Jobs of the future - "green" jobs pay scale lower (credit report, borrow)

[Teak]

Originally Posted by Luke9686

Actually the UAW make way more than $28, last I heard. Many labor/trade jobs pay very well, but are hard work. Which is why they pay well. My hands are too fragile for manual labor.

The number that I had seen reported on CNBC was the UAW was around US$74 per hour per worker. This is not all wages, of course, but represents the total cost of a worker: wages, social security, medicare, union dues, etc. By contrast, Toyota was reported as having a cost of around US$50 per hour per worker in their USA plants.

All of these reports just feed into my sense that the USA is losing its middle class. In years past, the CEOs were making maybe 30-50 times what the lowest-paid worker made, and wages for the average worker were sufficient for a comfortable life. Now, CEOs make 300-500 times the lowest-paid, and average wage (which has stagnated) no longer provides for a comfortable life.

Soon, our standard of living will meet that of China and India, and other developing countries, as we fall, and they rise. But be comforted, our CEOs will have a new set of people with whom to play tennis and go yachting off Cape Cod: Chinese and Indian CEOs.

[user_id]

Originally Posted by Teak

All of these reports just feed into my sense that the USA is losing its middle class. In years past, the CEOs were making maybe 30-50 times what the lowest-paid worker made, and wages for the average worker were sufficient for a comfortable life. Now, CEOs make 300-500 times the lowest-paid,

Income in the US has become poorly distributed over the last 1-2 decades, people like to blame a number of things like out-sourcing, CEO pay, illegals, etc but these are just easy scapegoats. In the 1920's wealth was similarly distributed, yet during that time we were a major export economy and CEO's were not paid as much. CEO pay represents a pretty small piece of the pie.

The depression greatly improved the distribution of wealth, the current events are likely to have a similar effect once they play out.

[Randomdude]

Originally Posted by user_id

Ugh, this is simply inane. Whether you want to know retail or wholesale prices you need to look at aggregates not single stores. The reasons for this are so obvious its not worth talking about.

Aggragate prices are worthless for determining wholesale prices. Period. I really dont care what else you have to say about it. You are wrong.

Originally Posted by HR_N8V

This is irrelevant to the point. Again, the point is that you need to look at local cost of living as it relates to local incomes, not raw income. Another thing that is so obvious its not worth talking about....

It is not irrelevant. You made the claim that there is more poverty in the inner city then rural areas, which is not only false, but even if it were true, the reason behind this is that the federal floor of minimum wage is much closer to the cost of living in ruraldom.

Originally Posted by HR_N8V

What else is the capitalist going to do with it, put it in his rear? In this case there will be a mass excess of productivity, the government could simply give everyone tax credits.

Sell it on endless credit. Suck every remaining ounce of wealth from the underclass. The underclass needs food, water and shelter, all of which is controlled by the capitalist.

Originally Posted by HR_N8V

Your same reasoning has been used again and again throughout history to suggest that innovation was going to create mass employment. Never, has it actually occurred. But this time its different! Its always "this time"...

Yes, because the automation of jobs is clearly the same as shifting from labor intensive farming, to labor intensive industrial.

Originally Posted by HR_N8V

There is land all over the place. Today, I could go into the mountains cut some wood and start making things out of it.

Every square inch of land is owned by someone. You are STEALING by "going in to the mountains and cutting some wood".

Originally Posted by HR_N8V

Hogwash. A political revolution is far different than an internal collapse of an economic system. Political revolution is about power.

A political revolution would gain no support without a large number of oppressed people.

Originally Posted by HR_N8V

People in the US on average live better than people in any socialist or communist crap hole. In fact most socialist and communist crap holes are filled with poverty and ironically have worse distributions of wealth than free market economies! Free markets don't create poverty, they empower people.

There are no "communist" countries, and it would depend on how you defined "socialist". If you defined socialist as welfare capitalist states, then the US ranks behind many of those at 13th. Quality-of-Life Index - Wikipedia, the free encyclopedia

As for distribution of wealth, I suggest you dont even go where you clearly have no knowledge.

Free markets are vehicles for economic enslavement and wealth extraction. Nothing more.

[Lincolnian]

Pure capitalism is every bit as scary as pure communism. Thankfully we don't have either in the U.S. As long as passionate people fight on both sides of the issue the middle position will be preserved.

