Why do I hear people saying raising the min wage isn't going to help anyone BECAUSE prices will

[diabeticman]

raise on everything and the poor will be in the same boat as before.


I have heard this from two different people who voted for republicans.


In fact one insisted that I should want the min wage to be abolished because if people don't have to pay employees a certain amount of money and there fore they can past the savings onto customers.

[Blecht]

1. Maybe because you have people around you who lack the ability to think critically (nt)

[TreasonousBastard]

2. Because the truth is that...

maybe some prices will rise and maybe some won't.

Nobody really knows, but they choose to be pessimistic.

[TexasProgresive]

3. Like prices have been stable

for all these years that minimum wage has been stagnant?

[Kurska]

4. Probably because they have no idea how inflation works.

Raising the minimum wage doesn't increase the amount of money that exist, it just forces more of into the hands of those on the lower end of the economic ladder.

Raising the minimum wage would only increase prices on goods if there wasn't enough goods. America produces more than enough for everyone (evidenced by the amount of food and other goods that groceries stores are forced to throw away everyday). The poor just don't have enough money to buy them. Even then, giving the poor more purchasing power would probably actually increase the supply of good for them, because it would shift production from luxury goods to the basic necessity (the market follows the money, not the other way around).

[madokie]

5. hogwash

This shit has been proven to be wrong on so many occasions I don't know where to start. Hell Henry the Ford proved this to be bullshit a hundred years ago

[oldhippie]

6. The whole concept of sellers being able to "pass on" .....

.... either costs or savings to consumers is a vast oversimplification seized by small minds that are unable to grasp actual economic principles. Market pricing is not merely a direct function of production costs.

(And yes, I am in a bad mood this morning.)

[rock]

21. Yeah, like the rich will pass on those savings to us (the poor)

Seems like we've heard that before (as in "the piss down theory of economics&quot .

[oldhippie]

30. They might, if their competitors do .....

The trick is having competitors.

[reformist2]

7. Ask them what percentage increasing the min wage will increase overall consumer spending ability.

That is, if they can even do simple math.

[Wounded Bear]

8. It's the corollary to "trickle down economics"....

Plain and simple. That's how they view things. They think that the increased profits companies get from low wages are passed on to consumers. Generally, that isn't true. It goes to CEO salaries and stock dividends first. Usually, after that payout there is nothing left for worker wage increases or price reductions.

In fact, of course, prices are set as much or more by demand and competitive forces than labor rates.

History is on the side of raising the minimum wage, as it shows no corresponding significant rise in inflation.

[madville]

10. Not ALL prices will rise but some will have to

Say you have a small landscaping business that you gross $10,000 a month at and you have one employee at 40 hours a week. Their monthly wages plus employer SS contribution would be $1335 at $7.25. At $10.10 an hour it's $1859 a month. So that company would have to raise their customers rates by 5.2% to maintain the same profit.

Say you have a convenience store that does $200,000 a month in gross sales. Let's say you have an average of two employees on the clock 24 hours a day 7 days a week. That's $11,241 ($10,585 + $656 employer SS contribution) a month in wages to the employee in order to staff those two positions for the year at $7.25 minimum wage. Raise it to $10.10 an hour and labor costs increase to $15,660 ($14,746 + $914 employer SS contribution) a month. That's a monthly increase of $4,419 for the employer. So they have to raise prices an average of 2.2% to cover the increase.

There are so many variables though, like the type and size of business, the labor required, etc. That's not counting the suppliers to those business who may have to raise their rates a bit and then it gets passed along until it reaches the customer.

In the end a 5% or less increase in some customer prices is pretty negligible in order to raise minimum wage employees pay by 39% and seems worth it.

[doc03]

11. The owner of a convenience store near me said each employee costs him roughly $3000

a month after all the costs. He said they raise the minimum wage to $10.10 it would raise his employee cost about another
$500 per month so he has to either somehow cut employees or raise prices to cover the $500.

The owner does drive a new Cadillac XTS so he is making well over minimum wage himself.

[Warren Stupidity]

12. or accept lower profits.

you are assuming that profit is invariant. you are also assuming price elasticity, when in fact the market may not allow that.

[SomethingFishy]

15. Ding Ding Ding! We have a winnah!

Maybe the CEO can take home 5 million instead of 10 million, I know it would be a hardship but hey, we're all in this together...

[madville]

17. Lots of variables

Generally though, some consumer prices will have to rise, not much though. Everyone can agree on that.

