NJ referendum on raising minimum wage. Opinions?

[HYHYBT]

Will someone holding the position that an increase in the minimum wage will cause inflation *by at least as much as the wage increase* please provide evidence, or at least logical argument, specifically for the part in asterisks?

[Gravekeeper]

These are all bad things.

Since you haven't read this thread, let me just quote myself:

Companies respond to a raise in labour costs by seeking methods to reduce overhead costs, increase efficiency and increase worker productivity. An increase in productivity that goes hand in hand with increased employee wages. When the minimum federal wage was increased in Alabama and Georgia, only 8% of businesses surveyed considered cutting jobs as a solution to make up the labour costs. Conversely the most important thing the businesses in question listed to offset the cost was increasing performance standards. ( Per a 2011 study from Georgia State University ).

Additionally, the top 10 States with the highest minimum wages have FASTER small business and retail business growth. They also hired more workers and expanded their businesses more. Whereas in the other 40, small business growth was actually a net negative. ( Per the Fiscal Policy Institute ).

Finally, a profit boom for practically everyone involved always follows an increase in minimal wage. The Chicago Federal Reserve Bank conducted a study in 2011 on the effect of a minimum wage hike on spending habits of households. An increase in $1 in minimum wage causes a household to spend twice as much money on large durable purchases ( New appliances, electronics, furniture, home improvement, cars, etc ) in the next quarter. Additionally, spending on goods and services increases for two quarters BEFORE a minimum wage hike goes into effect.

Additionally, as I pointed out earlier. Even if McDonalds passed the ENTIRE cost of a raise in minimum wage onto the customer, it would result in a global price increase of 4.7% on all menu items. Or another 18 cents for a Big Mac. Realistically, little of the increase would be passed on to the customer.

You make it sound like hardly any industries utilize minimum wage. The reality is that few products exist in the US that are not brought to you by a minimum wage employee somewhere along the line. Raw materials, production, transportation, and retail all have to be considered, and all of them have minimum wage positions.

I am considering retail. The largest section of minimum wage workers are concentrated in the hospitality, service and retail industries. They account for 29.8% with the hospitality industry being the largest ( 18.5% ) followed by service ( 6.1% ) and retail ( 5.2% ).

Materials, production and transportation have a very small % of minimum wage workers. Manufacturing ( 1.7% ), Transportation ( 1.5% ), Mining ( 0.7% ), Construction ( 0.7% ).

Per the US Department of Labour.

And why do you think that is? McDonalds decided to sell it for less, while deciding to pay their people more? Cause they're just so nice and sweet and caring?

I would venture to say better economic regulations and social support. Seeing as they are franchises.

I didnt see anyone arguing against my call for less government waste, only challenging it as a refusal to band aid with minimum wage increase. Band aids do have a use. They are temporary treatment, until advanced care can be administered. So I have no problem with a short term artifical increase in the wage, as long as it's backed up with an attack on buerocracy.

You would reduce government spending immediately because the government would no longer have to subsidize minimum wage workers so they don't starve.

Also define "artificial increase". Minimum wage is 76% of what it was in 1960.

But most people see challenging a 100+ year old gluttony machine that has grown accustomed to it's multi-trillion dollar diet as just too difficult, and instead have lead us to tacking yet another band aid on an infected wound, with no hospital in sight.

People work tirelessly to change the government every day. But the speed of that change is not helping the people that need it right now. You act like no one is doing anything to change the way things are done. My concern is that people can live better lives as soon as possible. Being Canadian, I'm awash in filthy socialism like that -.-

The 100+ year old American system you want to challenge is not going to topple until at least one more generation is dead. It didn't topple even after it brought your country to its financial knees and took half the world with it.

Can it be changed? Sure. Slowly. Very slowly. But that's not helping the people already locked in generational poverty and its not stopping the companies in question from subsidizing their own work force with government money.

[Gravekeeper]

Will someone holding the position that an increase in the minimum wage will cause inflation *by at least as much as the wage increase* please provide evidence, or at least logical argument, specifically for the part in asterisks?

There is none. Inflation has so many economic factors that blaming it on one thing is ludicrous. It certainly would not cause inflation equal to the wage increase. Seeing as that has never actually happened in the US all the other times it was increased. Inflation also only occurs if businesses past the entire cost on to the customers instead of improving their own production and operation, etc. Even saying that, minimum wage increases are very tiny in relation to the US economy and would effectively be inconsequential.

The US has an annual inflation rate of 2.6% or so. If you increased minimum wage
and then tied it to the annual inflation of the Cost Of Living Adjustment the average business would need to increase prices by 0.03% per year to cover it. Provided they choose to pass the entire cost onto the customer instead of taking measures to improve efficiency and production practices. Which is the go too solution most businesses try to use first.

