, or prices on anything would have to rise by 20% is so completely inaccurate, I question the intelligence of anyone who believes this and I can explaiin why. The cost of the labour to make the burger is not the ONLY cost which is factored into the price of the burger. In fact, it's only a small fraction of the price of the burger. There's the cost of the ingredients, the capital costs of the equipment, furniture and fixtures in the store, the costs of mortgage/rent and utilities for the store, franchise fees and profit - none of which is affected by the wage increase given to the staff cooking and serving the burgers.

This is not just true of the fast food industry, but of any business which employs people at minimum wage. Wages are just one component of the costs of goods and services sold, so that raises in wages may increase the cost of producing the item, but they're not the ONLY cost involved. This is a detailed study which says that raising the minimum wage to $10.50 per hour would lead to a price increase of only 2.7%, which is a far more realistic figure than 20%.

http://www.peri.umass.edu/fileadmin/pdf/research_brief/PERI_fast_food_wages.pdf

MacDonalds and Walmart are two of the most profitable corporations in the world. Both do business in countries where the minimum wage is much higher than in the US, and both are very profitable in those jurisdictions. If Walmart can be very profitable in Canada, where minimum wages are over $10 an hour, taxes are higher, and costs generally are higher, why can't they pay decent wages in the US? Why are American taxpayers subsidizing Walmart employees with food stamps, and Medicaid while Walmart is the 2nd most profitable company in the US, and why do right wingers think this is a GOOD thing?

Shouldn't Walmart and MacDonalds (another of the most profitable corporations in the US whose employees heavily rely on government programs) be required to pay their employees enough in wages to keep their employees off public assistance?

Yeah, the problem with their reasoning is that they forget that spending also increases by 20% when wages and prices increase by 20%.

They do only a partial analysis because their predisposition allows them to only recognize info that supports their bias and ignores everything else.

I can guarantee that as soon as they say "liberal", it is an admission that they are biased. By accusing everyone else of what they are obviously guilty of, they justify their inability at objective thought.

Actually, your recognition of the feedback that occurs between public assistance and falling wages tells me you have a clean objective view, "liberal" or not. Something has to give. Do we stop providing assistance to people working at Walmart for poverty level income or do we raise minimum wage? Little honest and objective though it required to figure that one out.

 

[Tresha91203]

Simple

Because not all workers are lower level workers, nor are all jobs lower level jobs.

The minimum wage recognizes this and ONLY mandates a minimum. Notice there is no law protecting CEO wages, because CEOs don't get taken advantage of.

That is after all the purpose of the law, to protect the weak. Nothing more.

How does shutting the 'weak' out of the job market altogether help them in any way?

who's shut out of the job market?

You live in fantasy land if you actually believe that the local mcdonalds would hire more people if the min wage were just removed.

They wouldn't They staff at a certain level and if their labor costs went down due to lower wages then they would love that , it would mean more profit for them.

I actually own 2 businesses and guess what, I hire exactly as many people as I need to get the job done, and none of my employees make near the minimum wage.

If I need 5 people to run a shift, I hire 5 people I don't say hey I could afford a 6th person here and likewise if I NEED that 6th person, I need him and I don't put off hiring him or her because of the wages. Either I need him or I don't.

I need another employee but wont have the revenue without more enrolls. Fyi, none of my staff make min wage but starting salary is $10 per hour and requires a degree. We are a secondary job for the record, their primary jobs are as teachers (and one accountant). Same job in Seattle would be closer to $15. It is the same business franchise, just different costs of living in those areas.

Here, you can buy a mobile home brand new for under 50k, insurance runs under $100 per month, and utilities will be low. It is cheaper here than an apartment by far, and you own it so rent it out when you are able to build your dream home. Most places here, you can set it up behind your parents house (not if they live in a subdivision obviously). Cant do that in Seattle.

My salaries have changed by as much as 50% between south louisiana, pacific nw and vancouver bc. Same me, same resume, different town. Mobile homes are for farms there and everyone moves to apartments. They also keep roommates. Roommates are not common here at all outside of dorms. Places are just different. We arent going to be able to make these kinds of decisions for the nation as a whole. People in Seattle are closer in culture to those in vancouver than new orleans. Cost of living is impacted by that culture.

 

[BillyZane]

How does shutting the 'weak' out of the job market altogether help them in any way?

who's shut out of the job market?