[Warren Stupidity]

22. Nope. There is no requirement in our current situation

that an increase in the minimum wage necessitates an increase in retail prices. Had you said "Generally though, some consumer prices may rise" that I could agree with. Some may. Others may not. At the moment prices are somewhat decoupled from labor costs because we are in a situation where productivity has been rising steadily for the last 30 years while wages have remained essentially stagnant. Where has the surplus value gone? Gone to the owning class rather than the working class. There is a huge amount of give-back on the profit side before we are in a situation where further increases in wages would be inflationary.

You know that whole "inequality" thing? It is directly related to the split between profits and wages. We are in a situation of extreme imbalance, thanks to St Reagan and Mother Thatcher and 30 years of upper class theft, and there can be a whole lot of wage adjustment done before worrying about the inflationary impact.

[madville]

27. I think the effect will be more apparent

in small businesses with just a few employees, like a small retail shop or landscaper with 2 or 3 employees for instance. $500-$2000 in extra payroll expenses would greatly affect a small business like those.

[doc03]

13. There are more costs than just wages an SS. You have unemployment compensation,

workers compensation and insurance. If you pay $10 an hour your employee cost may be $15 or more an hour depending
where you are located.

[madville]

14. Of course

That was a basic example but the general idea is the same. If things like social security and unemployment are charged as a percentage of hourly wages then yes, prices would like have to rise more than I stated.

[doc03]

16. If nobody else's wages ever went up there would be no need to ever

increase the minimum wage. Now all we have to do is get the CEOs, stockholders management to take a wage freeze, problem solved no inflation.

[Hippo_Tron]

18. Why do we never assume it's in the best interest of the business owner just to take the hit?

Workers take pay cuts all the time and still keep working just as they did before. Why can't we assume that business owners will take pay cuts and still keep working just as they did before? If the pay cut is severe enough that they find it more profitable to get out of the business and go do something else, sure they will. But if they're still making good money after the pay cut, why would they quit?

Sure, IF you can get away with passing the cost on to the consumer you do it. But if you have competitors who will take advantage of that situation by keeping their prices lower than yours, it's not the best option.

A minimum wage hike may mean that your business is less profitable than before, but it's often still the BEST option you have.

[Aerows]

19. Prices go up on everything

particularly in the grocery store regardless. Have you seen the price of milk lately? Other staples? I don't know how people that are on TWICE the minimum wage make it, nevermind regular minimum wage.

[TheKentuckian]

20. It is the same nonsense they are always spouting because from their perspective inflation is

almost exclusively tied to the cost of labor and the cost of raw materials. Mostly labor costs though, everything else is salesmanship type rhetoric to get the general public to conflate their inflation for capital's to support in actuality the suppression of their compensation in both dollars and benefits, often by converting pay to benefits and then reneging on the benefits which are portrayed as privilege rather than earned compensation to make pickings easier and blowback less.

[Rex]

23. We have some holdovers from the Reagan Era that still are too stupid

to understand the damage done by Reaganomics.

[Make7]

24. Quick check of selected food prices in a few U.S. cities from expatistan.com:

[div style="font-family:monospace; white-space:pre; font-size:1.077em;"]city min wage average fast food meal Bread for two people for one day ------------- -------- ---------------------- -------------------------------- dallas 7.25 7.00 2.59 new york 8.00 8.00 2.83 seattle 9.32 7.00 2.20 san francisco 10.74 7.00 3.03

[frylock]

25. when has anyone ever passed the savings on to the customer?

[Deep13]

26. it will cut into profits, not really drive up prices.

prices are controlled by supply and demand, not wages.

[arcane1]

28. Those benevolent corporations, always looking for a way to pass the savings on to us.

[abelenkpe]

29. Saw a post on this board recently saying the same

Raising minimum wage will lead to inflation and the cost of everything will rise.
And interest will go up.

Is it a right wing talking point? Are there economists forecasting this?

Seems like the talking point has been inflation is right around the corner for years now. Only before it was inflation will rise and interest rates will go up because of QE. Now it's because of a proposed minimum wage hike?

[lumberjack_jeff]

31. They used to call inflation "a wage and price spiral"

But given today's realities:
1) there is zero inflationary pressure on wages
2) most stuff is made elsewhere
3) profits are high
... it's unlikely that the trivial effect that increase in the minimum wage would have on production cost would meaningfully affect inflation.

Variation in price is much more subject to changes in energy prices. What retailers WILL do is try to use labor costs as an excuse for raising prices to account for energy costs and desire to keep margins high.

Until employment grows and wages begin to climb, it's all suck. The main benefit of raising the minimum wage is to increase spending.

[beachbum bob]

32. conservatives only think very simple thoughts and understand very simple ideas

and critical thinking process definitely not at play with them