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Old 12-31-2019, 11:41 AM
 
6,571 posts, read 2,399,266 times
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Quote:
Originally Posted by EDS_ View Post
So my argument would be that an increase in the minimum wage, spillover benefits and negatives ignored, is inflationary.
No, not necessarily. An increase in minimum wage is not inflationary if the economy is restrained by a shortage in aggregate demand due to low wages. Company X makes 1 million widgets per year but low paid workers can only afford to buy 600,000 of them, creating excess inventory (or excess production capacity). Give the workers a raise, now they buy 700,000 widgets per year. Company X does not raise the price because they are happy to sell their excess inventory. In other words, raising minimum wages is not inflationary until the slack and imbalance in the economy is sopped up.

The economy shows all the signs of being imbalanced with excess capital at the top (global savings glut) and a shortage of demand at the bottom (underpaid labor). The fact that you have a high stock market and a low rate bond market simultaneously is evidence of that.

The fact that the US is at full employment and there is no evidence of a wage-price spiral is more evidence that aggregate demand is suppressed by low wages. In the early 1970's full employment triggered a wage-price spiral because most workers belonged to a union, were well paid, and demand exceeded production capacity.
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Old 12-31-2019, 11:50 AM
Status: "The Mysterious Q" (set 28 days ago)
 
Location: DFW - Coppell / Las Colinas
34,240 posts, read 38,180,043 times
Reputation: 41019
Quote:
Originally Posted by Elliott_CA View Post
No, not necessarily. An increase in minimum wage is not inflationary if the economy is restrained by a shortage in aggregate demand due to low wages. Company X makes 1 million widgets per year but low paid workers can only afford to buy 600,000 of them, creating excess inventory (or excess production capacity). Give the workers a raise, now they buy 700,000 widgets per year. Company X does not raise the price because they are happy to sell their excess inventory. In other words, raising minimum wages is not inflationary until the slack and imbalance in the economy is sopped up.
Good, then raising the MW to $75 an hour would be a wise decision I guess. Think of all the widgets they could buy.
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Old 12-31-2019, 12:05 PM
 
447 posts, read 190,252 times
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Quote:
Originally Posted by Rakin View Post
Good, then raising the MW to $75 an hour would be a wise decision I guess. Think of all the widgets they could buy.

Great idea! I'll vote for that!
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Old 12-31-2019, 12:40 PM
 
27,073 posts, read 29,558,257 times
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Quote:
Originally Posted by Chas863 View Post
Why should we mandate a minimum wage when the cost of living varies so greatly from state to state and even from city to city within some states?

Minimum wages were never intended to be a "living wage" for a family... or even for an individual. Nevertheless, it is instructive to do some comparisons.

Would you rather be making $13/hour in California where the cost of a 1 BR apartment could be $3,000 per month (or HIGHER),

or would you rather be making $7.25/hour in Tennessee where a 1 BR apartment might cost you $700 per month?
Correct.

Let us not forget that despite the higher minimum wage, California still has America's highest cost of living adjusted poverty rate. Raising the minimum wage does little to help people with their biggest expense--housing. Only building a lot more housing will help with that, which California refuses to do.

https://www.politifact.com/californi...overty-rate-w/
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Old 12-31-2019, 01:35 PM
 
7,427 posts, read 7,004,040 times
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And just to clarify what I said before about dollars for dollars, pennies for pennies,

I mean after initial markup to current unit price level set by the demand. After that, for non elastic items any more additional cost will eat into your markup. Either that or people stop consuming it, or you get undercut.

If initially you cannot even achieve current demanded price with cost and markup then you cannot enter the market at all.
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Old 12-31-2019, 01:40 PM
 
7,427 posts, read 7,004,040 times
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Quote:
Originally Posted by tijlover View Post
In a city like San Francisco, with a minimum wage of $18 an hour, that would be a relief to those sharing an apartment with 4 others. And with a raise in the minimum wage to $20 an hour, it would make that apartment a bit roomier with just 3 sharing it!

I'm all for the alternatives and actually lowering the minimum wage. Alternatives: free bus tickets for the working class (Kansas City recently made all bus ridership free. Ogden, UT is another city), subsidized housing and generous food stamps, and tax breaks.

And with this issue you can't blame either political party. Back in the mid-90's both parties were opposed to raising the minimum wage, but with an election coming up in 1996, both parties embraced it.
I think the whole point of capitalism is to rely as little as possible on govt/taxpayer welfare. Free bus tickets, subsidized housing and food stamps must by paid by somebody.

Quote:
Originally Posted by Rakin View Post
Good, then raising the MW to $75 an hour would be a wise decision I guess. Think of all the widgets they could buy.
If we pay people 75 cents/hr, then the investors will save more money and create more jobs at 75 cents/hr. That will be a much better world.

Last edited by NJ Brazen_3133; 12-31-2019 at 01:55 PM..
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Old 12-31-2019, 02:00 PM
 
3,685 posts, read 2,498,466 times
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Quote:
Originally Posted by Frank Purlin View Post
The minimum wage is ZERO . . . . . . A business is not required to hire anyone.
If your business model requires a pool of desperate low-wage workers in order to be profitable, maybe your business sucks? The constitution doesn't guarantee your right to employ workers without paying them decent wages so you can make a buck (not since the 13th amendment, anyway). Try creating a business that adds sufficient value to the economy to justify the time of the workers it requires.
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Old 12-31-2019, 02:12 PM
 
3,685 posts, read 2,498,466 times
Reputation: 2912
Quote:
Originally Posted by RationalExpectations View Post
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.
So basically, the answer is simple, as long as you only assess the question using material from introductory first-semester economic class. That's like saying the answer to [any quantum mechanics problem] is clear, you just use F=ma.
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Old 12-31-2019, 04:46 PM
 
7,667 posts, read 3,411,024 times
Reputation: 4942
Quote:
Originally Posted by NJ Brazen_3133 View Post
And just to clarify what I said before about dollars for dollars, pennies for pennies,

I mean after initial markup to current unit price level set by the demand. After that, for non elastic items any more additional cost will eat into your markup. Either that or people stop consuming it, or you get undercut.

If initially you cannot even achieve current demanded price with cost and markup then you cannot enter the market at all.
That’s correct, that means your peddling junk and your business model sucks.
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Old 12-31-2019, 05:58 PM
 
9,050 posts, read 9,694,093 times
Reputation: 7677
Quote:
Originally Posted by Elliott_CA View Post
No, not necessarily. An increase in minimum wage is not inflationary if the economy is restrained by a shortage in aggregate demand due to low wages. Company X makes 1 million widgets per year but low paid workers can only afford to buy 600,000 of them, creating excess inventory (or excess production capacity). Give the workers a raise, now they buy 700,000 widgets per year. Company X does not raise the price because they are happy to sell their excess inventory. In other words, raising minimum wages is not inflationary until the slack and imbalance in the economy is sopped up.

The economy shows all the signs of being imbalanced with excess capital at the top (global savings glut) and a shortage of demand at the bottom (underpaid labor). The fact that you have a high stock market and a low rate bond market simultaneously is evidence of that.

The fact that the US is at full employment and there is no evidence of a wage-price spiral is more evidence that aggregate demand is suppressed by low wages. In the early 1970's full employment triggered a wage-price spiral because most workers belonged to a union, were well paid, and demand exceeded production capacity.
I'll have to circle back tomorrow but most of that is wrong.
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