[Randomdude]

Originally Posted by user_id

The capitalist does not "own education", the capitalist owns universities, etc. But primary and secondary education is state owned, and so are many colleges and universities.

The state is a capitalist.

Originally Posted by user_id

There is always an alternative, working for yourself. Around 15% of the work force is self-employed (around 12 million or so), another 1~2 million have secondary self-employment.

Most of those self employeds are self employed because of former or current indenture to a capitalist. Many go bankrupt or lose their house and assets to the capitalist when their "self employment" doesnt work out.

Originally Posted by user_id

Only around 30% of the work force works for large corporations.

Large corporations are not the only capitalist in the world

Originally Posted by user_id

Just because you've committed yourself to serfdom does not mean everyone else makes the same commitment.

Every person who is in debt to a capitalist has commited themselves to serfdom. The business I work for now is in serfdom to a bank.

Originally Posted by user_id

Of course they have! Inflation is almost always positive! They are perfectly correlated, they both move up piecemeal. But there is no way to know to what degree an increase in the minimum wage contributed to inflation.

Actually, in history, inflation has fallen after minimum wage hikes in some cases, most notably in 38 and 39. There is no evidence that hikes in minimum wage have ever led to anything over natural inflation.

Originally Posted by user_id

1.) The 4th employee no longer makes sense because as his monthly pay is now $1,280 but he only generates $1,200 worth of product. So +1 to the unemployment line.

2.) The business man increases the cost of the widget (assuming such does not cause a decline in sales that offset the increase as would often happen) to make up for the increase in labor costs. But this would be inflationary.

For companies operating on such thin margins, the first will be the most often response. I do admit that there may be some temporary rise in unemployment. However, companies rarely operate on such thin margins that a raise to living wage will amount to them losing money. I worked in a sub shop when I was much younger. We made subs for $1.75, and sold them for $6.50. Labor never came to over 20% of gross receipts, and usually was around 10%-12%. I once figured out, with all costs including rent, insurance, utilities, leases, etc, he could afford to pay every labor hour $10.20. A majority of the staff was at $5.15, and there was nobody over $7.


The second response will rarely happen. The reason is perfect competition and the nature of most things being substitutable goods. Microsoft could jack the price of Windows up, but BK couldnt jack up its burgers in direct response, because McDonalds or Wendys would be willing to absord the added labor costs in to the profit margin.

Originally Posted by user_id

By the way, the amount of additional widgets that can be produced declines because there is limited capital (e.g., only X number of machines, space etc). This is the "marginal productivity of labor".

This means that the factory was running inefficiently in the first place, and the only thing allowing it to run was sub living wages to the employees. In my opinion, this needed to be adjusted any how.

For facilities already running at a high efficiency level, marginal productivity will not be much of a factor.

Originally Posted by user_id

Until of course the currency is worthless.

Currency will not be worthless, because no more currency will be printed. The supply of currency will not be adjusted, only the distribution.

Originally Posted by user_id

This will be the real effect:

- The landowners will increase rents to suck the excess right out of the system. After rent, the workers will be left with the same amount of money. The only way the worker can avoid this is by himself being a landlord (i.e., owning his owe home).

Minimum wage increase = gift to land owners at the expense of business.

1. Landowners are in supply-demand competition just as any other industry. Unless they all collude to jack rates up, this simply will not happen.

2. Purchasing power will rise significantly, allowing more people to become home owners. This will lower demand for rental properties and flatten the rates.

[user_id]

Originally Posted by Randomdude

Aggragate prices are worthless for determining wholesale prices. Period. I really dont care what else you have to say about it. You are wrong.

Dude............if you wanted to know about wholesale prices you'd look at ahem, wholesale prices. You'd use the same technique as you would for retail, namely trying to determine aggregate prices.

Originally Posted by Randomdude

but even if it were true, the reason behind this is that the federal floor of minimum wage is much closer to the cost of living in ruraldom.

hahaa.....and WHY would that be the case!? Why is the cost of living so much more in the city? There is one may reason - housing.

Originally Posted by Randomdude

Sell it on endless credit.....

So basically they are going to give it away. If the credit is "endless" than the "underclass" can just keep taking out more and more debt to purchase the items without ever really paying for them! Sounds good to me.

