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Real_Trouble -> RE: The sting of poverty (4/17/2008 6:15:18 AM)
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quote:
ORIGINAL: seeksfemslave
Both Real_Trouble and MmeGigs assert that the statistics show that raising minimum wage does not cause inflation. This argument seems totally counterintuitive to me especially when labour is the highest component of most business costs.
The most probable explanation is that governments at about or slightly after the time minimum wage was raised took financial actions to reduce the inflation that was occuring due to various causes, including general wage pressure and say rising commodity prices.
MmeGigs even asserts that she has faith in the "market" to solve the problem when in fact it is that very "market" that is the root cause of the problem.
Most large corporations I suspect could easily restructure their pay scales to help alleviate the problem of the working poor, but they show no inclination to do so. That is why I believe the only solution is oppressive government economic control.
I repeat I know that many poor people work hard and get nowhere.
adding: Real_Trouble admits that after min. wage rises fewer higher paid jobs are available and no increase in low paid jobs occurs. They would undoubtedly diminish IMO.
So...where's the overall gain ?
I've never claimed raising the minimum wage will cause any gains. I am merely debating that it will have a significant impact on prices.
Wages are the most significant expense for many corporate enterprises, but this is because of a combination of factors surrounding them (taxes, workers compensation insurance, various benefit plans, etc) combined with the wages themselves. Minimum wage earners are most likely to have little to none in the way of those benefits, and their wages are lower on average. It takes truly staggering amounts of minimum wage earners getting a raise to have a material impact.
I am simply asserting that price increases due to supply pressures and commodity demand are much more likely (and historically, this has been the case).
Minimum wage increases instead tend to reduce jobs or shift production. That's all I'm saying; this is not an argument for or against, it is an accurate accounting of the facts.
quote:
Any time costs increase, it's inflationary. It's only in the amount that it is that's in question.
Now, whether or not the minimum wage should be raised is an entirely different question. Frankly, whether there should even be a minimum wage is a great topic, but that rising costs in any aspect, any amount or in any industry is or is not inflationary simply defies mathematics.
You are looking at this wrong; there are multiple options when one input cost increases for a corporation.
First, they can eat the reduced profit margins.
Second, they can raise prices.
Third, they can scale back that particular cost (ie, do more with less, or possibly less with less) or transfer resources to areas with more favorable price situations.
I am stating that the third option is what has been demonstrated to happen so far. Basically, that minimum wages might not lead to higher prices, but they will very likely lead to less jobs overall. The total slice of the pie spent on wages does not chage, it is just distributed in slightly larger amounts to slightly fewer people.
That, precisely, is why there is often (and there are exceptions, as with everything) no inflationary effect on prices, or that the effect is of a lesser magnitude than the change in minimum wage. Namely, total wage cost does not change. It just goes to less people.
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