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Huh? Economic theory is not clear by any means on this topic.
Incorrect.
Quote:
Originally Posted by Elliott_CA
Economists have different views and there is no consensus. Some say raising the MW is contractionary, others say it is stimulative.
Nothing in the above is in conflict with my post. In economics, the concept of contractionary or stimulative refer to macroeconomics & GDP. My statement is about microeconomics, the behavior of individual firms, employers and employees..
Quote:
Originally Posted by Elliott_CA
As to your other point on inflation...
I didn't say anything about inflation. Inflation is an increase in the general price level. An increase in the retail price of a hamburger at a fast food restaurant is not inflation.
Inflation is almost exclusively a monetary phenomenon and is not affected by a change in the minimum wage.
Quote:
Originally Posted by Elliott_CA
In the current economy we have a surplus of excess capital at the top
There is no such thing as a "surplus of excess capital." It does not exist - at the top, bottom, middle, or anywhere else.
Quote:
Originally Posted by Elliott_CA
while at the bottom we have a shortage of aggregate demand
Incorrect again.
Quote:
Originally Posted by Elliott_CA
caused by stagnant wages that haven't kept up with productivity.
Doubly incorrect.
Wages are not stagnant. Wages for rank-and-file workers are rising at the quickest pace in more than a decade. Wages for rank-and-file workers are increasing faster than for their bosses, a sign that the labor market has tightened sufficiently to convey bigger increases to lower-paid employees.
Pay for the bottom 25% of wage earners rose 4.5% in November from a year earlier, according to the Federal Reserve Bank of Atlanta. Wages for the top 25% of earners rose 2.9%. Similarly, the Atlanta Fed found wages for low-skilled workers have accelerated since early 2018, and last month matched the pace of high-skill workers for the first time since 2010.
True, but only for those who keep their jobs. Their employers, of course, have less money to spend.
Other MW workers see their jobs completely vanish, so they have less money to spend.
Quote:
Originally Posted by Elliott_CA
which increases demand
You're ignoring the decrease in demand from employees who lose their jobs.
Quote:
Originally Posted by Elliott_CA
businesses see higher revenues
Others see lower revenues. And of course you are ignoring higher costs.
Most importantly you are ignoring marginal profit.
Quote:
Originally Posted by Elliott_CA
and hire more employees to meet the demand.
No. You're ignoring marginal analysis. At the margin, an employer sees that an extra employee generate, say, an incremental $12 in revenue. With a new, higher minimum wage of, say, $15, the rational employer doesn't create that job. If the job already exists and is staffed, the employer, faced losing money on the marginal job, will terminate the employee and destroy the job.
A study done in July by the Congressional Budget Office projected that a wage increase to $15 an hour would result in a the destruction of 1.3 million jobs. That's 1.3 million workers thrown out, or 0.8 percent of the workforce.
There are very few places where $15 hr is considered good money. Many states courts struck down individual cities being able to set higher min wages which has caused alot of problems.
15-20/hr across the nation is a good bar with major cities and other expensive locals having much higher min wages. Anything less than 15 is exploitive (it takes advantage of people's bad situations) unless its a high school student who is still learning to brush their teeth.
You seem to think that the economic laws of supply and demand have been repealed. They haven't. If prices and conditions in a city are such that a higher wage is needed to attract minimum wage workers, there is nothing stopping the employer from paying higher wages to attract those workers. Likewise, if workers aren't happy with the wages being offered, they are free to take their labor to someone who will pay them what they are really worth.
History has shown us that raising the minimum wage is simply an inflationary action that pushes everyone's wages higher and consequently the prices on everything go up too. So, in a short time, we're right back where we started except with higher numbers attached to everything. The minimum wage workers will still be minimum wage workers unless or until they acquire additional skills that make them more valuable to an employer.
If you recall the recession started before Obama took office.
True. But Obama owns the slow recovery caused by his anti-business administration.
