Making less as inflation raises prices of goods?

[Darkatt]

Originally Posted by stburr91

Nowhere in my post did I say wages were based on, or set by the Federal Reserve. Of course wages are set by supply and demand, where did I say otherwise?





What about the inflation, and globalization that you mentioned in the very same post?





I agree with what you have said, just one thing. Let's say all of the working class makes themselves more valuable to employers. Will their be better paying jobs for them? If these people did makes themselves more valuable to employers, would it not drive down the wages of the "better" jobs because the market is now oversupplied?

Not really.
Simply raising the minimum wage deflates the wages of everyone else who's wages aren't raised in direct proportion. However, employees who are more valuable, means they earn more for their employers. As they earn more for their employers, it increases the money in circulation, in both paychecks and employers earnings, which means, more money being spent, requiring more jobs to be filled, and more employees needed, both for their employer and other employers.

This differs from raising the minimum wage in that simply raising the minimum wages, increases employer overhead, without increased earnings, which causes prices for goods and services to be increased to compensate for increased overhead.

Increased overhead however is offset, when an employee is more productive, and provides increased revenue for their employer. That's the difference between earning higher wages by being more valuable vs higher minimum wage.

The key words are, higher revenues for employers. It's really economics 101.

[stburr91]

Originally Posted by Darkatt

Not really.
Simply raising the minimum wage deflates the wages of everyone else who's wages aren't raised in direct proportion. However, employees who are more valuable, means they earn more for their employers. As they earn more for their employers, it increases the money in circulation, in both paychecks and employers earnings, which means, more money being spent, requiring more jobs to be filled, and more employees needed, both for their employer and other employers.

This differs from raising the minimum wage in that simply raising the minimum wages, increases employer overhead, without increased earnings, which causes prices for goods and services to be increased to compensate for increased overhead.

Increased overhead however is offset, when an employee is more productive, and provides increased revenue for their employer. That's the difference between earning higher wages by being more valuable vs higher minimum wage.

The key words are, higher revenues for employers. It's really economics 101.

There's no doubt that more productive employees can lead to higher revenues for employers, but only to a point, there still has to be people willing/able to buy the goods/service. With incomes dropping, the average working people's ability to buy goods, and services is diminishing. Producing more is pointless if there are no buyers. This may be a chicken, or the egg situation, but the inability of most Americans to buy more goods/services, and therefore see more job creation, is one of the major reasons why the economy has stalled for so long.

[momonkey]

Originally Posted by Opin_Yunated

..........except the world isn't moving away from U.S. dollars. Do you call 66% in 2002 to 60% in 2014 drastic? The land of Fox News would have you think otherwise.

Deflation is lack of demand. Economics is all about the producer and consumer. Extreme wealth inequality and poor demographics (baby boomers getting old, millenials being **** broke) are your culprits, not the U.S.'s status in world currency.

What does currency have to do with Japan, the EU, and Canada having the same low-inflation / deflation issues? No amount of stimulus is going to bail Japan out of its aging problem.

"Moving away from" is a relative term.

Even if the world still trades in dollars, the demand for dollars will decline as more dollars become available via the Fed's printing presses.

As demand for dollars declines, so will the relative value and buying power of the dollar.

When families have to get by with less because their dollars don't buy what they used to, there is less left after the bills are paid to grow the economy and then we have stagnation.

Reagan took the exact opposite approach.

Taxes were cut so people would take home more money and interest rates relative to inflation were increased so that these dollars would be worth more.

The multiplier effect gave us the booming economy of the 1980s.