Minimum Wage primer

@joe-shmo said
"I would rather see that gap closed by corporations, not gubment. Maybe it's just me?"

But its not going to be closed by corporations, its going to be closed by the gubmint either way you slice it. The corporations aren't paying because its a better economic system...they are "theroetically" ( and I stress theoretically ) going to pay as a result of Big Government saying, you are going to pay. Its turtles all the way down for this scenario.

You don't see the distinction between your employer paying you vs a taxpayer?

@wildgrass said
You don't see the distinction between your employer paying you vs a taxpayer?

There is no value being added to the system. The employers that survive, are just going to re-maximize profits. Give everyone in America $1,000,000 its not going to do a thing...there are still going to be the "have's" and "have not's" its just the "have not's" will now have a million dollars for a short while. Nothing has changed, poverty and wealth are intrinsic to the system. Have's and have not's are Nature... almost exclusively in the natural world mating rights are hoarded by a select few. Wealth distributions in the natural world seem to be almost always skewed...because it works! Nature knows best.

@joe-shmo said
https://www.businessinsider.com/raising-federal-minimum-wage-cbo-jobs-poverty-2019-7

See this is the kind of thing that clearly supports "you can't get something for nothing" economic spring analogy.

"Raising the federal minimum wage to $15 an hour by 2025 would shed 1.3 million jobs from the economy but also reduce the number of Americans living in poverty by the sam ...[text shortened]... e? What happens to the 1.3 million who lost their jobs? How are they magically kept out of poverty?

From the same report:

In an average week in 2025, the $15 option would boost the wages of 17 million workers who would otherwise earn less than $15 per hour. Another 10 million workers otherwise earning slightly more than $15 per hour might see their wages rise as well."

https://www.cbo.gov/system/files/2019-07/CBO-55410-MinimumWage2019.pdf

Hardly the "wash" you are pretending.

@joe-shmo said
There is no value being added to the system. The employers that survive, are just going to re-maximize profits. Give everyone in America $1,000,000 its not going to do a thing...there are still going to be the "have's" and "have not's" its just the "have not's" will now have a million dollars for a short while. Nothing has changed, poverty and wealth are intrinsic to the ...[text shortened]... ibutions in the natural world seem to be almost always skewed...because it works! Nature knows best.

I don't quite follow your logic, I guess. What does "re-maximize profits" mean? A minimum wage hike won't do anything at all about the wealth gap, right? Minimum wage increases are a few bucks an hour but the wealth gap we're talking many orders of magnitude. No one's talking about a minimum wage of $150/hour. That seems quite off topic.

We decided as a society to help keep folks fed and housed regardless of their circumstance. Because of this, we don't have a 'natural' system currently as you describe it. The question then becomes who foots the bill. Among the working class, this should be employers right? Since we like capitalism here the minimum wage, as I see it, is just a contract between the government and corporate America to ask corporations to pay their employees enough money to keep them out of poverty and off the government dole. Something got out of sync with federal benefits programs beginning to take over this responsibility from corporations. A minimum wage hike is one possible way to right the ship. I can't believe conservatives and Republicans are arguing for MORE GOVERNMENT control over poor people.

You seem interested in maintaining the status quo and also complaining about it.

@earl-of-trumps said
@no1marauder -IF businesses could get higher prices for their goods, they'd already charge them.

Sure, if they colluded. (which is why collusion is illegal)
But with the wages going for *everyone*, it allows them all to raise prices.

It isn't like we have never done tis before. The minimum wage has changed 22 times, we know what to expect.

Here's what ...[text shortened]... n a higher tax bracket.

"And for those of you in Rio Linda" - Limbaugh :-)

Megaditto's y'all

Yes we do know what to expect based on past experience:

"According to a recent piece of economic research that examined the effect of prices on minimum wage increases in various states in the U.S. from 1978 through 2015, they found that a 10% increase in minimum wage only accounts for around a 0.36% increase in prices.1

https://www.investopedia.com/ask/answers/052815/does-raising-minimum-wage-increase-inflation.asp#:~:text=According%20to%20a%20recent%20piece,a%200.36%25%20increase%20in%20prices.

So even in the minority of States that have a $7.25 minimum wage, a gradual 5 year increase in the minimum wage would raise prices about 4% or less than 1% a year. This is hardly the catastrophic inflation that the Joes are insisting would be caused by such a minimum wage increase.



The post that was quoted here has been removed

If they have the money and its necessary to to stay competitive, maybe... but I doubt it!

@wildgrass said
I don't quite follow your logic, I guess. What does "re-maximize profits" mean? A minimum wage hike won't do anything at all about the wealth gap, right? Minimum wage increases are a few bucks an hour but the wealth gap we're talking many orders of magnitude. No one's talking about a minimum wage of $150/hour. That seems quite off topic.

We decided as a society to help k ...[text shortened]... ver poor people.

You seem interested in maintaining the status quo and also complaining about it.

Prices rise. That is the re-maximization of profit.

@joe-shmo said
Prices rise. That is the re-maximization of profit.

Nonsense. Profit can go up if prices drop, or down if prices rise.

@joe-shmo said
"Never have corporate profits outgrown employee compensation so clearly and for so long."