Originally Posted by Randomdude

Yes, because the automation of jobs is clearly the same as shifting from labor intensive farming, to labor intensive industrial.

Your whole premise here is just silly. People have not shifting from framing to labor intensive industry. People have shifted from framing into a variety of fields most of which are not labor intensive.

At one point the vast majority of people were involved with framing and hunting, where as for some time now the majority of people have not been involved in labor intensive work.

Automation is not knew, the automation of production has been occurring for centuries.

Originally Posted by Randomdude

Every square inch of land is owned by someone. You are STEALING by "going in to the mountains and cutting some wood".

No its not. Theoretically the government owns all the land in its state, but that is not the same as private ownership. Stealing? Stealing from who?

This is not to mention that some privately owned land is essentially worthless. You can buy plots for next to nothing in multiple areas of the country.

Originally Posted by Randomdude

A political revolution would gain no support without a large number of oppressed people.

The cases you mentioned were largely cases of government oppression, they were not democracies with free market economies. Czarist Russia, etc was not a capitalist society. These are political revolutions, not economic ones. Even the revolution in Russia was not really against Capitalism in Russia, but rather the idea of Capitalism in Russia.

This is rather different than the economy collapsing as was the case when the USSR collapsed. There is not a single example of a capitalist economy collapsing by its own weight, yet almost every communist crap hole's economy collapses internally.

[user_id]

Originally Posted by Randomdude

The state is a capitalist.

Haha...then there is no way to avoid capitalism. Things are either owned privately or by the state. There is no way to have "no ownership" in a civilization.

Originally Posted by Randomdude

Most of those self employeds are self employed because of former or current indenture to a capitalist. Many go bankrupt or lose their house and assets to the capitalist when their "self employment" doesnt work out.

You simply equate capitalist with "big business" and its silly. A small business owner is just as much a capitalist as those running a large corporation. The number of capitalist in this country is rather large. If there were less people like yourself, there would more. Most people willingly enslave themselves to business owners because they think its "less risky".

Originally Posted by Randomdude

Every person who is in debt to a capitalist has commited themselves to serfdom.

Having debt does not commit you to anything. Debt can be used smartly or stupidly. It is stupid financial/life choices and thoughts about the world that commit one to such a life.

Originally Posted by Randomdude

There is no evidence that hikes in minimum wage have ever led to anything over natural inflation.

Ugh....There is no such thing as "natural inflation", inflation is caused always by government (and central bank) action. Increases in minimum wage have been almost perfectly correlated with inflation, now you want to suggest that this inflation is really "natural". How do you determine the "natural rate" of inflation vs inflation caused by government and monetary policy?

Originally Posted by Randomdude

For companies operating on such thin margins, the first will be the most often response. I do admit that there may be some temporary rise in unemployment. However, companies rarely operate on such thin margins that a raise to living wage will amount to them losing money.

Its amazing that you think you know things as facts, that are rather far from such. All (success) business will employ labor to the point where the marginal return of labor equals the costs associated with the labor. In the situation I described the business owner would be losing money by not hiring a 4th employee. This has nothing to do with "thin margins", all businesses will observe a diminishing marginal return of labor as they increase the number of people they employ, this is because again, they have limited capital. Over time the capital can grow, in which case they can hire more people. But short term, capital is essentially fixed.

Originally Posted by Randomdude

I worked in a sub shop when I was much younger. We made subs for $1.75, and sold them for $6.50. Labor never came to over 20% of gross receipts, and usually was around 10%-12%. I once figured out, with all costs including rent, insurance, utilities, leases, etc, he could afford to pay every labor hour $10.20.

Who cares what he "could afford to pay", you could say the same thing for his rent, equipment costs, etc. Why should he pay above market rates for labor rather than rent, his supplies etc?

When you go into a store do you give them an extra $10 bucks because you can afford it?

Originally Posted by Randomdude

The second response will rarely happen. The reason is perfect competition and the nature of most things being substitutable goods. Microsoft could jack the price of Windows up, but BK couldnt jack up its burgers in direct response, because McDonalds or Wendys would be willing to absord the added labor costs in to the profit margin.

