View Poll Results: Results of Raising the Minimum Wage

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  • Greater buying power

    14 25.00%
  • Greater unemployment

    32 57.14%
  • Less unemployment

    7 12.50%
  • Higher prices

    36 64.29%
  • Less competitive on world markets

    25 44.64%
  • Benefits low income workers

    20 35.71%
  • Places people in higher income tax brackets

    7 12.50%
  • More jobs go overseas

    32 57.14%
  • More businesses close

    30 53.57%
  • Benefits middle income workers

    5 8.93%
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Thread: Effects of Minimum Wage

  1. #101
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    Re: Effects of Minimum Wage

    If we are to assume revenue = cost (in its fullest), then yes the cost will be passed along to the consumer. However, if revenue does not equal cost, the amount passed along to the consumer is completely arbitrary.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

  2. #102
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    Re: Effects of Minimum Wage

    Minimum wage is primarily wealth reallocation. It really doesn't affect international trade much, as you're not changing the resources of a country simply how the fruit of the labor is allocated.

    So greater buying power for someone who previously earned minimum wage and now earns a higher wage. For those who make more reduced buying power (until inflation evens it out, at which point they raise minimum wage again. Or they tie minimum wage to inflation like in WA state and inflation never catches up.)

    Greater unemployment to some level, but not an extreme change. Most of the minimum wage positions are labor intensive jobs that can't easily be outsourced. They're not going to put videophone registers at McDonalds so that they can have someone in China take your order, or cook the burgers in China.

    Higher prices for products heavily dependent on labor. But not as much as the minimum wage increase. If labor costs 25% (pretty normal in the fast food industry) then doubling the cost of labor would only increase the costs of the goods by 1/4. 200% wage but only 125% more expensive cost. (Doesn't stop businesses from using it as an excuse to raise prices above that in order to increase profits by blaming the minimum wage increase.)

    Competition on world markets wouldn't really happen. While it's easy to assume if US labor becomes more expensive foreign labor is now cheaper and everything will be outsourced, that ignores some basic economics. If you did for example outsource things you skew the trade balance such that you increase our trade deficit. Which reduces the value of the dollar which makes the foreign labor now more expensive. Ultimately the resources available within our country do not change. Our potential GDP does not change.

    People in higher income tax brackets - sort of. The brackets actually change every year due to inflation. So really, it wouldn't affect it in the long term. If it does inflate wages the standard deductions and tax brackets change to compensate.

    More jobs going overseas, not really. Due to how difficult it is to oursource minimum wage jobs and the trade deficit/affect on US currency value.

    Benefits middle income workers - no, probably the opposite (but not significantly.)

  3. #103
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    Re: Effects of Minimum Wage

    Quote Originally Posted by Goldenboy219 View Post
    If we are to assume revenue = cost (in its fullest), then yes the cost will be passed along to the consumer. However, if revenue does not equal cost, the amount passed along to the consumer is completely arbitrary.
    How about proportional?

    Who shall ascend the hill of the Lord? And who shall stand in his holy place? He who has clean hands and a pure heart, who does not lift up his soul to what is false, and does not swear deceitfully. Psalm 24
    "True law is right reason in agreement with nature . . . Whoever is disobedient is fleeing from himself and denying his human nature [and] will suffer the worst penalties . . ." - Cicero

  4. #104
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    Re: Effects of Minimum Wage

    Quote Originally Posted by phattonez View Post
    How about proportional?
    You mean if consumer demand and producer supply have equal slopes (in terms of absolute value)? If so, then the increased costs are split equally among the consumer and producer.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

  5. #105
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    Re: Effects of Minimum Wage

    Quote Originally Posted by Goldenboy219 View Post
    You mean if consumer demand and producer supply have equal slopes (in terms of absolute value)? If so, then the increased costs are split equally among the consumer and producer.
    Let's say that revenue does not equal cost. If this is true, then there is some other revenue or cost is covered through another method. So then, minimum wage (higher cost) could be somewhat absorbed by those other things, but price would still go up proportionally.

    Who shall ascend the hill of the Lord? And who shall stand in his holy place? He who has clean hands and a pure heart, who does not lift up his soul to what is false, and does not swear deceitfully. Psalm 24
    "True law is right reason in agreement with nature . . . Whoever is disobedient is fleeing from himself and denying his human nature [and] will suffer the worst penalties . . ." - Cicero

  6. #106
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    Re: Effects of Minimum Wage

    Quote Originally Posted by phattonez View Post
    Let's say that revenue does not equal cost. If this is true, then there is some other revenue or cost is covered through another method. So then, minimum wage (higher cost) could be somewhat absorbed by those other things, but price would still go up proportionally.
    The extent of the price increase is determined by the slope of the demand curve. The larger the slope (in terms of absolute value) the more the consumer bares the increase in cost.

    For instance, when a good is highly inelastic such as gasoline, the consumer bares the majority burden of increased cost.
    Last edited by Kushinator; 10-27-09 at 08:34 PM.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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