I'm not saying corporations aren't greedy...they are! How does raising the minimum wage change that fact?

I'm not talking about "greed"; I'm talking about the dynamics of the system. US Government policy since the 1980s has favored employers and disfavored workers resulting in reduction of labor's share in national income (which is not static as you seem to be claiming). Further, the situation has been even worse for the median worker as high paying professions have seen their pay grow at exponential rates:

Wages for most workers have badly lagged productivity growth over the last four decades. But the shift from labor to capital has been a relatively small part of the story. Most of the gap between the growth rate of productivity and the growth in the median wage is due to the rapid growth in the pay of the workers at and near the top of the wage distribution.

The pay of the typical worker has been depressed, in part, due to the growth in the pay of high-end professionals, like doctors and dentists, and especially very highly paid workers like Wall Street traders, CEOs, and hedge fund and private equity partners. These were the big winners in the economy over the last four decades. The shift from labor to capital is, by comparison, a minor sidebar.

https://cepr.net/declining-labor-shares-of-gdp-is-there-something-to-be-explained/

Note though that even that article concedes that overall labor share has fallen and that wages are 4.8% lower than they would be if labor share was the same as 1979. While the author considers this not a big deal, an increase of 4.8% wages in real terms would mean about $450 billion extra dollars in wages (personal income accounts for $18.6 trillion and wages are 50% of personal income https://fas.org/sgp/crs/misc/IF10501.pdf).

So what would an increase in the minimum wage change? It would increase overall wages, sharply increase the wages of lower income workers and have minimal price effects based on prior experience.

@joe-shmo said
Prices rise. That is the re-maximization of profit.

Again google "supply and demand". A rise in prices might or might not increase profits. And if a rise in prices would increase profits automatically, why don't businesses simply raise prices now?

@no1marauder said
Again google "supply and demand". A rise in prices might or might not increase profits. And if a rise in prices would increase profits automatically, why don't businesses simply raise prices now?

Because there is competition dynamics in play now. If they try to be too greedy they won't sell the product...competition in their industry keeps the grounded. However, when the entirety of industry is forced to pay at least $15 per hr for labor, everyone is in the same boat, there is much more incentive to try to climb together to recoup losses from paying increased wages that every industry will be incurring, thus resetting the bar for competition at higher prices.

Imagine company A has the least competition in its industry and it supplies B,C,D. All the companies got the squeeze from above with forced wage increases. Company A having the least competition ( there is always 1 with the least competition ) in the market is naturally going to try to recoup profits. Compay A ( since it has the largest bankroll in its industry ) knowing that its competitors are feeling the squeeze more than itself, may decide to drop prices to further remove competition. once they are not a threat, Company A can push back. Companies B,C,D are now getting squeezed from below in rising cost for company A's goods and services and have significant less places to turn, naturally they either increase prices for their product or face the possibility of failing. A chain reaction will take place until all the groups find a new steady higher price state.

@joe-shmo said
Because there is competition dynamics in play now. If they try to be too greedy they won't sell the product...competition in their industry keeps the grounded. However, when the entirety of industry is forced to pay at least $15 per hr for labor, everyone is in the same boat, there is much more incentive to try to climb together to recoup losses from paying increased wages that every industry will be incurring, thus resetting the bar for competition at higher prices.

I doubt they will for several reasons:

A) Historically, price raises after minimum wage increases have been minimal as already shown. If your simplistic analysis was correct, a far larger overall price increase would have occurred;

B) Non-managerial wages are a rather small part of most businesses' total revenue esp. in low wage industries;

C) Many of these industries have easily acquired substitutes. If McDonald's significantly increased its food prices, then consumers could quickly shift to buying more food for home consumption as an example. This is a component of price elasticity;

D) Many low wage industries have high degrees of competition;

E) Many low wage industries are esp. reliant on lower income consumers. An increase in prices that outstrips demand will lead to a loss of profits not an increase.

I could go on but I feel no need to keep refuting a data empty, ideologically driven analysis based on nothing more than your and others political biases.

@no1marauder said
I doubt they will for several reasons:

A) Historically, price raises after minimum wage increases have been minimal as already shown. If your simplistic analysis was correct, a far larger overall price increase would have occurred;

B) Non-managerial wages are a rather small part of most businesses' total revenue esp. in low wage industries;

C) Many of these indus ...[text shortened]... ta empty, ideologically driven analysis based on nothing more than your and others political biases.

"A) Historically, price raises after minimum wage increases have been minimal as already shown. If your simplistic analysis was correct, a far larger overall price increase would have occurred;"

Historically, when was the last 115% increase in minimum wage that took place over a period of 4 years?

@joe-shmo said
"A) Historically, price raises after minimum wage increases have been minimal as already shown. If your simplistic analysis was correct, a far larger overall price increase would have occurred;"

Historically, when was the last 115% increase in minimum wage that took place over a period of 4 years?

The minimum wage was increased from 40 cents a hour to 75 cents an hour in January 1950, an immediate 88% increase. https://www.dol.gov/agencies/whd/minimum-wage/history/chart

The inflation rate in 1950 was 1.26%. https://www.officialdata.org/1950-dollars-in-1946?amount=$100

Many you could present some historical data supporting your claim that a minimum wage increase will trigger large price increases.