HAHA. This is great, because you mention "perfect competition" as your answer, yet ignore it. If there was "perfect competition" there would be NO extra profit margin to absorb! If McDonalds or Wendy's is willing to take a hit in their profits with an increase in minimum wage, why then not do it to increase market share?

Originally Posted by Randomdude

This means that the factory was running inefficiently in the first place...

Ugh. What do you think determine how many people a business hires? A magic eight ball? NO! Its the marginal return on labor! A business will employ new people up to the point where another employee would either not make or lose money! EVERY business will observe a dinimishing return on labor because every business has short term capital constraints.

Originally Posted by Randomdude

1. Landowners are in supply-demand competition just as any other industry. Unless they all collude to jack rates up, this simply will not happen.

Again, you say something about ignore it. People want to live in the best place they can. If people's wage's increase, people will try to "move up" this will create additional demand there by increasing property costs across the board (because at the lowest level you have multiple households in one home).

The landlord always wants to increase rent, the only thing that stops him are people's incomes. Over time the excess money will just go to rent.

[Randomdude]

Originally Posted by user_id

Dude............if you wanted to know about wholesale prices you'd look at ahem, wholesale prices. You'd use the same technique as you would for retail, namely trying to determine aggregate prices.

Wholesale prices for Levis jeans in 1999 are not readily available, therefore, it became neccessary to assume a constant wholesale price, and that can only be done by assuming a steady profit margin, which can only be done by using one store.

If you use a random aggragate retail sample, at two different points in time, it is impossible to make the assumption of a steady profit margin, and therefore these prices can be badly swayed by things such as geographic location, and are worthless for arguments sake.

Originally Posted by user_id

hahaa.....and WHY would that be the case!? Why is the cost of living so much more in the city? There is one may reason - housing.

Actually, housing is only one factor. In many large expensive cities, the cost of a normal basket of goods is higher as well.

Any how, Im failing to see what your point is of this whole statement.

Originally Posted by user_id

So basically they are going to give it away. If the credit is "endless" than the "underclass" can just keep taking out more and more debt to purchase the items without ever really paying for them! Sounds good to me.

The debt will not be invisible eventually, it will be in the form of material possessions or slave labor.

Originally Posted by user_id

Your whole premise here is just silly. People have not shifting from framing to labor intensive industry. People have shifted from framing into a variety of fields most of which are not labor intensive.

People went from farming to the factory, factory to low paying service. You can trace the trends on various BLS reports.

Originally Posted by user_id

At one point the vast majority of people were involved with framing and hunting, where as for some time now the majority of people have not been involved in labor intensive work.

They are in labor intensive work, the only difference is that they are in low level health care or fast food.

Originally Posted by user_id

Automation is not knew, the automation of production has been occurring for centuries.

Not remotely to the level its going to be within the next 50-100 years. This isnt going to just be a shift to a different field. Every single profession is going to replaced wholesale by computers and robots. The last non robot related jobs that will remain are ones that require creativity, emotion and human contact. Robots will be able to reap farms, fix cars, manufacture everything, and serve you at the drive thru. This will be reality at some point.

Originally Posted by user_id

No its not. Theoretically the government owns all the land in its state, but that is not the same as private ownership. Stealing? Stealing from who?

All land in every state, unless it is government owned, which is usually for a specific purpose such as a park or military installation, is privatley owned. There are no "free patches" you can just claim. Those miles of nothingness in Arizona, New Mexico, Nevada.....they are all part of someones ranch.

Even if it were a state piece of land, you can not just harvest tax payer resources. That is stealing.


[quote=user_id;9467290]
This is not to mention that some privately owned land is essentially worthless. You can buy plots for next to nothing in multiple areas of the country.
[quote=user_id]

The price tag on the land is moot, its still owned by someone, and you still have to buy it from that someone to use it.

Originally Posted by user_id

The cases you mentioned were largely cases of government oppression, they were not democracies with free market economies. Czarist Russia, etc was not a capitalist society. These are political revolutions, not economic ones. Even the revolution in Russia was not really against Capitalism in Russia, but rather the idea of Capitalism in Russia.

This is rather different than the economy collapsing as was the case when the USSR collapsed. There is not a single example of a capitalist economy collapsing by its own weight, yet almost every communist crap hole's economy collapses internally.