You live in fantasy land if you actually believe that the local mcdonalds would hire more people if the min wage were just removed.

They wouldn't They staff at a certain level and if their labor costs went down due to lower wages then they would love that , it would mean more profit for them.

I actually own 2 businesses and guess what, I hire exactly as many people as I need to get the job done, and none of my employees make near the minimum wage.

If I need 5 people to run a shift, I hire 5 people I don't say hey I could afford a 6th person here and likewise if I NEED that 6th person, I need him and I don't put off hiring him or her because of the wages. Either I need him or I don't.

I need another employee but wont have the revenue without more enrolls. Fyi, none of my staff make min wage but starting salary is $10 per hour and requires a degree. We are a secondary job for the record, their primary jobs are as teachers (and one accountant). Same job in Seattle would be closer to $15. It is the same business franchise, just different costs of living in those areas.

Here, you can buy a mobile home brand new for under 50k, insurance runs under $100 per month, and utilities will be low. It is cheaper here than an apartment by far, and you own it so rent it out when you are able to build your dream home. Most places here, you can set it up behind your parents house (not if they live in a subdivision obviously). Cant do that in Seattle.

My salaries have changed by as much as 50% between south louisiana, pacific nw and vancouver bc. Same me, same resume, different town. Mobile homes are for farms there and everyone moves to apartments. They also keep roommates. Roommates are not common here at all outside of dorms. Places are just different. We arent going to be able to make these kinds of decisions for the nation as a whole. People in Seattle are closer in culture to those in vancouver than new orleans. Cost of living is impacted by that culture.

then sir, you currently do not NEED another employee. You don't need another employee until AFTER the revenue justifies it, although there are cases where hiring an employee before the need is there makes sense to.

Likewise , if you're running efficiently, you aren't going to be able to get rid of an employee just because the minimum wage goes up, because then you would be understaffed

 

[candycorn]

I've seen it posted here that if minimum wages were raised 20%, then fast food prices would have to be raised by 20% to pay for the increase, and prices on other goods and services would also have to rise by 20% and the minimum wage workers would be no better off. Posters further said that liberals were too stupid to understand this basic premise.

Well, I'm a liberal and the idea that raising minimum wages by 20% would cause fast food prices, or prices on anything would have to rise by 20% is so completely inaccurate, I question the intelligence of anyone who believes this and I can explaiin why. The cost of the labour to make the burger is not the ONLY cost which is factored into the price of the burger. In fact, it's only a small fraction of the price of the burger. There's the cost of the ingredients, the capital costs of the equipment, furniture and fixtures in the store, the costs of mortgage/rent and utilities for the store, franchise fees and profit - none of which is affected by the wage increase given to the staff cooking and serving the burgers.

This is not just true of the fast food industry, but of any business which employs people at minimum wage. Wages are just one component of the costs of goods and services sold, so that raises in wages may increase the cost of producing the item, but they're not the ONLY cost involved. This is a detailed study which says that raising the minimum wage to $10.50 per hour would lead to a price increase of only 2.7%, which is a far more realistic figure than 20%.

http://www.peri.umass.edu/fileadmin/pdf/research_brief/PERI_fast_food_wages.pdf

MacDonalds and Walmart are two of the most profitable corporations in the world. Both do business in countries where the minimum wage is much higher than in the US, and both are very profitable in those jurisdictions. If Walmart can be very profitable in Canada, where minimum wages are over $10 an hour, taxes are higher, and costs generally are higher, why can't they pay decent wages in the US? Why are American taxpayers subsidizing Walmart employees with food stamps, and Medicaid while Walmart is the 2nd most profitable company in the US, and why do right wingers think this is a GOOD thing?

Shouldn't Walmart and MacDonalds (another of the most profitable corporations in the US whose employees heavily rely on government programs) be required to pay their employees enough in wages to keep their employees off public assistance?

Yeah, the problem with their reasoning is that they forget that spending also increases by 20% when wages and prices increase by 20%.

They do only a partial analysis because their predisposition allows them to only recognize info that supports their bias and ignores everything else.

Can you give me an example? You're stating that if wages go up X, prices increase by X too, right?

If the FMW went up $0.05 at McDonalds, you'd see a $0.05 raise in what exactly? The Big Mac, Quarter-Pounder, McNuggets? On all drinks?


What exactly?

