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Raising Floor for Minimum Wage Pushes Economy into the Unknown

nytimes.com

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

#91

Post by crdoconnor »

rhino369 wrote: post #61
crdoconnor wrote: post #47

Earlier quoted context omitted.

>15 dollars will put people in most of the country out of work. Like it did in Australia?

But you also have to compare PPP, cost of living, and unemployment rates. Australia's PPP adjusted minimum wage is 10.50 USD. It's very possible that Australia's min doesn't hurt employment and it would in the USA. It's also plausible that Australia's recent increase in employment (while US is hitting post 2008 lows) is partially caused by too high of a minimum wage.

>It's very possible that Australia's min doesn't hurt employment and it would in the USA.

Much as the National Restaurant Association, Cato and American Enterprise Institute would love for us to believe this, it just isn't true.

It would hurt profits, though, and a lot of those restaurants paying minimum wage would go out of business (and be replaced by other restaurants).

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

#92

Post by Turing_Machine »

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.

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

#93

Post by jon-wood »

seanflyon wrote: post #86
toomuchtodo wrote: post #77

Earlier quoted context omitted.

Flat taxes are regressive. They're simple, but they don't work. You consider it "fair" because everyone pays the same. Not everyone should pay the same tax. Some people should pay more, some less.

Define "regressive" because when I google it I get "(of a tax) taking a proportionally greater amount from those on lower incomes". Are you talking about the wealthy having greater ability to find tax loopholes or do define "regressive" as everyone paying the same proportion of their income?

8% is going to hurt at different levels depending how much you have to spare - compare the pain caused by losing $8 of the $100 you have for the week to the $800 of $8000 for the week. One of those people is going to have to make real sacrifices, and it won't be the guy with $7200 left over.

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

#94

Post by velik_m »

seanflyon wrote: post #86
toomuchtodo wrote: post #77

Earlier quoted context omitted.

Flat taxes are regressive. They're simple, but they don't work. You consider it "fair" because everyone pays the same. Not everyone should pay the same tax. Some people should pay more, some less.

Define "regressive" because when I google it I get "(of a tax) taking a proportionally greater amount from those on lower incomes". Are you talking about the wealthy having greater ability to find tax loopholes or do define "regressive" as everyone paying the same proportion of their income?

Going from 1000 USD to 900 USD hurts a lot more than going from 1 million to 900k.

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

#95

Post by jon-wood »

paulhauggis wrote: post #25
grecy wrote: post #13

This is absurd. The results of raising the minimum wage are perfectly known. Learn from the other countries that have done it in the last 10-15-25 years. Australia, Scandinavian countries, etc. etc. Why can't America look outside it's own borders and learn from what other countries have done and are doing? i.e. watch this John Oliver video on gun control [1] where it's stated Australia is not on this planet and Ameri…

All of the countries you list have huge costs of living. I went to Australia last year and a coke and a small bag of chips at 7-11 was ~$12. Instead of raising minimum wage (which is a short-term bandaid, because inflation will eventually catch up), we should be focusing on educating those that can only get a minimum wage job.

Who does the minimum wage jobs once that happens? Those people coming after also deserve a decent wage.

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

#97

Post by SamReidHughes »

crdoconnor wrote: post #88
yummyfajitas wrote: post #63

Earlier quoted context omitted.

This is completely backwards. The wealthy primarily invest their money; it is mainly spent on non-consumer goods (servers, backhoes, research, etc). If we redistribute to people with a higher propensity to spend, then we are shifting wealth from investment to consumption. This will raise demand for consumer goods, hence raising prices, and causing inflation. Note that an increase in the speculative value of real esta…

>This is completely backwards. The wealthy primarily invest their money; it is mainly spent on non-consumer goods Have you not noticed that these goods have experienced a considerable degree of price inflation over the last decade? Did houses get cheaper? >Note that an increase in the speculative value of real estate is NOT inflation Bullshit. If I'm spending more on rent or mortgage (which I will if property prices…

Speculative property price increases won't cause an increase to rent, that's a function of what prices the market will pay for housing at particular levels of quality. It might cause somebody who'd buy a home to decide to rent instead, but remember that somebody else is currently occupying that home (or better yet, renting it out). In areas with room for development, speculative price increases on housing will make it profitable to build more housing, which will lower rents (i.e. make them rise less quickly).

