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One of my friends works for Safeway... went to management and found he was earning more working as a Union Employee AND his wife was much happier... so he went back to Union.
Here at the Hospital no one wanted the job of OR Supervisor when the current one retired after 22 years... she approached several and none were interested for the 6k boost in pay AND going salary... which means the boost disappears if you put in long hours...
I find this amongst a lot of my friends... they have zero interest in leaving the Plumber's Union or Electricians Union to open their own legit business... not that they don't take side jobs... they simply don't want all that is entailed with being the boss... same for the independant family practice Doctors... a lot of the new guys are happy to work for a Kaiser or Sutter where they can schedule vacations and can concentrate on being a Doctor and not dealing with personnel and compliance issues...
Yes it makes a lot of sense . There just isn't the incentive for most people . The wage increase will similarly disincentive small business owners more would be entrepreneurs in certain cities and states will chose not to open and instead look for a decent paying job with a large company .
Which might end up working fine for them but it won't create any more jobs and won't grow the economy
The other option would be to focus more on online business and hire people in the Philippines or other countries .. Which doesn't really help the local economy like a restaurant or other local brick and mortar small business would .
Nope. Raising the minimum wage is a market interference, and the result of that market interference is a shift in the general equilibrium to a new state with a lower GDP. Some people win, other people lose, but the GDP is lower and the GDP per capita is lower.
Looking at growth in GDP per capita on a log scale, I think you are wrong. When the minimum wage was the highest, in terms of % of hourly average wage, we had 2% growth in GDP per capita per year. The long term, going back into the 1800's, was 1.8% per capita per year. Time spent above the curve gets you time spent below the curve.
Our slow growth now is a function of two things, from 1980 on we ran up debt instead of rolling over gains in worker compensation into higher workers wages, and wages world wide are equilibrating.
Pushing our wages up will reduce our debt load in %GDP. Pushing foreign wages up will cut the equilibration time.
Quote:
Originally Posted by SportyandMisty
I spent some time looking through econ textbooks and I cannot find a definition of "excess income." I suspect there is no such thing in economics.
Pardon me for not being precise in my language. Disposable income, non leveraged income, income that you haven't spent on mere survival. Income that you get to decide what you do with above recreation and a comfortable life.
Their is a difference between economics and life. Book smart and street stupid will give you a very short half life on the street.
Quote:
Originally Posted by SportyandMisty
You've strung together a bunch of words, but their semantic content is null.
That you can't or chose not to understand what I'm trying to say is your problem not mine.
More simply for your benefit.
People with a lot of money tend to use some of it to get more money. People working for minimum wage tend not to have much money at all. Give them a loan and they spend money now. That money does not result in more income later as they are on the minimum wage. The interest payment on the debt is money not spent on consumption that otherwise would've been spent on consumption, as the person that receives the interest payment is every likely to roll that money over into more investment.
Giving a minimum wage worker a loan is trading an increase in present consumption for a decrease in future consumption.
Giving a minimum wage worker a raise by increasing the minimum wage gets you an increase in present consumption and an increase in future consumption.
higher minimum wage independent of true supply/demand of labor market means in the next recession, more people get fired than if it hadn't gone up.
also, privately owned companies, small businesses, are already preparing to layoff workers when the new minimum wage goes into effect. the people who keep their jobs will have increased workload, having to do more work to replace those that were fired. thanks for playing.
The people on this thread, are missing a few facts.
Minimum wage jobs, are not offered by large companies. They are in smaller local employers.
Lets use an example. A fast food restaurant sells hamburgers for $3. The food cost will be 30.3% or $1. Labor costs will total 33.3% or $1. $1 is left to pay for lease and franchise payments, utilities and every thing else in the way of expenses. If the owner is lucky, he will be able to have a little left for profits.
If minimum wages double, labor costs double and that is an immediate raise of $1 in his prices. Others such as his suppliers will be raising wages, so the cost of food will also increase, so he will be selling a $5 hamburger. Problem, when the price is raised that much, business declines, which means to keep having the money to pay for rent, etc., he will have to raise the price even more to compensate.
The same thing will be happening in department stores who pay at or just above minimum wages. And the list goes on and on. The businesses have two choices. Raise price to cover, or lay off part of the employees, increasing the unemployment rate.
The people on this thread, are missing a few facts.