 

[itfitzme]

I've seen it posted here that if minimum wages were raised 20%, then fast food prices would have to be raised by 20% to pay for the increase, and prices on other goods and services would also have to rise by 20% and the minimum wage workers would be no better off. Posters further said that liberals were too stupid to understand this basic premise.

Well, I'm a liberal and the idea that raising minimum wages by 20% would cause fast food prices, or prices on anything would have to rise by 20% is so completely inaccurate, I question the intelligence of anyone who believes this and I can explain why. The cost of the labour to make the burger is not the ONLY cost which is factored into the price of the burger. In fact, it's only a small fraction of the price of the burger. There's the cost of the ingredients, the capital costs of the equipment, furniture and fixtures in the store, the costs of mortgage/rent and utilities for the store, franchise fees and profit - none of which is affected by the wage increase given to the staff cooking and serving the burgers.

This is not just true of the fast food industry, but of any business which employs people at minimum wage. Wages are just one component of the costs of goods and services sold, so that raises in wages may increase the cost of producing the item, but they're not the ONLY cost involved. This is a detailed study which says that raising the minimum wage to $10.50 per hour would lead to a price increase of only 2.7%, which is a far more realistic figure than 20%.

http://www.peri.umass.edu/fileadmin/pdf/research_brief/PERI_fast_food_wages.pdf

MacDonalds and Walmart are two of the most profitable corporations in the world. Both do business in countries where the minimum wage is much higher than in the US, and both are very profitable in those jurisdictions. If Walmart can be very profitable in Canada, where minimum wages are over $10 an hour, taxes are higher, and costs generally are higher, why can't they pay decent wages in the US? Why are American taxpayers subsidizing Walmart employees with food stamps, and Medicaid while Walmart is the 2nd most profitable company in the US, and why do right wingers think this is a GOOD thing?

Shouldn't Walmart and MacDonalds (another of the most profitable corporations in the US whose employees heavily rely on government programs) be required to pay their employees enough in wages to keep their employees off public assistance?

Yeah, the problem with their reasoning is that they forget that spending also increases by 20% when wages and prices increase by 20%.

They do only a partial analysis because their predisposition allows them to only recognize info that supports their bias and ignores everything else.

Can you give me an example? You're stating that if wages go up X, prices increase by X too, right?

If the FMW went up $0.05 at McDonalds, you'd see a $0.05 raise in what exactly? The Big Mac, Quarter-Pounder, McNuggets? On all drinks?


What exactly?

I can't figure out what you are talking about. General wage increases and general price increases aren't specific to anything. What a minimum wage increase does, in general, is simply wage compression. It raises the standard of living for minimum wage workers by reducing the income spread.

The simplest view is to consider an economy where income is all identical. Everyone works for X per hour, producing Q goods. Everyone spends their X dollars per hour on Q goods. Simply increasing the X per hour isn't going to impact the Q goods produced as the increased income all gets spent on the Q goods. Everyone makes more money, everyone spends more money, everyone still works the same amount of hours producing the same amount of goods that the same amount of people consume.

Now, consider an economy with an income spread. Everyone works so many hours producing so many goods. The lower end of income is minimum wage. When minimum wage is raised, the average wage increases. The lower end increases, the upper end remains the same. The average price increases. Still, same amount of people producing and consuming the same amount of goods. The only difference is that the income spread is smaller. Minimum wage workers are now a bit closer to the average and now afford a bit more of the goods.

That is pretty much the basic conclusion that the empirical evidence supports.

The effect that is a bit harder to factor in is the fact that increasing the money supply tends to increase production ahead of prices. And decreasing the money supply tends to decrease production ahead of decreasing prices. The money supply has a mechanical aspect to it.

I suspect that this same effect is at play with minimum wage because the economy isn't homogeneous. Minimum wage and lower income workers buy products at businesses that pay minimum wage and lower incomes. Walmart, Walgreen's, Target, McDonalds, Taco Bell, FoodMax, etc, tend to make up a "sub economy" within which the monies used by lower income workers flows. As inflation reduces the effective value of minimum wage, the amount of monies flowing in the lower income economy gets smaller relative to the whole. Or, we might say that it fails to grow as effectively as it should. I suspect that this tends to cause the lower income economy to wind down.

