Minimum Wage Increase

[mikoyan29]

Not sure if this belongs here in politics or in the social woes section. But I guess there is a component of politics in this.

I can't imagine what it would be like to try to make do on minimum wage. It's what $7.25 right now? If you assume 40 hour weeks, that means you are making around $15,000/year. That would be barely enough for housing in some parts of the country, so it pretty much means the government is subsidizing these people and in essence it means that the government is subsidizing rich bastards that really don't need it. And if some in the government get their way, there wont even be that.

Now we get the argument that if business have to raise wages, they wont get to hire as many people. How come there are companies like In N' Out and CostCo that can manage to pay their people well and still make a profit? And their prices aren't really that much more expensive than their counterparts? And just think, more of that money gets pumped into the economy which means it will find its way back to the people that run the companies...so it's not like the money will disappear.

[HYHYBT]

I'd like to know why minimum wage was never tied to inflation. It seems so boneheadedly obvious, but then maybe that's the problem.

[Greenday]

They were talking about it on the radio the other night and were acting like it would be the end of the world as we know it. Small businesses everywhere will die off. WE ARE ALL GOING TO DIE!!!!!!!

Seriously, if you can't afford to pay employees a meager $9 an hour, you can't afford to pay them $7.25 an hour. It's pathetic. God forbid people make a living wage.

[mikoyan29]

I mean I can understand the hesitation of paying that kind of money to a teenager who is just looking for an after school job...sort of. But why is it that some companies can afford to pay their workers a living wage and are quite profitable and others seemingly can't. And the really sad part is that when companies don't pay a living wage, the rest of society foots the bill because of food stamps, emergency room visits and what not. Why should I pay more in taxes so that Mr. Walton can get another Bentley?

[crashhelmet]

I'd like to know why minimum wage was never tied to inflation. It seems so boneheadedly obvious, but then maybe that's the problem.

Increases in minimum wage help cause inflation. It would be a vicious cycle.

1) Raise Minimum Wage
2) Business see people can spend more money
3) Businesses raise prices
4) Cost of Living increases
5) People can no longer afford to spend more
6) Go back to Step 1

Then add in the raises that all of the other employees should be getting for their jobs in marketing, accounting, etc while this cycle is churning and things are inflated even more.

That's just how I see it though.

[Gravekeeper]

I never understood the thing with minimum wage in the US. Or indeed with any of the things that make rich assholes freak out and declare it will destroy the entire country if the poor people get an extra dollar somewhere.

Minimum wage up here is $10.25 ( US and Canadian dollar are equal atm too ). The cost of living is a little higher in Canada, but by the same measure you don't have medical expenses either. I can't imagine trying to live on like $7 an hour.

[Nyoibo]

Increases in minimum wage help cause inflation. It would be a vicious cycle.

1) Raise Minimum Wage
2) Business see people can spend more money
3) Businesses raise prices
4) Cost of Living increases
5) People can no longer afford to spend more
6) Go back to Step 1

Then add in the raises that all of the other employees should be getting for their jobs in marketing, accounting, etc while this cycle is churning and things are inflated even more.

That's just how I see it though.

Actually it tends to work the other way around, with the wage increase comes more disposable income which gets passed on to businesses increasing profits, the problem is that it doesn't happen immediately and most businesses are to short sighted to see the long term benefits

[Greenday]

Minimum wage up here is $10.25 ( US and Canadian dollar are equal atm too ). The cost of living is a little higher in Canada, but by the same measure you don't have medical expenses either. I can't imagine trying to live on like $7 an hour.

Now, how does the cost of living vary in Canada across the country? I live in New Jersey and as far as the US goes, we have one of the highest costs of living in the entire country. You go out to the Midwest and your dollar can go a lot further. $10 an hour in NJ still won't get you very far at all.

[crashhelmet]

Actually it tends to work the other way around, with the wage increase comes more disposable income which gets passed on to businesses increasing profits, the problem is that it doesn't happen immediately and most businesses are to short sighted to see the long term benefits

One thing I forgot to include is there are some businesses that increase the costs of their goods to accommodate for the increase in wages they have to pay out. They still want that x% profit, so prices go up by whatever they determine to offset the increase. Similar to Papa Johns saying he'd have to increase pizza costs by 20 cents to make up for "Obamacare."

