- Joined
- Jul 12, 2013
- Messages
- 1,185
- Reaction score
- 151
- Gender
- Male
- Political Leaning
- Very Liberal
So, you feel that minimum wage can just be raised artificially by about 20%, and everyone is better off? Just to point out one basic effect, you raise the price of something, and the demand will go down. But, if I am reading this correctly, you feel increasing the cost will also increase the demand. Obviously, that is not true.
The minimum wage is an artificial (not organic) means of setting pay level minimums. And no; I do not advocate a 20% increase, since from $7.25 to $12.00 is a 65.5% increase. And yes; everyone benefits when we expand our middle class, economically. And since minimum wage workers' pay is not likely to be socked away in Cayman Trusts, it indeed would explode demand, since it would affect nearly 50% of our workforce. (The epitome of high monetary-velocity-point)
And cost is a calculation (%) based on demand side, too. So while increased labor cost would rise, for it to remain at or near the same percentage, sales need not increase at the same rate that wage minimums are raised. Plus other fixed monthly costs remain the same, and are thus now a lower percentage, which can actually result in higher gross profits for smaller retailers (McDonalds, which are franchises) and in fact be a windfall for larger retailers (Walmart which serves the lower-income market) since nearly half of their customers now have substantially more to spend on food, clothing and durable items.
Consider the Big Mac Index, which has been the bailiwick of Economist (mag), which enables us to consider what FMW increases have done to a bellwether item, sold by franchise operations which are the epitome of FMW-affected labor cost ...
http://koios.us/ph/bm-fmw.png