This last part is just my sense of it. The fact of the general effect of increasing and decreasing money supply is well established, though I can't say "well understood". That Target workers tend to purchase at Target, McDonalds, Walgreen's and Foodmax isn't to much of a leap. So I don't believe I am to far off on declining real value of minimum wage having a real effect in kind of "winding down" the economy. The opposite would be that increasing the minimum wage would tend to increase output. Maintaining a real dollar value of minimum wage (COLA) would tend to keep standard of living steady.

What appears to be NOT TRUE is the idea that increasing minimum wage increases unemployment.

 

[candycorn]

Yeah, the problem with their reasoning is that they forget that spending also increases by 20% when wages and prices increase by 20%.

They do only a partial analysis because their predisposition allows them to only recognize info that supports their bias and ignores everything else.

Can you give me an example? You're stating that if wages go up X, prices increase by X too, right?

If the FMW went up $0.05 at McDonalds, you'd see a $0.05 raise in what exactly? The Big Mac, Quarter-Pounder, McNuggets? On all drinks?


What exactly?

I can't figure out what you are talking about. General wage increases and general price increases aren't specific to anything. What a minimum wage increase does, in general, is simply wage compression. It raises the standard of living for minimum wage workers by reducing the income spread.

The simplest view is to consider an economy where income is all identical. Everyone works for X per hour, producing Q goods. Everyone spends their X dollars per hour on Q goods. Simply increasing the X per hour isn't going to impact the Q goods produced as the increased income all gets spent on the Q goods. Everyone makes more money, everyone spends more money, everyone still works the same amount of hours producing the same amount of goods that the same amount of people consume.

Now, consider an economy with an income spread. Everyone works so many hours producing so many goods. The lower end of income is minimum wage. When minimum wage is raised, the average wage increases. The lower end increases, the upper end remains the same. The average price increases. Still, same amount of people producing and consuming the same amount of goods. The only difference is that the income spread is smaller. Minimum wage workers are now a bit closer to the average and now afford a bit more of the goods.

That is pretty much the basic conclusion that the empirical evidence supports.

The effect that is a bit harder to factor in is the fact that increasing the money supply tends to increase production ahead of prices. And decreasing the money supply tends to decrease production ahead of decreasing prices. The money supply has a mechanical aspect to it.

I suspect that this same effect is at play with minimum wage because the economy isn't homogeneous. Minimum wage and lower income workers buy products at businesses that pay minimum wage and lower incomes. Walmart, Walgreen's, Target, McDonalds, Taco Bell, FoodMax, etc, tend to make up a "sub economy" within which the monies used by lower income workers flows. As inflation reduces the effective value of minimum wage, the amount of monies flowing in the lower income economy gets smaller relative to the whole. Or, we might say that it fails to grow as effectively as it should. I suspect that this tends to cause the lower income economy to wind down.

This last part is just my sense of it. The fact of the general effect of increasing and decreasing money supply is well established, though I can't say "well understood". That Target workers tend to purchase at Target, McDonalds, Walgreen's and Foodmax isn't to much of a leap. So I don't believe I am to far off on declining real value of minimum wage having a real effect in kind of "winding down" the economy. The opposite would be that increasing the minimum wage would tend to increase output. Maintaining a real dollar value of minimum wage (COLA) would tend to keep standard of living steady.

What appears to be NOT TRUE is the idea that increasing minimum wage increases unemployment.

Okay.

What I had heard more than few times is that if you were to start paying Nancy $0.50 more per hour on Monday, on Tuesday you'd have to raise your prices. As if you have one sales unit and sell only one of them per day. I mis-understood what you had wrote.

 

[itfitzme]

Can you give me an example? You're stating that if wages go up X, prices increase by X too, right?

If the FMW went up $0.05 at McDonalds, you'd see a $0.05 raise in what exactly? The Big Mac, Quarter-Pounder, McNuggets? On all drinks?


What exactly?

I can't figure out what you are talking about. General wage increases and general price increases aren't specific to anything. What a minimum wage increase does, in general, is simply wage compression. It raises the standard of living for minimum wage workers by reducing the income spread.

The simplest view is to consider an economy where income is all identical. Everyone works for X per hour, producing Q goods. Everyone spends their X dollars per hour on Q goods. Simply increasing the X per hour isn't going to impact the Q goods produced as the increased income all gets spent on the Q goods. Everyone makes more money, everyone spends more money, everyone still works the same amount of hours producing the same amount of goods that the same amount of people consume.