In other words an increase in minimum wage is so insignificant to inflation that its actually smaller than the Depart Of Labor's margin for error when calculating annual inflation. >.>

[crashhelmet]

Good point. I have a younger brother who has an MBA. After his graduation, he took the attitude of "I have an MBA, I'm worth a lot." So he was constantly passing up many jobs/interviews, simply because the starting salary wasn't what he thought he was worth. Rather than take the job, stick around and work his way up, he was after the "big money."

He got a bit annoyed at me, simply because I make more than he does...and I don't have an MBA. Of course, I've also been at my job over 15 years (16 years in July ), started at the bottom, and worked my ass off.

That reminds me of this commercial (YouTube)

Will someone holding the position that an increase in the minimum wage will cause inflation *by at least as much as the wage increase* please provide evidence, or at least logical argument, specifically for the part in asterisks?

GK is right, as there is no definitive evidence,but the logic in it is that it perpetuates a cycle. Workers make more money, they spend more money on things they normally didn't, thus creating a demand, which in turn raises prices.

Call it coincidence, but right now with all this talk about raising minimum wage, fast food places like McDonald's and Wendy's have gotten rid of their "Dollar Menu" or increased the prices on everything by enough to compensate for the increased wages they'd have to pay out.

[Gravekeeper]

GK is right, as there is no definitive evidence,but the logic in it is that it perpetuates a cycle. Workers make more money, they spend more money on things they normally didn't, thus creating a demand, which in turn raises prices.

Demand only tends to raises prices if it can't be met by supply. The inflation logic they use is that adding new cost to production = higher prices. Which in turn requires higher wages to buy the product which in turn causes higher prices. Creating a death spiral. Its a rather simplistic way of looking at it that ignores, well, math and reason.

It also relies entirely on every company passing the cost directly to the consumer rather than absorbing it. Absorbing it always the more attractive option for a business because it allows them to remain competitive. Plus the economic boon that always follows a minimum wage increase lets them make it back on volume anyhow.

Finally, it completely ignores how much value production labour is worth to the company. If a 1:1 ratio between wage costs and inflation actually existed the economic system would collapse. The entire basis of business is that the product/service being offered is worth more than the costs and labour involved in selling it. Labour is a money multiplier and its only one component of the cost of a product. Saying there's a 1:1 ratio is just silly.

Call it coincidence, but right now with all this talk about raising minimum wage, fast food places like McDonald's and Wendy's have gotten rid of their "Dollar Menu" or increased the prices on everything by enough to compensate for the increased wages they'd have to pay out.

No, they haven't. The Dollar Menu is still the same, they've just added new items to it which are normally more expensive. It has nothing to do minimum wage talk. All of the $1 options are still there, they just added some $2 options and one $5 option. Wendy's is doing the same thing.

The idea behind them is not profit, the dollar/value menus don't have much of a profit margin. But they increase sales and attract more customers. Making back the money in volume and foot traffic. People tend to add things from the value menu to regular orders because its cheap. It increases the size of the average order.

Which is exactly how it played out for Wendy's, whose been testing the new menu for over a year now. Its not a recent thing in response to the minimum wage debate. Its just regular marketing. -.-

[crashhelmet]

Demand only tends to raises prices if it can't be met by supply. The inflation logic they use is that adding new cost to production = higher prices. Which in turn requires higher wages to buy the product which in turn causes higher prices. Creating a death spiral. Its a rather simplistic way of looking at it that ignores, well, math and reason.

It also relies entirely on every company passing the cost directly to the consumer rather than absorbing it. Absorbing it always the more attractive option for a business because it allows them to remain competitive. Plus the economic boon that always follows a minimum wage increase lets them make it back on volume anyhow.

Finally, it completely ignores how much value production labour is worth to the company. If a 1:1 ratio between wage costs and inflation actually existed the economic system would collapse. The entire basis of business is that the product/service being offered is worth more than the costs and labour involved in selling it. Labour is a money multiplier and its only one component of the cost of a product. Saying there's a 1:1 ratio is just silly.

A lack of supply is not required to raise prices for an increase in demand. Prices are fixed all the time to create demand and/or control supply. Some will even argue that they're done to control class division.

Prices are increased almost completely across the board. From their lowest items to their most expensive items.

Are you saying that the economic system isn't broken? Never underestimate the level of greed in the corporate world.

No, they haven't. The Dollar Menu is still the same, they've just added new items to it which are normally more expensive. It has nothing to do minimum wage talk. All of the $1 options are still there, they just added some $2 options and one $5 option. Wendy's is doing the same thing.

