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OK, so why are big-box retailers driving mom-and-pop stores out of business? Because they can offer lower prices, and people can't afford to shop anywhere else.
Why can't people afford to shop anywhere else? Because they don't earn enough money.
Do you really think that reducing the minimum wage (which, to use the same logic as those who are insisting that raising it would have an inflationary effect on local prevailing wages, would depress local wages) would somehow drive more customers to those mom-and-pop stores?
The effect would be negligible, IMO.
You're also using the fallacious argument that people only shop at value stores because they can't afford to shop anywhere else, when, in fact, people of all income levels are always looking for the best prices on whatever they buy. Why on earth would you spend more for a product than you have to?
Longer term employees would have to receive a raise to keep the parity between themselves and new hires. That will lead to one of two things:
Higher prices (your inflationary spiral) or,
greater efficiencies which lead to prices staying more or less the same. With greater efficiencies usually comes reduced hiring or, in some cases, even staff reductions.
Once again, take the next step.
HAHAHAHAHA
In the minimum wage world, it doesn't work that way. Parity will not be retained and wages will be compressed.
Which doesn't explain why the big-box conglomerates are fighting it so fiercely.
They're fighting minimum-wage hikes that are aimed specifically at themselves, the big box stores like Walmart. They want minimum wage hikes across the board which they know would be disastrous for their local competition.
Lost in the discussion about the potential raise in the minimum wage is what impact that will have on people who CURRENTLY make slightly more than the new minimum wage when it is implemented.
Here is what I am talking about:
Current Minimum Wage $7.25 an hour is paid to mostly people with no skills and in retail or fast food.
Semi Skilled person working in a position such as an Office Clerk, Nurses Aide, Receptionist, Cook, factory worker with some skills, etc. (Lets say they currently make $10.25 an hour)
They are paid more than minimum wage because these semi skilled employees have some unique education and talents and the marketplace says they should make more than minimum wage.
OK now, lets say President Obama is successful and get a law passed that will increase the Minimum Wage to $10.00 an hour and now low skilled fast food workers make $10 an hour.
What happens to the semi skilled workers who use to make $3 more than Minimum Wage because they had talents and education? Will their pay go up to $13 an hour?
Many people in retailing make more than the minimum. It depands on if they are "salespeople" or just clerks. Salespeople are required to sell. Selling is a skill.
"Factory worker" is too broad a term. They may be welders, sheet metal workers, electronics assembly, mechanical assembly, finished goods or unfinished goods stock people (must have knowledge of material handling systems), planners, quality control inspectors, shipping/receiving, etc.
Within these departments there are people at various wage levels. There are supervisors and managers.
To assume that all these "factory workers" are all making minimum wage is deceptive. It may be that there are none that are at minimum wage.
Finally, what happens to all of these people when minimum wage goes up? As I have pointed out before, all of these people are going to feel entitled to an increase. And rightfully so. That is the problem with the government setting a minimum wage.
Mid-priced employees won't get a raise because what might have become their money had to go to entry level minimum wage employees.
Raising the minimum wage reduces the money available to better co-workers.
It also makes entry level jobs disappear, as employers find they can't afford to bring on additional workers. Service and productivity decline and less people have jobs = Obamanomics.
Longer term employees would have to receive a raise to keep the parity between themselves and new hires. That will lead to one of two things:
Higher prices (your inflationary spiral) or,
greater efficiencies which lead to prices staying more or less the same. With greater efficiencies usually comes reduced hiring or, in some cases, even staff reductions.
Once again, take the next step.
This is true. Proponents of government imposed wage increaes never think of this.
Many people in retailing make more than the minimum. It depands on if they are "salespeople" or just clerks. Salespeople are required to sell. Selling is a skill.
"Factory worker" is too broad a term. They may be welders, sheet metal workers, electronics assembly, mechanical assembly, finished goods or unfinished goods stock people (must have knowledge of material handling systems), planners, quality control inspectors, shipping/receiving, etc.
Within these departments there are people at various wage levels. There are supervisors and managers.
To assume that all these "factory workers" are all making minimum wage is deceptive. It may be that there are none that are at minimum wage.
Finally, what happens to all of these people when minimum wage goes up? As I have pointed out before, all of these people are going to feel entitled to an increase. And rightfully so. That is the problem with the government setting a minimum wage.
Skilled sales people work on commission in addition to their hourly rate. My wife used to work in retail. She was paid $22/hour and 3% commission on her sales. She was earning around $79K/year.
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