Now, consider an economy with an income spread. Everyone works so many hours producing so many goods. The lower end of income is minimum wage. When minimum wage is raised, the average wage increases. The lower end increases, the upper end remains the same. The average price increases. Still, same amount of people producing and consuming the same amount of goods. The only difference is that the income spread is smaller. Minimum wage workers are now a bit closer to the average and now afford a bit more of the goods.

That is pretty much the basic conclusion that the empirical evidence supports.

The effect that is a bit harder to factor in is the fact that increasing the money supply tends to increase production ahead of prices. And decreasing the money supply tends to decrease production ahead of decreasing prices. The money supply has a mechanical aspect to it.

I suspect that this same effect is at play with minimum wage because the economy isn't homogeneous. Minimum wage and lower income workers buy products at businesses that pay minimum wage and lower incomes. Walmart, Walgreen's, Target, McDonalds, Taco Bell, FoodMax, etc, tend to make up a "sub economy" within which the monies used by lower income workers flows. As inflation reduces the effective value of minimum wage, the amount of monies flowing in the lower income economy gets smaller relative to the whole. Or, we might say that it fails to grow as effectively as it should. I suspect that this tends to cause the lower income economy to wind down.

This last part is just my sense of it. The fact of the general effect of increasing and decreasing money supply is well established, though I can't say "well understood". That Target workers tend to purchase at Target, McDonalds, Walgreen's and Foodmax isn't to much of a leap. So I don't believe I am to far off on declining real value of minimum wage having a real effect in kind of "winding down" the economy. The opposite would be that increasing the minimum wage would tend to increase output. Maintaining a real dollar value of minimum wage (COLA) would tend to keep standard of living steady.

What appears to be NOT TRUE is the idea that increasing minimum wage increases unemployment.

Okay.

What I had heard more than few times is that if you were to start paying Nancy $0.50 more per hour on Monday, on Tuesday you'd have to raise your prices. As if you have one sales unit and sell only one of them per day. I mis-understood what you had wrote.

And that seems right. Assuming the company just meets costs, as a free market firm should, then if Nancy earns $0.50 more per hour on Monday then you'd certainly have to raise prices on Tuesday, or however long it takes to get goods from production to the store shelf. By the time the next Monday comes around, or however long a pay period is, Nancy would see it is her paycheck and be able to pay that $0.50 more.

It is interesting to note the little details like we get paid three weeks after we do the work. Paychecks come every two weeks after a one week lag time. So the work we do on the week of the 1st through the 7th has better than a week on the store shelves before the revenues find their way into out paycheck on the third week. So it really is the $0.50 Nancy gets paid per hour in the first week of the Month means prices go up that week and Nancy actually sees her paycheck go up by the third week. By the time the fourth week comes around, she can afford the increased prices that showed up two weeks prior.

Seems to me you've got it spot on. For simplicity sake, we can think of it as being one sales unit per day. For practical purposes, I think of it as being a "standard basket of goods", as if Nancy produced a grocery cart full of stuff. She doesn't, of course, but unless we are concerned with how efficient production is, it doesn't matter.

Of course, in reality, every company doesn't necessarily have all or any minimum wage employees. The trick which thinking economics is being able to find the simpler model that answers the question without over complicating things. For many practical analysis, we can think of the economy as one big company producing one big basket of goods for one huge household of 300 million people (big mansion). As money flowed back and forth between business and household, paycheck, purchases, paycheck, purchases, it has to be the same total amount. For many practical purposes, the time period is irrelevant. It can be Monday, Tuesday, or this week, the next week.

 

[itfitzme]

I've seen it posted here that if minimum wages were raised 20%, then fast food prices would have to be raised by 20% to pay for the increase, and prices on other goods and services would also have to rise by 20% and the minimum wage workers would be no better off. Posters further said that liberals were too stupid to understand this basic premise.

Well, I'm a liberal and the idea that raising minimum wages by 20% would cause fast food prices, or prices on anything would have to rise by 20% is so completely inaccurate, I question the intelligence of anyone who believes this and I can explaiin why. The cost of the labour to make the burger is not the ONLY cost which is factored into the price of the burger. In fact, it's only a small fraction of the price of the burger. There's the cost of the ingredients, the capital costs of the equipment, furniture and fixtures in the store, the costs of mortgage/rent and utilities for the store, franchise fees and profit - none of which is affected by the wage increase given to the staff cooking and serving the burgers.

