Bernie Sanders at Hoffheinz at U of H Sunday Night !!

It could also place a good portion of low-skilled workers out of the job market all together... Raise the minimum wage up to 15 bucks in hour _ the unemployment rate amongst young people could rise. So many of the people pushing for wage increases could be shooting themselves in the foot in the long run.

 

The problem with this line of thinking is that it assumes young people are in the majority when it comes to working for minimum wage. Not only that but there are companies who do pay more who are flourishing. It turns out treating your employees right makes them happier better workers and it also makes them customers with more money in their pockets. The wage gap has widened as a nation we have paid people much higher wages before and there are countries who pay much higher wages and their economies are flourishing also. The thing about the economy is trickle down economics is very irresponsible and never works. Companies like to keep the extra money overpay executives and that definitely hurts the economy. When you give that money to people who will spend it the economy will improve and that business will likely improve too.

 

Paying people a livable wage is an honorable goal. $15 an hour is only $2400 a month at 40 hours (which we know corporate employers avoid) If you add up healthcare, food, insurance taxes, transportation, utilities you still don't have anything left over for inflationary spending.

As usual, I think Bobby's arguments start with the assumption he wants to believe and contorts whatever il-logic he needs to to support it.

 

The price of food or whatever that relies minimum wage labor will increase, but not as much the wage will rise.

Bobby's argument is stupid.

 

Again, the problem with your theory is that it is completely discredited by the real-life results of repeated minimum wage increases over time.

 

You wouldn't really be doing that though, prices will rise in reaction to the increase in labor costs....usually more so than the increase in the cost of labor. Companies that can't afford to raise prices will either have to find ways to cut corners, be bailed out by the government, or will fail.

Playing with the minimum wage doesn't give anyone more purchasing power, which is what matters. Like I said before, make the minimum wage 100 buck an hour and people making that much are still broke. Their purchasing power won't be increased in the long term.

You're simply wrong, not only will it increase as much as the wages rise, they will usually increase more than the rise in labor costs because companies will overcompensate in order to prevent a shortfall in revenue....not to mention the rise in cost of supplies or materials needed to create whatever product they sell or serve.

The idea that merely raising the minimum wage would give those making it more purchasing power is something I would expect from a child.

Since it seems we're on this level, which container has more liquid in it, the one of the left or the one on the right?

 

If you read the first sentence of my post I said low-skilled workers... I was using young people as an example because the unemployment rate amongst young people (in certain groups) is already high. So logically if minimum wage is raised _ it would make it even harder for those groups of people to find a job. Just from my individual assessment, I've noticed a lot more older people working in job fields like the fast food industry that younger people use to dominate.

 

1) This post fails to differentiate between nominal and real wages and is missing the entire history of real wages being stagnant or worse while labour productivity has boomed. An increase in real wages (nominal wages adjusted for inflation) does increase purchasing power.

The story of the 1970s to now has been the gradual erosion of purchasing power--thanks mostly to lax Congressional oversight on the duty to index wages to inflation.



2) Here is a compiled study on the price effects of wage increases using a suite of different methodologies. These are the numbers behind your theory.

http://ftp.iza.org/dp1072.pdf

Given the sectoral impact of minimum wage increases (concentrated in away-from-home food) ,the % of expenses those sectors incur as a % of a typical American household expense (one of the lowest percentages in the world), and the balencing effect of disemployment (though notably small-non-existent in the economic literature), it was always foolhardy to assume that a nominal wage increase would always lead to a real wage decrease due to your economic theory hanging in space.

http://www.theatlantic.com/business...eats-how-america-spends-money-on-food/273811/

A decrease in the real wage due to an increase in the nominal wage has simply not happened in economic literature that has charted both the steady rise in the federal minimum wage and difference-within-difference raises between different states.


Since it seems we're on the level of economic debate without econometrics, model analysis, economic literature, or regression analysis--

Here's a sad kitten.

 

http://www.cepr.net/documents/publications/min-wage-2013-02.pdf

Minimum wage increases have been shown to have nearly no employment effects.