Actually, France did collapse under its own weight.

Any how, most capitalisms do not get the chance to collapse. They are overthrown by the suffering before that point, or they are changed in to welfare capitalisms.

Free market Laissez Faire capitalism simply cannot exist. The goal of this system is purely to extract wealth towards the top, and it is highly effective at doing so. However, its not a terribly great situation when its 5 or 10% of the people controlling the other 90% who have nothing.

As for "communist crapholes", you will find that every "communist craphole" was not "communism" in the Marxist sense at all. Most were/are nothing more then state run capitalisms which were an even more effective agent of funneling wealth to the ruling class then Laissez Faire capitalism. There is not a single "communism" that meets even a fraction of the pillars of communism, or the transition to communism.

[Randomdude]

Originally Posted by user_id

Haha...then there is no way to avoid capitalism. Things are either owned privately or by the state. There is no way to have "no ownership" in a civilization.

The abolishment of the state as an entity in itself. It is true, in the abstract sense, there is no way to "not own" something, however, the collective ownership and goverance of resources is the closest thing to lack of ownership at all.

Originally Posted by user_id

You simply equate capitalist with "big business" and its silly. A small business owner is just as much a capitalist as those running a large corporation. The number of capitalist in this country is rather large. If there were less people like yourself, there would more. Most people willingly enslave themselves to business owners because they think its "less risky".

Where did I equate "big business" with "capitalist"? Anyone can be a capitalist, the line gets drawn where you actually own your own means. The fact is, most small businesses do not own the means, and therefore are simply serving the capitalist by "borrowing" their investments. The majority of capitalists are still "enslaved" to business owners, except, they are enslaved by a loan payment and interest, rather then a desk and a paycheck.

Originally Posted by user_id

Having debt does not commit you to anything. Debt can be used smartly or stupidly. It is stupid financial/life choices and thoughts about the world that commit one to such a life.

You go ahead and miss a payment on debt and see what happens. Debt enslaves you to the holder of the note. You are doing nothing other then borrowing means or assets until you have exchanged an acceptable amount for them.

Originally Posted by user_id

Ugh....There is no such thing as "natural inflation", inflation is caused always by government (and central bank) action. Increases in minimum wage have been almost perfectly correlated with inflation, now you want to suggest that this inflation is really "natural". How do you determine the "natural rate" of inflation vs inflation caused by government and monetary policy?

Ok, "natural inflation" was a bad term. Lets say, instead, "statistically predictable inflation". There is absolutely zero evidence that has or can ever be shown that minimum wage increases have led to inflation at all, and certainly not inflation outlying historical norms.

Originally Posted by user_id

Its amazing that you think you know things as facts, that are rather far from such. All (success) business will employ labor to the point where the marginal return of labor equals the costs associated with the labor. In the situation I described the business owner would be losing money by not hiring a 4th employee. This has nothing to do with "thin margins", all businesses will observe a diminishing marginal return of labor as they increase the number of people they employ, this is because again, they have limited capital. Over time the capital can grow, in which case they can hire more people. But short term, capital is essentially fixed.

It DOES have to do with thin margins. Simply adjust your model to have a higher price point on the good. Ta da! Oh look, it still makes sense to keep the forth worker within the constraints of your example. At some price point, you could afford to fill all orders, and profit on all labor, regardless of the marginal return.

Originally Posted by user_id

Who cares what he "could afford to pay", you could say the same thing for his rent, equipment costs, etc. Why should he pay above market rates for labor rather than rent, his supplies etc?

This was an example of what kind of profit margin your average sandwich shop is operating at. It was meant to prove that he had significant padding in his profit margin to absorb additional labor cost without jacking up the price. You are trying to turn the argument in to something it is not.

Originally Posted by user_id

HAHA. This is great, because you mention "perfect competition" as your answer, yet ignore it. If there was "perfect competition" there would be NO extra profit margin to absorb! If McDonalds or Wendy's is willing to take a hit in their profits with an increase in minimum wage, why then not do it to increase market share?

Because, over time, in perfect competition, prices will gradually chase each other upwards to the highest sales/demand point. However, in the short run, given, say, a minimum wage increase, BK would NOT be able to simply jack the prices up reactively. Wendys and McDonalds would not follow, and instead capture the market share.

