Double The Minimum Wage

[MikeMangum]

OR…

The minimum wage goes up, prices stay the same, and employment increases, and the fed doesn't print additional money. It's such a simple mathematical operation, I'm surprised it took me so long to figure it out. Just look at the incomes and ask what change can you make that raises the minimum wage without shifting the curve. It's a fun little problem.

Could you explain HOW the above happens? Why don't you show your work with the basic restaurant example from above.

 

[Emperor_Gestahl]

We simply can't burden businesses with an increase in the minimum wage. The effects would be catastrophic. Many of them are still recovering from the damage dealt by the outlawing of affordable child labor.

But it's not the business you're burdening, it's whoever they shift the cost onto. Nobody intentionally runs a business at a loss..

Child labor was banned (within U.S. borders) for moral reasons, the same reasons I think we shouldn't allow anyone to do business in the U.S. who uses Asian sweatshop or child labor. I don't pretend doing this would be good for the U.S. economically, it would probably be devastating, but I think it's the "right" thing to do.

Like I said, the increased costs of a doubled minimum wage would be immediately shifted by businesses onto customers, or they'd lay workers off, or they'd go under.. I can't possibly predict what the total effect would be, but so far I don't see a clear case for moral or economic benefit in doubling the minimum wage.

 

[maxpower1227]

But it's not the business you're burdening, it's whoever they shift the cost onto. Nobody intentionally runs a business at a loss..

Child labor was banned (within U.S. borders) for moral reasons, the same reasons I think we shouldn't allow anyone to do business in the U.S. who uses Asian sweatshop or child labor. I don't pretend doing this would be good for the U.S. economically, it would probably be devastating, but I think it's the "right" thing to do.

Like I said, the increased costs of a doubled minimum wage would be immediately shifted by businesses onto customers, or they'd lay workers off, or they'd go under.. I can't possibly predict what the total effect would be, but so far I don't see a clear case for moral or economic benefit in doubling the minimum wage.

Alright, so moral reasons were sufficient for ending child labor, and doing so did not destroy business in this country. There are also moral reasons for ensuring that someone who works a full time job earns enough money to make ends meet without supplementing their income with welfare and food stamps or a second job.

 

[dudalb]

Alright, so moral reasons were sufficient for ending child labor, and doing so did not destroy business in this country. There are also moral reasons for ensuring that someone who works a full time job earns enough money to make ends meet without supplementing their income with welfare and food stamps or a second job.

Of course you know the additonal costs would just be passed on to the consumer?
Or maybe the Government should put in price controls to see that would not happen and tell businesses how much to charge for their product and determine how much profit they make.
In that case,since the Gov is pretty much running the busines anyway they might as well take it over complety.
Which seems,since I get the vibe that you really think the profit motive is basically immoral,to be what you really want.
And of course we know how great a totally govenrment ran economy has worked in the past......

 

[theprestige]

There are also moral reasons for ensuring that someone who works a full time job earns enough money to make ends meet without supplementing their income with welfare and food stamps or a second job.

How do you square this moral imperative with your recognition that the person working the full time job has to actually be providing something to their employer that is valuable enough to be worth that kind of pay?

 

[Joecool]

ensuring that someone who works a full time job earns enough money to make ends meet without supplementing their income with welfare and food stamps

If we did not have welfare or food stamps, businesses would have less taxes to pay and could pay their workers more.

Instead in the US, there are so many people receiving entitlements that the tax burden for that alone is driving up taxes.

In my state, I believe 17% of the residents are on food stamps and medicaid (medical welfare) is almost 10% of the State's operating budget.

 

[maxpower1227]

If we did not have welfare or food stamps, businesses would have less taxes to pay and could pay their workers more.

Instead in the US, there are so many people receiving entitlements that the tax burden for that alone is driving up taxes.

In my state, I believe 17% of the residents are on food stamps and medicaid (medical welfare) is almost 10% of the State's operating budget.

It's cute that you think companies would respond to a decrease in taxes by raising wages across the board. Do you have any historical data to back this claim?

 

[theprestige]

It's cute that you think companies would respond to a decrease in taxes by raising wages across the board. Do you have any historical data to back this claim?

I'd expect that companies would respond to a decrease in taxes by taking the following steps, in roughly the following order):

1. Revising their earnings projections upwards.

2. Reviewing their expansion plans based on the change to relative tax burdens in different jurisdictions.

3. Putting some of the increased profits into increased capital investment (possibly creating more jobs).

4. Putting some of the increased profits into increased dividends for stockholders (if they're the kind of company that does that kind of thing).

5. Putting some of the increased profits into pay increases if their business model depends for success in part on a rare skillset and there is a competitive labor where they can attract better talent by improving their compensation package. Say, nuclear reactor repair technicians. Or large vessel salvage crews. Or C-level executives with major corporation experience.

But line workers in the factory? Probably not. If they're already attracting the quality of talent they want, in the numbers they need, at the current pay they're offering, then no amount of increased profits is going to get them to increase that level of pay. And why should it?

 

[MikeMangum]

It's cute that you think companies would respond to a decrease in taxes by raising wages across the board. Do you have any historical data to back this claim?

I don't necessarily agree that welfare or food stamp benefits are that large of a contributor to tax burdens since they really aren't as large of a fraction of government spending as many people seem to think, but reduced tax burdens on companies would basically end up split 3 ways: very slightly higher wages, very slightly higher profits, and very slightly lower prices to consumers.

 

[balrog666]

I don't necessarily agree that welfare or food stamp benefits are that large of a contributor to tax burdens since they really aren't as large of a fraction of government spending as many people seem to think, but reduced tax burdens on companies would basically end up split 3 ways: very slightly higher wages, very slightly higher profits, and very slightly lower prices to consumers.

Well, gosh, thanks for all that personal research you did to add to the thread knowledge!

 

[jj]

I don't necessarily agree that welfare or food stamp benefits are that large of a contributor to tax burdens since they really aren't as large of a fraction of government spending as many people seem to think, but reduced tax burdens on companies would basically end up split 3 ways: very slightly higher wages, very slightly higher profits, and very slightly lower prices to consumers.

Present evidence suggests that it will be split 1 way - higher profits for the owners.

 

[jj]

I'm guessing you aren't that familiar with WalMart. There are 2 basic strategies for making profits as a retailer of goods: charge a large markup and have relatively fewer sales (ex: Tiffany's or Apple), or charge a smaller markup, compete on price, and make your profits off of a large volume of sales (WalMart).

Where does Costco come in to this?

 

[Solitaire]

Could you explain HOW the above happens? Why don't you show your work with the basic restaurant example from above.

I cannot do it with the restaurant model because I'm working at a higher level with the economy as a whole. Basically, I take the household income enter it into a spreadsheet then multiply the difference between the listed income and the average income by four sevenths and I get the squeezed income. I took a while but I finally got a good graph.

As you can see, the low incomes increase and the high incomes decrease thus no inflation. I suppose for the restaurant example prices would rise but be offset by falling prices elsewhere in the economy. I think this squeeze play was tried once in the United States economy from around 1945 to 1975.

 

[Tsukasa Buddha]

And if set a "living wage" to above the equilibrium price, that is what will happen for many, many people.

Somehow, earning nothing is better than earning less.

That is just one economic model, an incomplete view and a contested one at that.

But I forget, neoliberal ideology == Economics nowadays.