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The purchasing power of the FMW didn't increase by a lot in that period, because the high increases in the minimum wage caused other wages to increase as well. Hence, we got inflation.
In Venezuela the minimum wage purchasing power has actually declined massively, does that mean their massive increases in their minimum wage , is not causing inflation?
You need to learn what median wage is. You only need 50%, not 100%.
But yes it is impossible in a market economy, because when the minimum wage tripples, then other sectors will tripple their wages to keep their workers happy. This means, large increases in the minimum wage causes inflation.
If they didn't tripple their wages, then it wouldn't take long before the minimum wage catch up to the median wage.
https://www.easycalculation.com/math...ry/median.html
Median: It is the middle value located in a group of ordered numbers. Median splits the higher number with the lowest number. It is also termed as middle value in a collection of numbers.
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Camlon, I could explain “median” further but that shouldn’t be necessary.
I don’t understand what you intended to communicate when you wrote “You only need 50%, not 100%.“. I suppose this sentence is in regard to the median wage rate?
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You seem to have an incorrect expectation that the federal minimum wage, (FMW) rate has a great proportional effect upon all USA wage rates. Although it affects all USA employment compensation, it does not proportionally affect them all equally.
FMW rates general affect upon individual job rates is inversely proportional to the difference between the job’s and the FMW rate; [job rate benefits are of greatest benefits to the earners of the lowest job rate and those benefits continue to proportionally decrease relative to higher job rates.
As job rates approach the median rate, the benefits due to the FMW rate are much less perceivable and beyond the median they are unperceivable.
For examples; due to a FMW rate increase from $7.25/Hr. to $14.50/Hr., (i.e. doubling the rate), the expected consequences for various other rates would (approximately) be the following:
$7.25 + (14.50 – 7.25) + [ 7.25 /(7.25 - 7.25)] = 7.25 + 7.75 + (0) = X
X = $14.50/Hr.
$8.00 + (14.50 – 7.25) + [( 8.00 /(8 - 7.25)] = 8 + 7.75 + (8/1.75) = X
X = 8 + 7.75 + 8(0.571) = $20.32/Hr.
$10.00 + (14.50 – 7.25) + [( 10 /(10 - 7.25)] = 10 + 7.75 + (10/2.75) = X
X= 10 + 7.75 + 10(3.636) = $21.39/Hr.
$20.00 + (14.50 – 7.25) + [( 20 /(20 - 7.25)] = 20 + 7.75 + (20/12.75) = X
X = 20 + 7.75 + 20(1.568) = $29.32/Hr.
$60.00 + (14.50 – 7.25) + [60/(60 - 7.25)] = 60 + 7.75 + (60/51.75) = X
X = 60 + 7.75 + 1.159 = $68.91/Hr.
The FMW rate does not affect all USA wages and salaries or all USA products prices equally.
The FMW rate’s greatest proportional affect is upon the lowest wage scales and of much lesser affect upon the median wage rate.
The FMW rate’s proportional affects upon individual products’ prices are dependent upon the proportion of the price that’s attributable to labor and the proportion of those labor costs that are attributable to lower wage rate earners.
This is why the FMW rate is not among the primary causes of inflation.
https://www.easycalculation.com/math...ry/median.html
Median: It is the middle value located in a group of ordered numbers. Median splits the higher number with the lowest number. It is also termed as middle value in a collection of numbers.
Camlon, I could explain “median” further but that shouldn’t be necessary.
I don’t understand what you intended to communicate when you wrote “You only need 50%, not 100%.“. I suppose this sentence is in regard to the median wage rate?
You said this
"It is mathematically impossible for the FMW rate to “catch up to the median wage” unless ALL jobs’ rates are equal to the FMW rate."
That is only true for average. For median, it is enough that 50% of the jobs pay minimum wage. Not likely to happen, but not impossible.
Quote:
You seem to have an incorrect expectation that the federal minimum wage, (FMW) rate has a great proportional effect upon all USA wage rates. Although it affects all USA employment compensation, it does not proportionally affect them all equally.
You seem to have read something in a college economic class, but not understood the concepts behind the theory.
How much it affects each wage class is dependent on how many years you wait, and how fast you increase the minimum wage, and how close the minimum wage is to the median wage. When expectations of inflation become high, then people demand larger wage increases.
So while your theory might be approximately right for 1975, each year thereafter the wage increases for other groups became larger and larger. You take the extreme case of Venezuela/Argentina, and you will notice that the minimum wage increases is only effective for a few months, because other groups will demand similar wage increases.
If your formula was right, then the minimum wage would catch up to the median wage, when the minimum wage is increased by a lot. In reality, large increases in the minimum wage lead to inflation.
CEO compensation has nothing to do with income inequality.
Income inequality has gotten worse the last 30 years because of demographics. This means many Baby boomers and a huge workforce. Think "supply and demand." There is a huge supply of workers while demand hasnt kept up.
The reverse will happen as the baby boomers retire. Less workers means less supply. That should tighten up the labor supply and drive up wages via competition for workers. Assuming demand for workers stays the same or increases.
Camlon, when a federal minimum wage, (FMW) rate increase has become law and prior to its enactment, almost all enterprises, (with the exception of many of the smallest enterprises), begin applying the increase to their payrolls; enterprises do not do this for altruistic reasons.