The idea behind them is not profit, the dollar/value menus don't have much of a profit margin. But they increase sales and attract more customers. Making back the money in volume and foot traffic. People tend to add things from the value menu to regular orders because its cheap. It increases the size of the average order.

Which is exactly how it played out for Wendy's, whose been testing the new menu for over a year now. Its not a recent thing in response to the minimum wage debate. Its just regular marketing. -.-

I don't know how it is for you up there in Canadialandia, but here in the States prices on most items on McDonald's "Dollar Menu and More," as it's now called, are up 10 to 20 cents from the former "Dollar Menu" prices. They have introduced new items at a $1 price point, but not many. Prices at Wendy's and KFC have increased as well, again by a small margin of about 10 to 20 cents per item.

They try to claim that the price increases are due to increases in the cost of beef, chicken, produce, etc, but commodity costs fluctuate all the time. I see prices skyrocket in my grocery store, but nothing changes at a fast food place. The closest correlation to commodity cost is the coincidental re-release of the McRib every time pork costs drop.

The price increases are more than enough to justify the raise of minimum wage.

But as I said, there's nothing definitive to prove it all. It's correlative coincidence. But it happens every time.

[Andara Bledin]

Demand only tends to raises prices if it can't be met by supply. The inflation logic they use is that adding new cost to production = higher prices. Which in turn requires higher wages to buy the product which in turn causes higher prices. Creating a death spiral. Its a rather simplistic way of looking at it that ignores, well, math and reason.

And the entire basis behind Economy of Scale, too.

[kamn]

GK is right, as there is no definitive evidence,but the logic in it is that it perpetuates a cycle. Workers make more money, they spend more money on things they normally didn't, thus creating a demand, which in turn raises prices.

Even if that were true, it wouldn't be sustained. You're presenting it like philosophers presented Achilles and the tortoise. The tortoise had exactly half of the movement that Achilles had, and would always move away from him. And everytime achilles would try to grab the tortoise, he wouldn't be able to, cos it would be farther away. While practice says that it doesn't work that way, that the loop would end, if by nothing else, approximations. Just like the problem you are saying would occur.

But what has been stated in this very thread, such a loop would not even occur, or rather it already is, it is a normal part of the economic cycle, and would only be marginally affected (someone said 0.03%?).a

[Gravekeeper]

A lack of supply is not required to raise prices for an increase in demand. Prices are fixed all the time to create demand and/or control supply. Some will even argue that they're done to control class division.

No, its not, but I'm addressing the death spiral argument in regards to overall inflation. The individual fuckery of companies is a whole other can of worms.

Are you saying that the economic system isn't broken? Never underestimate the level of greed in the corporate world.

Well, the US system is pretty fubar I'll admit.

They try to claim that the price increases are due to increases in the cost of beef, chicken, produce, etc, but commodity costs fluctuate all the time. I see prices skyrocket in my grocery store, but nothing changes at a fast food place.

It is due to an increase in the cost of beef though. The US cattle industry is having a rough time after a few years of drought. The whole sale cost of a pound of beef is up from $1.69 in 2010 to $3.14. The whole sale price was setting a new record every month there for the first half of 2013. US cattle herds are the smallest they've been since 1952.

So it has nothing to do with minimum wage chatter.

[HYHYBT]

Wendy's has had their 99c menu for more than 20 years. McDonald's has had the Dollar Menu about half as long. Of course they cannot keep prices the same forever; if they could, the hamburgers would be 15 cents and Coke 5, and we'd still have dimestores that lived up to the name. It happens even without changing the minimum wage, and there's precisely zero basis for claiming the current change is because the minimum *might* be raised sometime in the future.

[fireheart17]

Call it coincidence, but right now with all this talk about raising minimum wage, fast food places like McDonald's and Wendy's have gotten rid of their "Dollar Menu" or increased the prices on everything by enough to compensate for the increased wages they'd have to pay out.

Minimum wage for 15-year-olds (technically the "legal age" you can work down here*) is around $8-$9 an hour. Adult minimum wage is $18-$20 per hour depending on the job (Supermarkets paid much higher than hospitality).

We still have a dollar menu at Hungry Jacks and McDonalds (although the dollar menu at McDonalds is less noticeable).

*-My state sets the minimum age at 14 years, 9 months (I'm guessing to compensate for the "trial" period most places set). McDonalds down here will allow 13-14 year olds to work there WITH parental permission.

Unfortunately places like that prefer kids under 18 because they're cheaper to hire and train, and also easier to screw over labor-law wise.

[Hyena Dandy]

http://www.addictinginfo.org/2013/10...-minimum-wage/

Edit: I forgot to actually say something about it.

This is a link that argues that, actually, increasing the minimum wage by a pretty biga mount is not going to destroy the economy.