Over time, all of their prices would go up to retain past profit margins, however, that would be the point of continuously adjusting minimum wage, so that trailing inflation will never catch and pass it.

Originally Posted by user_id

Ugh. What do you think determine how many people a business hires? A magic eight ball? NO! Its the marginal return on labor! A business will employ new people up to the point where another employee would either not make or lose money! EVERY business will observe a dinimishing return on labor because every business has short term capital constraints.

Yes, but if the hiring of additional workers is based solely on paying substandard wages, you are operating inefficiently, assuming of course, that other factories are matching your prices at higher wages (I did not initially include this caveat, and probably should have).

Additionally, EVERY business will only observe diminishing returns if their capital is employed to the point in which its units per worker begin to reduce, essentially when non human capital is over employed. For example, if 1500 units could be produced on a machine, and worker A could produce 800 units, but demand was only 400, this business would have underemployed capital.

Originally Posted by user_id

Again, you say something about ignore it. People want to live in the best place they can. If people's wage's increase, people will try to "move up" this will create additional demand there by increasing property costs across the board (because at the lowest level you have multiple households in one home).

Many peoples idea of "moving up" is moving out of rental property altogether. If you raise incomes, more people will be able to afford to buy housing. Given, this will eventually put such upward pressure on the housing market prices that the bottom levels of people will eventually be priced out of the market again. However, initially, home ownership will swell, and the demand for rental units will fall.

Originally Posted by user_id

The landlord always wants to increase rent, the only thing that stops him are people's incomes. Over time the excess money will just go to rent.

Are you kidding me? There are MANY things that prevent landlords from raising rent. Ignoring government interference, the supply and demand of apartments in a given area contributes greatly to what can be charged, so does affordability of local housing stock. If there is a 10% apartment vacancy rate, landlords are renting to bums for peanuts, not jacking up rates.

[user_id]

Originally Posted by Randomdude

.... it became neccessary to assume a constant wholesale price, and that can only be done by assuming a steady profit margin, which can only be done by using one store.

Except that wholesale prices are not constant, profit margins are not steady, and retailers vary their prices for a number of reasons. Looking at a single store makes no sense at all, but of course since you don't have real data you'll try to convince yourself that this makes sense

Originally Posted by Randomdude

Any how, Im failing to see what your point is of this whole statement.

The excess wages in cities vs more rural areas is not going to improve peoples lives, its going to pay a landlord.

Originally Posted by Randomdude

People went from farming to the factory, factory to low paying service. You can trace the trends on various BLS reports.

Yes you can, and you'll quickly find most people don't work in "labor intensive" fields anymore. Most labor intensive work has been automated or at least made easier with machinery.

Originally Posted by Randomdude

Not remotely to the level its going to be within the next 50-100 years. This isnt going to just be a shift to a different field.

People have been saying this for centuries, the world is dramatically difference today that it was 100 years ago. Most people did not even have electricity 100 years ago.... What is going on now is the same thing that has been going on for centuries.

Originally Posted by Randomdude

There are no "free patches" you can just claim.

There are most certainly land that is nearly worthless and can be purchased for almost nothing. The mid-west is filled with it in previously industrial communities, or of course you can look at land in the middle of no where.

The land is free, in fact, sometimes people will pay you just to take it off their hands!

Originally Posted by Randomdude

Even if it were a state piece of land, you can not just harvest tax payer resources. That is stealing.

Call it whatever you wish, but I can easily go into the mountains and get wood. I've done it numerous times.

Originally Posted by Randomdude

The goal of this system is purely to extract wealth towards the top..

That is not the goal of free markets, that is what you believe. None of the major advocates of free markets think the point of it is to "extract wealth towards the top", rather the opposite.

Originally Posted by Randomdude

There is not a single "communism" that meets even a fraction of the pillars of communism, or the transition to communism.

There is not a pure communist community (with the possible exception of band societies), but that is because Marxism is unrealistic drivel.

Originally Posted by Randomdude

You go ahead and miss a payment on debt and see what happens. Debt enslaves you to the holder of the note.

It does no such thing. What happens when you miss a payment? The creditor puts a mark on your credit report. What happens if you can't pay it back? If the loan is non-recourse, the lender simply takes back whatever was used to secure it. If its recourse, the lender can try to sue you for the money. If you can't pay, you can file for bankruptcy.