This is not just true of the fast food industry, but of any business which employs people at minimum wage. Wages are just one component of the costs of goods and services sold, so that raises in wages may increase the cost of producing the item, but they're not the ONLY cost involved. This is a detailed study which says that raising the minimum wage to $10.50 per hour would lead to a price increase of only 2.7%, which is a far more realistic figure than 20%.

http://www.peri.umass.edu/fileadmin/pdf/research_brief/PERI_fast_food_wages.pdf

MacDonalds and Walmart are two of the most profitable corporations in the world. Both do business in countries where the minimum wage is much higher than in the US, and both are very profitable in those jurisdictions. If Walmart can be very profitable in Canada, where minimum wages are over $10 an hour, taxes are higher, and costs generally are higher, why can't they pay decent wages in the US? Why are American taxpayers subsidizing Walmart employees with food stamps, and Medicaid while Walmart is the 2nd most profitable company in the US, and why do right wingers think this is a GOOD thing?

Shouldn't Walmart and MacDonalds (another of the most profitable corporations in the US whose employees heavily rely on government programs) be required to pay their employees enough in wages to keep their employees off public assistance?

Yeah, the problem with their reasoning is that they forget that spending also increases by 20% when wages and prices increase by 20%.

They do only a partial analysis because their predisposition allows them to only recognize info that supports their bias and ignores everything else.

Can you give me an example? You're stating that if wages go up X, prices increase by X too, right?

If the FMW went up $0.05 at McDonalds, you'd see a $0.05 raise in what exactly? The Big Mac, Quarter-Pounder, McNuggets? On all drinks?


What exactly?

Alternatively, what may easily happen is simply that the profit margin on soft drinks goes down. Apparently, everyone knows that the big profit margin is on the soft drinks.

Turns out to be a good search term;

Google Search: Profit Margin On Soft Drinks

Top 5 food mark-ups where restaurants make huge profits - DailyFinance

"

1. Non-Alcoholic Beverages
This would include all soft drinks, coffee, and tea. The cost for restaurants in this area is literally pennies on the dollar. This is why many restaurants and chains switched to "free refills" without worrying one bit about their bottom line. These items cost the restaurant between 5 cents and 20 cents per serving. Keep that in mind the next time you want to order a $2.50 Coke. Soda is so cheap that paper cups, when used, represent a bigger expense than the soda itself. "

It is almost as if the hamburger and fries is complementary, just to get you to buy the soft drink.

 

[BillyZane]

Yeah, the problem with their reasoning is that they forget that spending also increases by 20% when wages and prices increase by 20%.

They do only a partial analysis because their predisposition allows them to only recognize info that supports their bias and ignores everything else.

Can you give me an example? You're stating that if wages go up X, prices increase by X too, right?

If the FMW went up $0.05 at McDonalds, you'd see a $0.05 raise in what exactly? The Big Mac, Quarter-Pounder, McNuggets? On all drinks?


What exactly?

Alternatively, what may easily happen is simply that the profit margin on soft drinks goes down. Apparently, everyone knows that the big profit margin is on the soft drinks.

Turns out to be a good search term;

Google Search: Profit Margin On Soft Drinks

Top 5 food mark-ups where restaurants make huge profits - DailyFinance

"

1. Non-Alcoholic Beverages
This would include all soft drinks, coffee, and tea. The cost for restaurants in this area is literally pennies on the dollar. This is why many restaurants and chains switched to "free refills" without worrying one bit about their bottom line. These items cost the restaurant between 5 cents and 20 cents per serving. Keep that in mind the next time you want to order a $2.50 Coke. Soda is so cheap that paper cups, when used, represent a bigger expense than the soda itself. "

It is almost as if the hamburger and fries is complementary, just to get you to buy the soft drink.

Same thing with movie theaters. They actually lose money on every movie they show if you don't count concessions. But that $40 for 2 drinks a popcorn and a candy sure makes them money.

Ever used a SodaStream? Machine costs like 100 bucks. Then a refill of CO2 is $15 and a refill of syrup is around $6.

The CO2 cartridge can produce 60 liters of soda. So that is $.25 per liter.
The syrup can produce 12 liters . So that's $.20 per liter.

Total cost of $.45 per liter, which is CONSIDERABLY less than what you pay when you go out to eat or what have you.

No one should feel sorry for these places when discussing a minimum wage increase, they are making PLENTY of money.