Minimum wage jobs, are not offered by large companies. They are in smaller local employers.
Lets use an example. A fast food restaurant sells hamburgers for $3. The food cost will be 30.3% or $1. Labor costs will total 33.3% or $1. $1 is left to pay for lease and franchise payments, utilities and every thing else in the way of expenses. If the owner is lucky, he will be able to have a little left for profits.
If minimum wages double, labor costs double and that is an immediate raise of $1 in his prices. Others such as his suppliers will be raising wages, so the cost of food will also increase, so he will be selling a $5 hamburger. Problem, when the price is raised that much, business declines, which means to keep having the money to pay for rent, etc., he will have to raise the price even more to compensate.
The same thing will be happening in department stores who pay at or just above minimum wages. And the list goes on and on. The businesses have two choices. Raise price to cover, or lay off part of the employees, increasing the unemployment rate.
Yes ,exactly. The problem is that these Pro $15 hr posters have this belief that small business can continue to raise and raise prices to cover an increase in labor and it's "no biggie"
Maybe they are wealthy enough to just not care about prices?
Hard to say..but I think they are more the exception in terms of consumers versus the rule.
Even wealthy people have a limit in what they are willing to pay for things. Maybe especially the wealthy since they often became wealthy at least partially by being mindful of their spending.
Nope. Raising the minimum wage is a market interference, and the result of that market interference is a shift in the general equilibrium to a new state with a lower GDP. Some people win, other people lose, but the GDP is lower and the GDP per capita is lower.
I spent some time looking through econ textbooks and I cannot find a definition of "excess income." I suspect there is no such thing in economics.
You've strung together a bunch of words, but their semantic content is null.
And zoning (supply control) is NOT market interference?
The people on this thread, are missing a few facts.
Minimum wage jobs, are not offered by large companies. They are in smaller local employers.
Lets use an example. A fast food restaurant sells hamburgers for $3. The food cost will be 30.3% or $1. Labor costs will total 33.3% or $1. $1 is left to pay for lease and franchise payments, utilities and every thing else in the way of expenses. If the owner is lucky, he will be able to have a little left for profits.
If minimum wages double, labor costs double and that is an immediate raise of $1 in his prices. Others such as his suppliers will be raising wages, so the cost of food will also increase, so he will be selling a $5 hamburger.
There are problems with what your assumptions. Labor is about 24-26% of cogs in a fast food store. Not all fast food employees are paid the minimum wage, and those who are work the least number of hours. restaurant earns minimum wage, so there will a number of employees whose whose wages will not be raised. This study explains exactly how they reach their conclusion that a 45% increase in the minimum wage would require raising prices 2.7% It's probably easier for you to read it than for me to take the time to explain it. The findings are consistent with the Perdue Study which claims that increasing the minimum wage from $7.25 to $15 would result in a 4.3% price increase.
My neighbor insists that every time they raise the minimum wage here in the US the cost of living goes up too so that nothing ever improves financially for anyone and often they are worse off then before . He said he has seen it happen over and over again in his life and if they raise the minimum wage again to $15 dollars and hour all over the US the same thing will happen again things will become more expensive.
Is that true ? Does the cost of living always go up when the minimum wage increases?
Effects on prices can vary, it could cause an increase in prices, but usually only if the increase in min wage drives some employers out of the market allowing prices to rise due to less competition.
Prices are based on what the market will bear, not on costs. If the costs are too high, then the employer just redirects their energies away from the business.
Raising the minimum wage, as proposed to $15, is great for Income Equality which is celebrated a lot here.
Not too many people at 7.25, but plenty more between 7.26 and 14.99, and they would all get a raise from .01 to 7.75 deeming them all equal after the raise takes effect.
higher minimum wage independent of true supply/demand of labor market means in the next recession, more people get fired than if it hadn't gone up.
But increasing the minimum wage changes the supply/demand relationship by affecting the ratio of debt to income.
Quote:
Originally Posted by ControlJohnsons
also, privately owned companies, small businesses, are already preparing to layoff workers when the new minimum wage goes into effect. the people who keep their jobs will have increased workload, having to do more work to replace those that were fired. thanks for playing.
The minimum wage means that new growth in the economy happens above it. The new jobs added will pay more. Add enough new jobs and we are all better off.
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