What are you even talking about? We have been ringing it for years, because we can look at the prices, and see it happened.
It's not a 'theoretical' result.. it's a historically proven true result.
Actually, it's really not. Inflation happens whether the cost of labor goes up or not.
In fact, there is no correlation between inflation and the minimum wage. The last time the Min Wage went up was 2009.
Inflation did not go up in 2010 by more than 1%. It has remained between 0.5 and 3% for the last decade.
And what you don't get, is that if I don't have the money to pay them whatever "living wage" you make up, then I don't employ them.
Then you go out of business, and someone who can afford to pay his employees a fair wage gets your customers. It's a win-win for everyone.
You see, the kind of asshole who doesn't want to pay his employees a fair wage. I WANT THAT FUCKER TO LOSE HIS BUSINESS. I truly do. Someone else will provide those goods and services and they'll do it paying their employees a fair wage.
So I actually worked at McDonald's when the minimum wage went up.
First thing they did, was lay off 3 part time workers.
How did the store continue to operate? The rest of us simply had to work more.
The second thing they did was decrease serving sizes.
Charging the same amount of money, for a smaller amount of food is a way of subtly passing on the increased cost of labor.
How did I find this out?
What you are looking at is a somewhat similar fry station to the one I used when I worked there.
The fry cups are held in metal slots on this station, and are not adjustable.
When the company reduced the cup size over a period of about 12 months, eventually the cups would fall through the slots, because they were too small, and the metal slots can't be adjusted.
We ended up just setting them on the ground near the fry station, and picking them up when needed. (yes on the floor).
Over the course of a year, the large became a medium. The medium became a small. And the small got so tiny, it barely held 6 fries in it. Honestly it was ridiculous.
Eventually they introduced a new larger size fry cup, with a new higher price. Then after some time, they simply renamed everything. The extra large became the large, the large became the medium, and the medium became the small, and the small was just wiped off the menu.
Now here is what you need to grasp. The reasons McDonald's and Wendy's and other fast food joints do not make fry stations with adjustable racks, is because generally over the course of a decade, they don't change their drink cups, or their fry cup sizes.
The reason they did it this time, was because the minimum wage drove up costs, and passing that cost on in overt price hikes, pisses people off. So instead they changed the cup sizes, and phased in a price hike over time.
All companies pass on these price hikes. All of them.
In downturns, companies reduce the size of some products, disguising price increases and avoiding comparisons on same-size packages.
www.nytimes.com
This is a story from March 2011, talking about how companies were reducing the net weight of their packaged products, without changing the price.
So mother goes in to buy cereal for Timmy, and the exact same size box, but with less cereal in the box, but for the same exact price.
Why did they do this in 2010 to 2011? Oh that's right, we had a minimum wage hike from 2007-2009.
From the article:
“Whole wheat pasta had gone from 16 ounces to 13.25 ounces,” she said. “I bought three boxes and it wasn’t enough — that was a little embarrassing. I bought the same amount I always buy, I just didn’t realize it, because who reads the sizes all the time?”
The cost of labor is always.... ALWAYS passed onto the consumer. Companies avoid directly passing on the cost in increased prices, because people get pissy about it. They are less likely to notice that the net weight reduced by 3 ounces per box.
But... the cost of labor is ALWAYS passed on. ALWAYS. There is zero example anywhere, where the minimum wage costs are not passed onto consumers. Zero. No such example anywhere ever.