Raising Floor for Minimum Wage Pushes Economy into the Unknown • Hacker News Board

Re: Raising Floor for Minimum Wage Pushes Economy into the Unknown

#101

Post by civilframe » Tue, Jul 28, 2015, 9:42 PM UTC

Kequc wrote: post #14

civilframe wrote: post #2

I don't believe that raising the minimum wage will trigger businesses to cut jobs significantly. They will probably pass the higher cost onto the consumer. Ultimately, it's a method of wealth redistribution, which is sorely needed in our economy.

As a general rule prices in a capitalist society are already as high as they can be. Any higher and they would be undercut. When a company becomes large and therefore able to produce goods for less money, the price doesn't fall, profit margins increase. These large businesses are the ones paying employees the federal minimum wage. Only thing that happens is their profit margin shrinks a tiny amount. As long as the pr…

This assumes that the economy is perfect, which is far from the truth. Prices are not already as high as they can be. Such a thing is meaningless in economics.

Re: Raising Floor for Minimum Wage Pushes Economy into the Unknown

#102

Post by civilframe » Tue, Jul 28, 2015, 9:45 PM UTC

Turing_Machine wrote: post #92

civilframe wrote: post #2

I don't believe that raising the minimum wage will trigger businesses to cut jobs significantly. They will probably pass the higher cost onto the consumer. Ultimately, it's a method of wealth redistribution, which is sorely needed in our economy.

It isn't super-rich people who shop at Walmart, eat at McDonalds, or patronize most other low-wage businesses, so I don't think your "wealth distribution" theory is correct.

Check page seven of http://www.bls.gov/opub/reports/cps/characteristics-of-minim... for some insightful statistics.

Re: Raising Floor for Minimum Wage Pushes Economy into the Unknown

#103

Post by civilframe » Tue, Jul 28, 2015, 9:49 PM UTC

bko wrote: post #49

civilframe wrote: post #2

I don't believe that raising the minimum wage will trigger businesses to cut jobs significantly. They will probably pass the higher cost onto the consumer. Ultimately, it's a method of wealth redistribution, which is sorely needed in our economy.

Businesses would generally charge the price that would result in the most profit (revenue - expenses). Businesses can't just raise prices and get more revenue. If they could, they would do that already. Minimum wage has to do with marginal cost of producing an extra product. Marginal cost generally increases after a while. So producing that last additional unit usually costs more than the one before. When you increas…

> Businesses can't just raise prices and get more revenue. Right, businesses gauge how much consumers are willing to pay. If minimum wages go up and businesses raise prices while citing said minimum wage increases, consumers will likely be willing to pay the higher prices. Consumers generally won't tolerate price increases that are not justified. Those increases that are justified are more readily accepted. This is why I think businesses can and will pass higher minimum wage costs down to the consumer, successfully.

Re: Raising Floor for Minimum Wage Pushes Economy into the Unknown

#104

Post by davis_m » Tue, Jul 28, 2015, 10:06 PM UTC

ealexhudson wrote: post #26

JonFish85 wrote: post #16

Earlier quoted context omitted.

"As a general rule prices in a capitalist society are already as high as they can be." What you're discounting is that once the minimum wage is raised, the market can bear higher prices, and will move accordingly.

It's not a huge number of people on minimum wage that would be affected by an uplift: in the UK in 2014, there were around 1.5M minimum wage jobs, 50% of which in hospitality, cleaning and retail (so, many not full time). The average wage shift would be virtually imperceptible and the extra spending power of those on the minimum wage does not translate to measurably higher prices (in the UK the minimum wage has rarel…

It isn't just the people on minimum wage that would get a raise. Anyone making between the current minimum wage and the new minimum wage would receive a pay bump.

I don't have the numbers, but I would guess that there are more people within a dollar or so of the current minimum wage than there are actually at the minimum wage. The trend in the US is for people to at least get nominal raises that would technically raise them above minimum wage, but well below the proposed new minimum wage.

Re: Raising Floor for Minimum Wage Pushes Economy into the Unknown

#105

Post by thomasfoster96 » Wed, Jul 29, 2015, 2:19 PM UTC

w1ntermute wrote: post #5

thomasfoster96 wrote: post #4

Earlier quoted context omitted.

I'd agree, but raising the minimum wage is a relatively good alternative to doing nothin given unconditional basic income is merely a political dream in most jurisdictions. The US has such a low minimum wage given the wealth within the economy it's hard to see a rise having much of an impact.

An EITC would more effectively incentivize the poor to work than unconditional basic income.

I should've clarified: by impact I mean negative impact on business costs and employment rates.