Quote:
Originally Posted by HDWill1
One of the reasons Obama was elected was that he was seen to have a steadier hand than McCain in September and October '08 as the economic storm clouds gathered.
Do you have a citation for that? I don't recall "steady hand" being an issue.
I recall "we've got to spread the wealth around" being an issue.
I recall "people clinging to their guns and religion" being an issue.
I recall senate leader Harry Reid forecasting Obama's election saying Obama, as a black candidate, would be successful thanks to his "light-skinned" appearance and speaking patterns "with no Negro dialect, unless he wanted to have one."
I recall Chris Rock summing it up. "I didn't vote for Obama because HE'S Black. I voted for Obama because I'M Black."
McCain was politically experienced. An International Relations expert. A recognized war hero, POW, married to statuesque big-chested blonde who owned a beer distributorship. He lost because of people like Chris Rock.
You seem to think that the economic laws of supply and demand have been repealed.
There are people in the world who fundamentally lack the capacity for rational economic analysis. It isn't that he merely doesn't "get economics." It is that he will never understand economics. Trying to teach him economics is like trying to teach a pig to sing: it annoys the pig and the music is never any good.
Quote:
Originally Posted by Chas863
History has shown us that raising the minimum wage is simply an inflationary action that pushes everyone's wages higher and consequently the prices on everything go up too.
There I disagree. History has shown us that inflation is almost exclusively a monetary phenomenon and is not affected by a change in minimum wage legislation.
Do you have a citation for that? I don't recall "steady hand" being an issue.
Don't have a citation, but I remember that McCain left the campaign trail to return to Washington in response to the looming economic crisis, but didn't really accomplish anything on the trip and was perceived as somewhat uncertain and ineffective in that moment. And his poll numbers slipped a bit as a result.
There are people in the world who fundamentally lack the capacity for rational economic analysis. It isn't that he merely doesn't "get economics." It is that he will never understand economics. Trying to teach him economics is like trying to teach a pig to sing: it annoys the pig and the music is never any good.
There I disagree. History has shown us that inflation is almost exclusively a monetary phenomenon and is not affected by a change in minimum wage legislation.
Since "monetary policy" is set by the powers that be in Washington DC and is the same for our entire country, then why does an average house in California (or some other high price state) cost 3 to 5 times what the same house would cost in low cost states? I contend that it is due to rapid historic wage growth in the high cost areas.
For a variety of reasons (types of jobs, union wage contracts, concentration of high paid workers, etc), wages in the high cost areas have greatly exceeded wages in the low cost areas. When wages go up, the price of goods and services in that area go up. In my view, that's "inflation".
When we have too many dollars chasing too few goods and services, the inevitable result is inflation. The low cost areas haven't had as many dollars chasing the goods and services, therefore inflation has been lower in those areas and the cost on nearly everything is less in those areas. If it were all about monetary phenomenon, prices and wages would be nearly identical whether you're in New York City, San Francisco, or Podunk, Iowa.
There are very few places where $15 hr is considered good money. Many states courts struck down individual cities being able to set higher min wages which has caused alot of problems.
15-20/hr across the nation is a good bar with major cities and other expensive locals having much higher min wages. Anything less than 15 is exploitive (it takes advantage of people's bad situations) unless its a high school student who is still learning to brush their teeth.
Why don't we just raise the minimum wage to $50/hour? That way everyone would be at least middle class if not rich. You have any problems with that idea?
History has shown us that raising the minimum wage is simply an inflationary action that pushes everyone's wages higher and consequently the prices on everything go up too.
No, you're ignoring the very recent history I posted above in Post No. 3.
I'll say it again: California raised its min wage from $8 in 2013 annually in $1 steps to $13 on Jan. 1, unemployment fell from 8.4% to 3.9% and inflation is moderate.
The California experience proves that minimum wage hikes don't automatically cause job losses nor do they trigger outsized inflation.
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