Minimum Wage Increase Blocked in Senate

[DinoDoc]

Originally posted by Zkribbler
The bottom line is, that if you put more money into the pockets of consumers, they will spend it.

Hell why not raise it to 15-20$ p/h then?

[Drake Tungsten]

That's what the Repugs said the last time the minimum wage was increased -- and we got a stronger economy. We've since raised the minimum wage in California, and again, we got another economic surge.

The bottom line is, that if you put more money into the pockets of consumers, they will spend it.

You'd know the correlation doesn't equal causation if you'd ever taken an economics course...

[Zkribbler]

Originally posted by DinoDoc
Hell why not raise it to 15-20$ p/h then?

While your heart is in the right place, you've overlooked the Law of Diminishing Returns. Someday the minimum wage will be that high, but it's too soon to raise it that high.

[Ogie Oglethorpe]

Originally posted by Admiral
The McDonalds argument is bogus, because the fact is that the minimum wage would apply across the board, not just to McDonalds. And foreign markets don't really qualify, because there are tons of political reasons why investors might be reticent to move their money to third-world markets.

Thus resulting is an increase in costs of goods and services that stunningly enough leaves those poor minimum wage earners at an almost net zero gain proposition.

Plus stunningly enough less new business creation thus less employment opportunities.

Plus since less employment opportunities less opportunity for promotion. Maximize employment then as work shortages for skilled and semi-skilled workers become scarce real wages rise. Minimum wage while claiming to help minimum wagers actually serves to punish them most as real wages don't increase significantly and causes employment and promotional opportunities to dry up and further denies them on the job training opportunities to move form unskilled to semi or skilled positions.

[Jon Miller]

Not necessarily Ogie. You are looking at things too simplistically.

JM

[KrazyHorse]

Thus resulting is an increase in costs of goods and services that stunningly enough leaves those poor minimum wage earners at an almost net zero gain proposition.

This is simply not true. Most workers do not fall in the gap between the old and new minimum wage, so overall goods and services will not increase by even close to the same percentage as the minimum wage does.

[Ogie Oglethorpe]

Simplisticly as in agreed to by every reputable economist. Obligatory Card/Kruger debunking insert here.

[KrazyHorse]

Those businesses which rely heavily on minimum wage workers will see a significant cost increase (McDonald's). Those which rely on non-minimum wage workers will not (your ISP, car companies etc)

[KrazyHorse]

Ogie, are you honestly claiming that raising the minimum wage by 40% will cause CPI to increase by 40%?

[Ogie Oglethorpe]

Originally posted by KrazyHorse
Ogie, are you honestly claiming that raising the minimum wage by 40% will cause CPI to increase by 40%?

No of course not. You saw my almost net zero qualifier is not the same as net zero.

OTOH as you indicate low end retailers of goods and services are most likely hit by the increased costs of minimum wage.

I submit it likely that minimum wage consumers are hit most strongly by these price increases more so then the costs at the local BMW dealer.

That coupled with less employment opportunities (and all that goes with it OJT, promotions, work experience etc.) ends up tilting the balance actually to the negative.

[Jon Miller]

Here is an example where the cost of goods would not increase at all, nor would anyone lose employment.

Lets say there is a town, lets call it Town A. In Town A there is a McDonalds owned by Wealthy Man M. At the McDonalds, employees are paid minimum wage. Also, the people who are employed are constantly busy serving the customers.

Also, in this town, is Wealthy Woman W. She sees the profits that Weathly Man M is making, and would like to open a McDonalds, but McDonalds does not allow her to since M's McDonalds is providing all the comunities desires for such a fast food restuarant (Saturation).

The Minimum wage is increased. M's McDonalds is making less money, as he has to pay his employees more. He could fire an employee, however, then he could serve less customers and so would make less money (so that would be stupid).

Now let's say he doesn't like the lower profits, and thinks he could make more money elsewhere (like investing in
Google). So he looks for a buyer (Investment problems). However, W wished to own a McDonalds in Town A. She considers the profits to be reasonable for her investment, and purchases the McDonalds from M.

In this situation:
1. No one was fired.
2. Wages of the Minimum Wage employees increased.
3. Prices did not increase.

Now, possibly a lot of people would complain to McDonalds headquarters. Saying that they aren't making enough profit, and that McDonalds should do something (like increase the price of it's menu items). However, McDonalds isn't likely to do that for several reasons:
A. In City C, there aren't enough unemployed and the McDonalds there are already paying above minimum wage. Therefore few McDonalds are complaining about not enuogh profits.
B. It looks bad for marketing to increase the price. Additionally, McDonalds is competing with BurgarKing and so worries that increasing the price will drive more customers away so that revenues would actually go down. C. The McDonalds are still profitable.

Depending on the situation, raising the Minimum wage doesn't necessarily mean less employment opportunities and increased prices.

If we follow your reasoning we should have no minimum wage, which was terrible for for the average working man.

There is quite a bit of elasticity in certain labor markets. Depending on the economic situation, increasing the minimum wage can put more money into the hands of those who get payed least.

And that is a good thing for the economy, because poorer people consume with a larger portion of their income than the wealthy.

Jon Miller

[Dinner]

Originally posted by Kuciwalker

Umm, if there is money to be made there, generally someone will fill the nitch. The fact that it is a bit less money won't cause a decrease in investment as long as a decent amount of money is being made.

Yes it will. Obviously. If something is less profitable fewer people will invest in it.

It depends. Opening up a fastfood place is relatively easy and doesn't require a lot of specialized training. That means there are a lot of people who could do it but which aren't qualified to do much else. There are certainly more people who want to rent restaurant space then there is restaurant space in many cities. The commercial retail vacancy where I live in less then one percent while housing vacancies are around 2.5%.

If fewer people invest in opening fast-casual or fastfood restaurants due to a $2 per hour raise then it might not matter given that currently demand is greatly exceeding the supply of good locations.

[Kuciwalker]

Originally posted by Admiral
The McDonalds argument is bogus, because the fact is that the minimum wage would apply across the board, not just to McDonalds.

It's not bogus. A company whose employees earn six figures a year wouldn't be particularly effected, and therefore be a more valuable investment.

[Kuciwalker]

Originally posted by Zkribbler
While your heart is in the right place, you've overlooked the Law of Diminishing Returns. Someday the minimum wage will be that high, but it's too soon to raise it that high.

Then why is it the right time to raise it now? Do you have any mathematical reasons for the particular number they want to set it at?

[Kuciwalker]

So those who support the raise in minimum wage: are you contending that there is oversupply of minimum wage jobs, and of the industries that employ them? And that this oversupply has persisted despite market forces? And that clearly government intervention and price controls are required to correct this oversupply?