by hoser 53 Replies latest jw friends
what do you think will then happen to prices?
Yes, any raise that people get is short term only as the prices for everything else will inflate to take the increased costs into account.
Market forces mean everything is baked into the pie - if you were poor before you'll be poor afterwards but because your pay has a higher number and you don't understand inflation you'll probably vote for the idiots keeping you poor.
I don't think people actually understand how market forces work and how trying to distort the market inevitably doesn't (but may win votes in the short term).
THIS!
Right now, in the U.S. minimum wage law, there are exemptions for the mentally handicapped. Why? Those are the most vulnerable. Shouldn’t it be in place especially for them? The reason is clear: if you require an employer to pay more than the value of the labor, the employer refrains from hiring. Just like if you set the price of an apple to $100 by law, nobody would buy apples anymore.
But a politician can go to apple growers and give them a load of crap about how much more revenue they would get if only they would vote said politician into office.
Those that vote this way can’t see just a few steps down the chain of causation.
what do you think will then happen to prices?
Yes, any raise that people get is short term only as the prices for everything else will inflate to take the increased costs into account.
Not entirely true. A prohibitively high labour cost can force a business to be innovative if the market can’t bear a higher price for it’s goods or services. A perfect example of this is grain farmers in western Canada over the last 100 years. Farmers are price takers meaning that world markets dictate the price they receive for their commodities and they can’t ask for a raise.
It used to take one farmer to work 160 acres. Today one farmer can look after 2000 acres plus. The wholesale price of grain has never been cheaper inflation adjusted than it is today. Because of a shortage of labour in agriculture industry has developed self steering tractors, harvesters that automatically adjust to changing conditions and conveyors that have automatic movers. There are autonomous seeders that are coming out in the next 10 years that can work 24 hours a day with minimum human intervention.
Minimum wage increases might force the service industry to innovate also. I’m not willing to pay $20.00 for a Big Mac . Machines should be able to flip burgers better than any human can at a cheaper cost .
@hoser:
I agree a combination of things is likely to happen. Prices could adjust up, or employment can adjust down, or both. In most minimum wage hikes, I think it’s some combination.
But the point of proposing a massive hike, to say $1,000,000/hr, is to force those in favor of a minimum wage to acknowledge the effects beneath the surface. It is not the case that law makers establish or raise a minimum wage, and the only thing effects are wonderful.
If you require a minimum wage of $1,000,000/hr, and the business didn’t shutter its doors immediately, then prices would have to go up. Firing all the employees and retaining just one wouldn’t cover the losses. If all employees are retained, then prices would have to rise even more. Of course, if automation can help, that might come into play over time too. Employment would fall from it. But it wouldn’t be cheap. After all, some entrepreneur would have front the capital, the risk, and employee people at the higher rate too. So even simple machines would cost millions.
Not to mention input costs along the supply chain of everything, just for raw materials.
At this point, the superficial boon from the minimum wage vanishes. The poor have millions of dollars, but are still poor.
These effects are still there, but to a lesser extent, with small hikes. With small hikes, employers do the math and might think: “Well, if I have to pay $15/hr then I would rather take the college student then the uneducated guy just out of high school...” So over time the demographics of employees shift, and prices might go up a little. The port have to pay the higher prices, but with less jobs.
It is just a mess.