Yes, the extra wages do get passed back to the businesses, but that happens in two ways. It happens with the populations spending more, because they have it to spend, and it happens with businesses raising prices.

The rules of Supply and Demand still apply. The increase in demand and the lack of change in supply causes the value to go up.

*EDIT*
Eventually, the demand will start to drop because of the increase in prices and they'll plateau again. Suppliers may even drop the prices a little to try and spark demand, but usually they stay on, or near that plateau until the cycle restarts

[Duelist925]

http://thinkprogress.org/economy/201...mum-wage-oops/


This seems applicable here.

[draco664]

http://thinkprogress.org/economy/201...mum-wage-oops/


This seems applicable here.

I love it when politicians try and make a point and end up shooting themselves in the foot.

[Cats]

One thing that bothers me about raising mimimum wage is those making more than it don't get a raise as well to compensate for the difference (note that I am aware it does not solve the problem CH pointed out).

A raise in min wage means now people who get it earn more money while dealing with the same amount of work and responsiblities. In my state, min wage is $8. If it went up to $9, that's an increase of 12.5%. I sure would love to get a raise like that while doing absolutely nothing. Instead of making more than $6 what the lowest of my crew makes, I'm suddently worth only $5 more, while still having the same amount of increased responsibilities (I'm a supervisor, BTW). Nice to be rewarded for one's hard work and long-term dedication to the company to have people doing less work/lesser experience than you creep closer to you in pay every time minimum wage rises.

What about someone who is ALREADY making $9 an hour? An employer may or may not give them a raise to compensate for minimum wage raising (they probably won't), so wouldn't that seem like sort of a dock in their pay?

Assuming we could blame minimum wage by itself to be the cause of inflation, it becomes a problem for those making higher who don't get a higher wage to compensate. With a price increase but with a forced raise for some but not all, what once was a comfortable affordable lifestyle for some may now become a struggle to make ends meet.


Note that I know jack crap about economics nor do I have any ideas about a "solution" that's mostly fair to everyone without some sort of backlash. Just putting my thoughts out there.

[Seifer]

Increases in minimum wage help cause inflation. It would be a vicious cycle.

1) Raise Minimum Wage
2) Business see people can spend more money
3) Businesses raise prices
4) Cost of Living increases
5) People can no longer afford to spend more
6) Go back to Step 1

Then add in the raises that all of the other employees should be getting for their jobs in marketing, accounting, etc while this cycle is churning and things are inflated even more.

That's just how I see it though.

The problem is that other countries, like Australia, have their minimum wage tied to inflation and they manage to do just fine.

While some prices might go up because people are greedy assholes, I don't think it would cause the economic collapse of America like some people fear. I would assume that prices wouldn't waver too drastically, since a lot of stores (like Wal-Mart) thrive on being "the cheapest." Even if people have more money, most won't drastically change their spending habits. (Especially since an extra $2-3 an hour isn't going to make as big of a difference as some people think). Will people spend money on frivolous bullshit? Of course, but then again, they do that now.

[Duelist925]

The problem is that other countries, like Australia, have their minimum wage tied to inflation and they manage to do just fine.

While some prices might go up because people are greedy assholes, I don't think it would cause the economic collapse of America like some people fear. I would assume that prices wouldn't waver too drastically, since a lot of stores (like Wal-Mart) thrive on being "the cheapest." Even if people have more money, most won't drastically change their spending habits. (Especially since an extra $2-3 an hour isn't going to make as big of a difference as some people think). Will people spend money on frivolous bullshit? Of course, but then again, they do that now.

Heh, friend of mine put it this way:

"Of course they'll spend their extra money on frivolous crap. Our entire economy is based on buying frivolous crap!"

[BlaqueKatt]

I mean I can understand the hesitation of paying that kind of money to a teenager who is just looking for an after school job...sort of.

Which is about a whopping 7% of minimum wage workers.

Source

some nice myths about low wage workers debunked as well.