The national enforcement of an enacted FMW rate is reasonably effective.
When enterprises’ first apply the FMW rate’s amount of increase to their payrolls, they generally apply (AT LEAST the same) amount of increase TO ALL of their payroll’s wage and salary rates.
I believe that you and I can agree with these descriptions of USA wages’ behavior. Our differences are in regard to the extent of differing wage rates’ increases beyond the FMW rate’s amount of increase.
Your math is all wrong. Wages don't exist in a vacuum.
In the first place, Price Elasticity and other factors set the wage ceiling for each class of workers in a given business.
Quote:
Originally Posted by Supposn
Camlon, when a federal minimum wage, (FMW) rate increase has become law and prior to its enactment, almost all enterprises, (with the exception of many of the smallest enterprises), begin applying the increase to their payrolls; enterprises do not do this for altruistic reasons.
That's pure guessing with no basis in fact.
Quote:
Originally Posted by Supposn
When enterprises’ first apply the FMW rate’s amount of increase to their payrolls, they generally apply (AT LEAST the same) amount of increase TO ALL of their payroll’s wage and salary rates.
There's no evidence to support that, either, it's just wishful thinking.
Perhaps you don't understand that only 3% of all US businesses are publicly traded corporations.
... In the first place, Price Elasticity and other factors set the wage ceiling for each class of workers in a given business. ...Perhaps you don't understand that only 3% of all US businesses are publicly traded corporations.
Mircea, when I referred to “the smallest of enterprises “, I was referring to the VERY smallest enterprises where (excluding the labor contributions of enterprises’ major owners and their families), the enterprise’s remaining full time employees number less than six people.
There are many such enterprises but they do in aggregate follow rather than lead the determination of median wage rates within differing types of enterprises and/or differing industries and/or differing regions and or our entire nation; but all of those median wage rates are affected by the federal minimum wage rate.
... How much it [i.e. the FMW rate increase?} affects each wage class is dependent on how many years you wait, and how fast you increase the minimum wage, and how close the minimum wage is to the median wage. When expectations of inflation become high, then people demand larger wage increases.
Camlon, the post of 5:42 PM, November 29, 2015 is a theory to describe wages and salaries rates' general behaviors within the durations of dates the federal minimum wage, (FMW) rate became laws, through to the dates of those laws’ enactment.
This description is a general approximation of the rate changes for employees that were (prior to the law) not earning exactly the then current FMW rate. Beyond the amount of the FMW rate, their rates are not mandated by law but are rather due to the customs and practices of market prices.
The scope of the description describes only the behavior induced by the increase of the FMW rate itself, (excluding additional affects due to other factors; (i.e. it excludes affects that were not due to the increase of the FMW rate).
Camlon, your responding comment refer to factors which drove the U.S. Congress to pass our prior FMW rate increases; these are not affects due the FMW rate increases themselves.
You’re rejecting the theory but you don’t cite any creditable alternative theory?
What have you experienced or observed that’s contrary to the theory?
I believe that you and I may agree with most of this description regarding the affects of FMW rate increases upon wages and salaries. Our differences are in regard to the extent of differing wage rate amounts’ increases beyond the exact amount FMW rate’s increase.
You said this
"It is mathematically impossible for the FMW rate to “catch up to the median wage” unless ALL jobs’ rates are equal to the FMW rate."
That is only true for average. For median, it is enough that 50% of the jobs pay minimum wage. Not likely to happen, but not impossible.
You seem to have read something in a college economic class, but not understood the concepts behind the theory. ...
... If your formula was right, then the minimum wage would catch up to the median wage, when the minimum wage is increased by a lot. In reality, large increases in the minimum wage lead to inflation.
Camlon, the federal Minimum wage, (FMW) rate has never and should never be suddenly increased radically; it has always been gradually increased.
The statement you quoted has been generally correct for ALL FMW rate increases and there’s no reason to believe they wiill not continue to be correct.
I believe that you and I may agree with most of this description regarding the affects of FMW rate increases upon wages and salaries. Our differences are in regard to the extent of differing wage rate amounts’ increases beyond the exact amount FMW rate’s increase.
Camlon, the federal Minimum wage, (FMW) rate has never and should never be suddenly increased radically; it has always been gradually increased.
Shouldn't it be indexed by inflation to avoid the political theatre and the political pricing of the next minimum wage hike instead?
The minimum wage is designed to protect workers from the erosions caused by inflation. Can anybody still live on $1.60 an hour ($10.74 in 2013 dollars) unadjusted since 1968, considering all the inflation since 1968?
In a related development...1,300 formerly employed restaurant workers in Seattle could not be reached at work for comment...because they no longer had jobs once the local minimum wage increased to $11.00/hour in April, 2015, thereby rendering their services too expensive relative to the value of the labor they were providing.
However, one former Seattle restaurant worker, who identified himself as Boris Boogerpicker, when asked what he thought about losing his job after the Seattle minimum wage increased to $11.00 per hour, responded, "It came out of left field all of a sudden. Nobody coulda seen it coming. We thought we wuz gettin' a raise, but we all got pink slips instead. You'd think these guys were runnin' a business or something. But yeah...all in all, I'd rather have one job at $8.50 an hour than no job at $11.00 per hour. Now I got nothin'. Just sayin'."
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