If labor costs are, say, 20% of the cost of an item, and labor costs increase 30%, the cost goes up 6% and we can assume prices follow roughly the same. So the workforce gets a raise of 30%, and prices go up 6%. That's not a bad deal, and it assumes that businesses can pass along all increases in costs dollar for dollar to their customers, which is doubtful. Likely there is some shifting of costs (higher prices), with profits taking some hit.
And in the meantime, that employee spends an extra (net of price increases) 24% on other goods, etc.......
Not saying there isn't an employment effect when the minimum wage goes up (not sure either way), but we can't assume the poor are left no better off with raises. Those with a job are very, very likely to see significant increases in their standard of living.
Alternatively, if they can decrease the number of workers, then there is no need for inflation to result from higher wages.
I don't understand why some people will argue that a higher min wage would cause both, or why when you defeat their argument about one of those options, they jump over to the other.
And what they totally ignore are all the other factors such as the cost savings to business due to an increase in economy of scale that ocures when demand increases. "Unintended consequences" are not always unintended, nor are they always bad.
Last edited by Deuce; 12-13-14 at 08:20 PM.
One of you will end up here next!
The Minimum Wage and the Great Recession: Evidence of Effects on the Employment and Income Trajectories of Low-Skilled Workers | Heartland Institute
It's a link to a link. The entire study is linked on this site. What you'll gather after going through it is that their study is based on the premise of higher labor cost = lower employment. In other words, the entire study is completely flawed. What you'll also notice is that they provide not one tiny shred of evidence to support that premise.
Why? Because it's completely illogical. Employers employ ONLY because they have too much work to get done for just themselves. At that point, it's either deny business, of hire. Period. Cost of hiring never even enters into the equation, because ultimately, it's the ONLY way to grow the business. Otherwise, there would be NOTHING but sole ownership, employee count of one businesses out there. It doesn't matter if the minimum wage is .01 cents per hour, or 20 dollars per hour, employers only hire the absolute minimum staff needed to get the work done. The only thing that changed in the recession is that businesses went OUT of business due to a lack of demand, not overpriced employees, which created a surplus of laborers looking for work. Which, of course, meant that employers could work their existing employees harder, because there WERE no better jobs for them to leave to.
But hey, don't take my word for it, lol. Go find another "study".
Food for thought...
Since it's inception, the minimum wage has been hated and reviled by people like you. And predicted to cause disaster after disaster. Now, it's been around a for a little while. And so far, the only economic disasters that have happened have NOT been the result of minimum wages.
Last edited by KevinKohler; 12-14-14 at 09:08 AM.