Timelordwho wrote:
Quote:
You asked for an example. I gave you one. In my example, the owner increases the cost of a meal by $1 to offset the increased labor cost. Does it really matter what the price increase is? If it's *any* increase than anyone who didn't get an accompanying wage increase is harmed.
Labor cost is not a 1:1 carrythrough, the cost basis is also dispersed through the rest of the populace. If you say 10% of the pop is min wage, and they receive a 20% wage increase (probably not that high) and labor costs are 30% of the min wage labor, your $5 burger now costs $5.30, and burgers are probably not a significant part of your cost of living. Regardless it's probably a <0.5% CoL increase net, and it's a reasonably good place to put money if you want it to recycle into the economy.
Except "burgers" are not the only good that is impacted by the cost of a minimum wage earner. That's the part you guys keep missing. If the only sector required to raise wages was fast food, you'd have a point. But when you mandate a minimum wage hike across the board, then it will affect every good you purchase. And as the effect of that cost increase ripples through the economy, each segment of that economy that is impacted will adjust their prices and wages in accordance. Until after a relatively short period of time, the adjustment results in us once again right back where we started.
As I keep saying, over and over, the relative value to the economy of a burger flipper to a computer programmer does not change if you raise the minimum wage. You've just artificially increased the *cost* of the burger flippers labor. The economy can only react to this in one way: Raise the relative costs for everything else until you reach parity. How long this takes can vary, but it will happen (usually within just a few years). The point being that you simply cannot improve the long term standard of living of the poor by raising the minimum wage. And given that the entire assumption here is about people "stuck" in minimum wage jobs, this is super relevant. Anyone who's on a career trajectory that will lift them well above minimum isn't benefited at all by a minimum wage hike (and may in fact be harmed briefly by one, depending on the timing). Anyone who is not may be briefly helped, but then reset to the same relative level once the economy adjusts.
The entire issue is just about selling people false hope to score political points. And, as I pointed out earlier, it can have a negative effect in that anyone who actually buys into the idea that a minimum wage hike will magically solve their problems may be less likely to spend the effort required to do the things that will actually improve their standard of living over time. Every single one of those people spending their time marching in "fight for 15" rallies instead of spending that time studying or training or otherwise increasing the value of their labor, is being hurt by this. The very idea that a raise in minimum wage represents a route to prosperity is harmful to them. Because it can't ever do that.
Edited, Jan 15th 2016 5:50pm by gbaji 
