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Don't people realize if minimum wage was $15 hr everything around them would just become more expensive. Food, Clothes, Rent.. they'd all increase as businesses would have to raise prices to pay employees higher wages. Plus people would be very aware that minimum wage doubled and now people have higher incomes, so prices will rise simply because they can. There is always going to be someone at the bottom that's just the way it is.. It stinks.. but there's very little that can be done about that.
And you can't just make it $15hr overnight. Imagine I run a small company and I make $50k a year. My 10 employees each make $24k a year (around $10.50hr). If minimum wage suddenly went to $15 I'd have to come up with an extra $45 every hour. That comes out to an extra $93,000 a year... Where in the world am I supposed to come up with that when its already about double my salary and I'm the owner!!???? I'd be forced to fire a few of my guys, that or close down the business and go get a job flipping burgers at $15hr.
Don't people realize if minimum wage was $15 hr everything around them would just become more expensive. Food, Clothes, Rent.. they'd all increase as businesses would have to raise prices to pay employees higher wages. Plus people would be very aware that minimum wage doubled and now people have higher incomes, so prices will rise simply because they can. There is always going to be someone at the bottom that's just the way it is.. It stinks.. but there's very little that can be done about that.
And you can't just make it $15hr overnight. Imagine I run a small company and I make $50k a year. My 10 employees each make $24k a year (around $10.50hr). If minimum wage suddenly went to $15 I'd have to come up with an extra $45 every hour. That comes out to an extra $93,000 a year... Where in the world am I supposed to come up with that when its already about double my salary and I'm the owner!!???? I'd be forced to fire a few of my guys, that or close down the business and go get a job flipping burgers at $15hr.
I don't think it would be an equal increase if you keep earning the same profit amount in dollars.
Price vs labor is not a 1 to 1 ratio. Labor is only about 15-50% of total expenses depending on industry.
Raising labor only partially raises total expenses so prices only partially go up. In other words people would be paid a larger percent than the percent increase in prices.
Of course that would mean businesses would have to give employees a larger percent of revenue, but companies are doing just the opposite right now. They are giving employees a smaller and smaller piece of the pie so I doubt it would actually work out.
Businesses need to be careful though, if they get too greedy they will end up like businesses in Seattle where the government starts to dictate more and more on how you run your business.
When you have price inflation without wage inflation the system starts to break down.
Last edited by High Altitude; 03-02-2016 at 08:57 PM..
I don't think it would be an equal increase if you keep earning the same profit amount in dollars.
Price vs labor is not a 1 to 1 ratio. Labor is only about 15-50% of total expenses depending on industry.
Raising labor only partially raises total expenses so prices only partially go up. In other words people would be paid a larger percent than the percent increase in prices.
Of course that would mean businesses would have to give employees a larger percent of revenue, but companies are doing just the opposite right now. They are giving employees a smaller and smaller piece of the pie so I doubt it would actually work out.
Businesses need to be careful though, if they get too greedy they will end up like businesses in Seattle where the government starts to dictate more and more on how you run your business.
When you have price inflation without wage inflation the system starts to break down.
Your factual post really serves to deny the propaganda regarding labor's piece of the price puzzle. No low wage business wants to be forced to pay more, and it is the low wage businesses that are leading the opposition to a higher min wage by frightening claims of much higher prices for ALL. Prices have always been rising throughout my lifetime, unlike wages that rise mostly in response. Like so much of the frictional politics we all suffer this will become another exercise in democracy VS special interest..
Don't people realize if minimum wage was $15 hr everything around them would just become more expensive....
And people don't realize that everything getting more expensive is called inflation and if you have that instead of stagflation you have full employment. That is the point.
Why should people who do not deserve $15 per hour, as they are not worth it, be rewarded for their inability to contribute to society? That's moral hazard.
Why should people who do not deserve $15 per hour, as they are not worth it, be rewarded for their inability to contribute to society? That's moral hazard.
The minimum wage should be set to minimize the amount of moral hazard. The question is what amount is that? On the one hand, yes, excessively high minimum wage is a moral hazard in regards to developing the personal skills needed to earn more "fairly". On the contrary, a minimum wage that is too low is also a moral hazard - when employers have the upper hand and can exploit employees until it becomes a race to the bottom.
The minimum wage should be set to minimize the amount of moral hazard. The question is what amount is that? On the one hand, yes, excessively high minimum wage is a moral hazard in regards to developing the personal skills needed to earn more "fairly". On the contrary, a minimum wage that is too low is also a moral hazard - when employers have the upper hand and can exploit employees until it becomes a race to the bottom.
There is no such thing as "exploit" in economics. It is a free market exchange of labor for wages.
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That is the point.
