The difference between Supply Side theory and Demand Side theory (2015, credit card)
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Look at what "demand side" did for wages and living standards from the early 30s to late 70s
What did demand side theory do for poor people in 1931 since you've specified a very exact timeline here?
Are you sure you're not missing a huge global political event here that MAY have destroyed the economies of the entire world except for that of the United States which granted the US global economic hegemony for a period of 3 decades?
While that might be true, the majority of companies have similar circumstances.
Minimum wage studies have borne that out.
The study that Liberals like to cite has a major flaw in its methodology.
The study said minimum wage had no impact, because labor hours didn't change.
Well, why would they?
If a fast-food restaurant is open for a certain number of hours each, it requires a minimum amount of labor hours.
The minimum wage didn't cause stores to open later or close earlier, but it did impact individual employees, which is what the study failed to consider.
If I'm an employer and forced to pay higher wages, I'm going to seriously re-evaluate how I allocate my labor resources.
I'm going to allocate more hours to the best employees and cut the hours of the mediocre and marginal employees.
That is, in fact, exactly what happened.
That's the Great Irony, because the minimum wage was intended to help the mediocre and marginal, but the end result is the mediocre and marginal got smaller paychecks, since they were given fewer hours of work, so they ended up being the losers.
Exactly.
Anyone who thinks the Demand side minimum wage cult has ever helped society at all, read the above.
Supply side economics is bunknum. It essentially say: "if you build it, they will come". Supply side economics says that if you build a 1000 unit apartment complex in a town of 500 people, you will triple the population. Supply side economics says that if Elon Musk builds 1,000,000,000 Tesla cars that people will buy them.
Supply side economics is a great theory if you like government giving tax incentives to pick winners and losers in the economy. S.S.E. is why we have so much corn that we turn a lot of it into ethanol (at great cost) which is a less efficient fuel than gasoline and why gas stations dilute their product with it. S.S.E. is why sugar and high fructose corn syrup is in everything.
What truly matters is demand. People want stuff, and it's up to entrepreneurs to step up to the plate, enter the marketplace and fulfill that demand.
It's not ridiculous because both firms reacted totally differently to the tax cuts, one implemented minimum wage, and the other organically increased wages based on profits and earnings.
That has absolutely nothing to do with supply and demand side economics. It's nothing more that different circumstances by 2 different companies.
EDIT: BTW your statement was completely meaningless. Stating "one implemented minimum wage," and, "the other organically increased wages" are the exact same things couched in different words.
Quote:
To say otherwise is simply dishonest.
To try to say your examples have anything to do with supply or demand side economics is not only dishonest, it displays a complete lack of knowledge about what supply and demand side economics even are.
Last edited by James Bond 007; 03-19-2019 at 10:34 AM..
Your examples have nothing to do with supply side and demand side economics. Those are more like policy-side prescriptions. One could just as easily claim that Amazon/Whole Foods could have raised hours working as well as hourly compensation because, after all, Amazon/Whole Foods received the same tax cut that Costco did. Or, one could also claim that Costco would have to cut hours to make up for its raise in hourly wages, just as Amazon/Whole Foods did. The two companies are both on equal footing and are doing nothing more than responding to individual company circumstances.
Bingo.
Costco has a policy of paying and treating employees well. Keeps the turnover rate low. Costco management views this as part of their business model along with keeping profit margins in the 13% range.
Amazon/Whole Foods raised wages and cut hours.
WalMart did neither.
If Costco, WalMart, Amazon/Whole Foods, ... had used their tax windfall to invest in opening more stores, and hiring more people and producing more economic growth, then we're talking supply-side economics.
Didn't happen. Why? Because it would be stupid way to run a business.
Now if their customer base expanded and had more money to spend, that would be a different story. Demand-side economics.
In response to public pressure and increasing scrutiny over the pay of its warehouse workers, Amazon enacted a $15 minimum wage for all its employees on 1 November, including workers at grocery chain Whole Foods, which it purchased in 2017.
On Thursday, Costco announced it would raise the hourly wage for 130,000 of its American employees. CEO Richard Galanti, while discussing the company’s fiscal third-quarter earnings, said that starting wages for employees would be raised $1 an hour to $14.50 an hour while other hourly wages would be hiked 25 to 50 cents an hour.
NEITHER of these were government-mandated wage rises. BOTH were 100% voluntarily done by the companies themselves.
Incidentally, it seems the OP saw the term "minimum wage" in the article about Whole Foods/Amazon and automatically the terms "government" and "artificial" popped into his head. It didn't occur to him that BOTH companies actually set their own new minimum wage.
If he had done nothing more than happened to have read a different article on the same story, he would have found Costco's action described as a "minimum wage" as well. To wit:
The warehouse retailer Costco announced Thursday it’s raising its hourly minimum wage for the second time in less than a year, part of a U.S. retail trend intended to attract and retain workers in a tight labor market.
Costco’s hourly base wage is now $15, following an uptick in June to $14 from $13.
So, just because the term "minimum wage" appears in this article, does Costco's action suddenly become "demand side economics" as well?
As there appears to be a fair amount of confusion over supply side versus demand side economics, would you please summarize the two and describe how they differ.
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Look at what "demand side" did for wages and living standards from the early 30s to late 70s