This is not rome, the legal system prevents people from becoming "debt slaves".

Originally Posted by Randomdude

There is absolutely zero evidence that has or can ever be shown that minimum wage increases have led to inflation at all

There is evidence of such, but the fundamental problem is that its rather hard to say that in year 2008 .5% of the increase in inflation was due to the minimum wage increase in 2007. How even in principle would you determine that? You really can't.

But if you don't think an increase in the minimum wage can increase inflation, then you must also think that an increase in oil costs can't increase inflation. Both would effect the markets in the same way (i.e, create a supply shock).

Originally Posted by Randomdude

It DOES have to do with thin margins. Simply adjust your model to have a higher price point on the good. Ta da! Oh look, it still makes sense to keep the forth worker within the constraints of your example.

No, it really does not. This is NOT an issue of "thin margins". The profit margin on the first couple employees is large, the point is that the "profit margin" on additional employees diminishes. This is true of ANY business.

What you are talking about is a business that is not maximizing its profit. Although the 4th employee does not add that much, he still adds some profit. Something is better than nothing. Any good business is going to employ people up to the point in my example, that is the point where an additional employee does not increase profit.

Originally Posted by Randomdude

It was meant to prove that he had significant padding in his profit margin to absorb additional labor cost without jacking up the price.

When you talk about small business, the "profit margin" is the salary of the owner. Could he a small business owner pay himself less in order to pay its employees more? Probably, but in what way is this interesting? Its not. People running sandwich shops are not making big bucks, even an owner of a successful chain like subway is not going to make much beyond $150k/year or so.

Competition has reduce the owners earnings to the point where there is not much "padding", your issue is that you most likely don't think the owner deserves say $120k/year for running/owning the store. But who cares? The market determines the owner deserves.

Originally Posted by Randomdude

Because, over time, in perfect competition, prices will gradually chase each other upwards to the highest sales/demand point. However, in the short run, given, say, a minimum wage increase, BK would NOT be able to simply jack the prices up reactively. Wendys and McDonalds would not follow, and instead capture the market share.

Again you contradict yourself. These business have all been around a long term, they have all driven each others margins down to the point where there is no significant padding. An increase in any cost will force them to all raise prices, because there is no "padding" due to competition over the years.

Its rather easy to demonstrate that your reasoning is wrong. When prices of dairy and some meat products was going up last year all the fast food places adjusted their pricing in some fashion (i.e., either increased the price or changed the product to make it cheaper). An increase in labor costs would believe in the same way, for the same reason. There is little wiggle room.

Originally Posted by Randomdude

Yes, but if the hiring of additional workers is based solely on paying substandard wages....

The actual wages are not the issue, the issue is that the returns on labor diminish as you increase labor (i.e., employ more workers). The market will determine what business have to pay for labor, given the price there will be a maximum number of employees they can hire before their return reaches zero.

Originally Posted by Randomdude

However, initially, home ownership will swell, and the demand for rental units will fall.

Home ownership may increase, but not by much because the increase in demand will just increase prices limiting any move to ownership. It will also not cause much of a decline in the rental market, because the people on the bottom are sharing units and they will start separating the households.

Communities with higher incomes have higher property costs even when the property is the same in quality. Land owners will do their best to extract any excess from the people they rent to, this is really just the classical theory of rents.

What determines rents in a free market? According to Ricardo the difference in productivity from the land that is free and the land in question. He was more so thinking of farming and such, but the same applies to anything. If a farmer can produce 25% more on land X and on land Y that is free, then the rent for X will be just marginally lower than 25% of its production. If the land owner takes 24%, the farmer is still better off on land X. But, the land owner is taking the majority of the spread. But for what exactly? Having his name on a piece of paper.

Originally Posted by Randomdude

Are you kidding me? There are MANY things that prevent landlords from raising rent.

In a market that is not depressed rents are determined by wages. Now in depressed markets, there are some other issues. Just as with the increase in minimum wage, the condition of the market when you do it will determine the outcome. But the market will nullify the result regardless.

The fundamental error of communist thinking is that the markets are a natural force, trying to control them always results in failure. You can't escape free market economics any more than you can oxygen.