 

Your chart shows "real minimum wage" continue to fall as the minimum wage continues to rise....wouldn't that suggest that raising the minimum wage isn't helping? The minimum wage was more than doubled twice from 1960 to 1991 and workers were left with less purchasing power in 1991 than they had in 1960 with a 1 dollar an hour minimum wage. The minimum wage has almost doubled since 1990 and workers have only a little bit more purchasing power than they did in 1990....and it's getting less and less every year as inflation keeps going up.

At some point, don't you think people will realize that simply increasing the minimum wage isn't going to lead to more purchasing power? Or should we keep doubling the minimum wage every 25-30 years thinking it's going to be different this time?

We'll make it 15 bucks an hour now, 30 bucks an hour in 2040, 60 bucks an hour in 2065, 120 bucks an hour in 2090.....at what point will it finally "work"?

 

Companies will still need workers no matter what minimum wage is. There is actually no proof that higher wages decreases jobs it's only a big assumption because people assume businesses pay as much as they can which is not in most cases true.

 

Fixed.

 

If you drop your unsubstantiated theory that minimum wage increases by themselves cause price increases that supersede it (i.e nominal wage increases cause real wage decreases) and go with the evidence that nominal minimum wage increases cause real wage increases then it simply shows that Congress hasn't risen the minimum wage enough to keep up with inflation largely produced outside of wage increases (ex: demand-pull inflation from global oil shocks in the 1970s).

This means that the minimum wage isn't even indexed properly for inflation unlike COLA adjustments in various social programs. That's the real failure here.

 

Ah yes, we should have raised it more....and when we raise it more and it has no effect, we need to raise it even more. Brilliant.

Again, let's make the minimum wage $100 an hour, that would certainly help the poor right?

Raising the minimum wage is simply short sighted thinking. Any arbitrarily picked floor is going to be poor, no matter what number is picked. Make the minimum wage $1000 bucks an hour and 2 mil a year won't be enough to live on.

 

No effect? If Congress hadn't raised the nominal federal wage at all, it'd be $0.25. Given the fact that inflationary effects of a minimum wage increase are about 0.4% of a general price raise, I'll let you calculate how much deflation you'd have to put in for the real wage of today to equal that.

http://fas.org/sgp/crs/misc/R42973.pdf

No effect?

https://dl.dropboxusercontent.com/u/15038936/Dube_MinimumWagesFamilyIncomes.pdf

Are you saying it has no effect on real wage decrease and small to near-zero employment effects?

You seem to be confusing the inflationary effect of minimum wage increases and overall inflation. Here's a hint: the latter is much greater and it does not solely comprise of increases in the price of labour or the effects thereof. That's why indexing to inflation is solid policy that increases the real wage, has low inflationary effects, and reduces poverty.

As an aside, I don't know why you think citing $100 and $1 million makes you have a stronger economic argument for your theory based in space. If you want to make sense, actual figures and proposals and actual elasticities and analysis would help your case immensely. As it is, you're basically advancing The Modest Proposal as a pro-life argument.

 

I can't believe this is so hard to understand?

If a 6$ burger is made by a $7.50 employee then what does a burger that is made by a $15 employee cost? Try not to forget that every ingredient, commodity, utility, and service leading to this product has been similarly affected by this wage increase.

If you truly believe that the burger will still cost $6 you are an idiot.

 

If you believe the increase in the price of the burger will cause an overall decrease in purchasing power by superseding wage increases, you're not conducting economic analysis. You're masturbating your own intellectual capability to contrive theories without fact, logic, or substance.

Quick hint: the component of labour to all prices in sectors affected by a minimum wage increase is not greater than 100%. Empirically. And logically too, but what the hell.

 

McDonald's posted $27.44 billion in profits in 2014. Their CEO compensation package is about $15 million a year. How much would that be reduced by paying a livable wage to all workers in their production chain? Their CEO compensation package is about $15 million a year. And, what would be the net effect on the national quality of life?

 

So, in your mind, companies will just choose to make less profit then? They'll just take the hit of increased labor costs without making a price correction? I mean, maybe companies fire some people and replace them with automation....that can happen and would result in less of a price increase than the raise in minimum wage....but that's not exactly good for those who got fired, and it wouldn't stop prices from going up significantly in other sectors where they can't simply fire people and replace them with machines or cut corners elsewhere.

You seem to have a fundamental misunderstanding of business and economics, which isn't surprising given your political leanings.

 

More than they are willing to part with and more than their unskilled workers can demand.