Note that property price increases are often associated with increases in rent, but they don't cause the increases -- rent increases is caused by influxes of population, decreases in the population's price sensitivity, etc. Property price increases are caused by the same thing, and speculative property price increases are caused by (among other things) expectations of that sort of thing.

The big difference between houses and milk is that houses are durable goods which don't completely depreciate.

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

#98

Post by yummyfajitas »

crdoconnor wrote: post #88
yummyfajitas wrote: post #63

Earlier quoted context omitted.

This is completely backwards. The wealthy primarily invest their money; it is mainly spent on non-consumer goods (servers, backhoes, research, etc). If we redistribute to people with a higher propensity to spend, then we are shifting wealth from investment to consumption. This will raise demand for consumer goods, hence raising prices, and causing inflation. Note that an increase in the speculative value of real esta…

>This is completely backwards. The wealthy primarily invest their money; it is mainly spent on non-consumer goods Have you not noticed that these goods have experienced a considerable degree of price inflation over the last decade? Did houses get cheaper? >Note that an increase in the speculative value of real estate is NOT inflation Bullshit. If I'm spending more on rent or mortgage (which I will if property prices…

Rent increases are inflation, house price increases are not. Similarly, burrito price increases are inflation but chipotle share price is not. Please, understand inflation and cpi before opining on it. Also google it - inflation has been very low over the past decade.

(In fact, its my belief that we've had deflation for a while, since I believe cpi is considerably overstated. The biggest driver of inflation is health care, which is not hedonically adjusted.)

According to you, money in the hands of the poor has a higher multiplier (I.e. causes more inflation) than money in the hands of the rich. How does that not contradict your previous post? In whose hands does money cause the most inflation, the poor or the rich?

Also, your ideas about stimulating different parts of the economy are pretty explicitly not Keynesian.

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

#99

Post by bko »

seanflyon wrote: post #87
bko wrote: post #49

Earlier quoted context omitted.

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…

> Marginal cost generally increases after a while That is possible, but I would generally expect the opposite with economies of scale.

In modern economics the assumption is that marginal cost decreases for a while due to economies of scale, but then increases. It's a bit confusing, but consider this, at first you will devote the best resources to their best appropriate task. If you buy a factory, you'll buy the most cost effective factory and you'll hire the most cost effective people. As you expand, you'll have to maybe get another factory that may not be as well suited (if it were, you would have gone with it in the first place) and hire the second best person, and so on. This is called diseconomies of scale. Similarly, running organizations above a certain size creates plenty of inefficiencies that also contribute to increased marginal cost.

Both economies of scale and diseconomies of scale play a role. Think about it in the extremes. Would a company be able to produce 2x, 10x, 100x the product they currently produce now at the same per unit cost, or less? If not, then there must be some point at which the marginal cost is upward sloping.

I believe this is the reason that large companies don't necessarily lead innovation. For instance, a company like Facebook could have easily created a Snapchat, but it could not. It wasn't even successful imitating the product after several attempts (popularity, not functionality).

More: http://www.investopedia.com/exam-guide/cfa-level-1/microecon...

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

#100

Post by unprepare »

BurningFrog wrote: post #75
littletimmy wrote: post #72

Earlier quoted context omitted.

Reasonable person: 8 glasses of water keep you healthy. You: WHY DON'T YOU DRINK 100 LITERS A DAY IF YOU LIKE IT SO MUCH!!

Well, yeah, I'm interested in what mechanism people think will make going to $100/h or $30/h fail, and what makes it not apply for $15/h.

I'll take a crack at this.

Because 100$ per hour is not what labor is currently worth.

The whole idea behind making the minimum wage a livable wage is to stop allowing corporations to keep wages artificially low by having workers augment their wages with government provided subsidies.

So what people are saying is, when you account for the subsidies people currently being paid minimum wage are taking advantage of, the real cost of that labor is much closer to 15$ per hour than the current 7.50$ per hour.

Shifting the minimum wage to 15$ an hour will shift many people with minimum wage jobs off of government subsidy programs, actualizing the real cost of labor on corporations and lowering the burden of our current government programs.

so this is much more than just picking a number and saying 'wages should be at least this high", its more "youre are paying X, we are subsidizing that by Y, we think you should pay all of X+Y"

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