CSNbbs

I was using the 100 to illustrate the insanity of a giant nationwide increase in MW. If Lad will see that at $16.50, I will gladly use $16.50. It like giving the kids ice cream - anything to keep them quiet.

And yes, the reference to fast food workers earning $200K was to point out that after the effects filter through the economy, the bottom tier of earners will once more be the bottom tier, and after price increases, this inane goal of enabling somebody to make a lifelong career of pushing burgers and raise a family in middle class splendor is just a pipe dream. $200K will no longer be enough for that and politicians on the left will be campaigning for $500/hr. MW.

I guess my graduate level courses in Economics failed to do me much good, same as my decades of setting prices, salaries, and making payroll.

Could someone explain why, if the minimum wage is doubled, the price of virtually everything would not double in very short order?

There was a study which concluded that if the MW, the price of fast food would go up, but only something like 20%. The problem with that study is that it considered only the payroll costs for that particular fast food place. It did not consider the the cost of the hamburger patties would go up and the cost of the buns would go up and the costs of literally everything would go up, because those suppliers would face the same wage increases.

Pretty much all costs are labor costs. The cost of a hamburger patty is not what you paid the steer, but rather what the rancher paid his/her cowboys, plus what the processor paid his/her employees, plus what the transporter paid his/her employees, plus a little margin of profit at each level. And yes, each level paid for things that were not paid directly to its employees, but they were acquired from someone who had to pay his/her employees. And the other thing the gets ignored is that the person working at the MW is not the only one whose wages go up. If you raise the MW from$7 to $15, the people making $8, $9, $10, $11, $12, $13, and $14 must also get raises, and those wages need to go higher than $15. So ultimately everybody's costs go up, and they have no alternative but to pass those costs along. So ultimately everybody's costs go up, and they have no alternative but to pass those costs along.

(08-13-2019 09:49 AM)Owl 69/70/75 Wrote: [ -> ]Could someone explain why, if the minimum wage is doubled, the price of virtually everything would not double in very short order?

There was a study which concluded that if the MW, the price of fast food would go up, but only something like 20%. The problem with that study is that it considered only the payroll costs for that particular fast food place. It did not consider the the cost of the hamburger patties would go up and the cost of the buns would go up and the costs of literally everything would go up, because those suppliers would face the same wage increases.

Pretty much all costs are labor costs. The cost of a hamburger patty is not what you paid the steer, but rather what the rancher paid his/her cowboys, plus what the processor paid his/her employees, plus what the transporter paid his/her employees, plus a little margin of profit at each level. And yes, each level paid for things that were not paid directly to its employees, but they were acquired from someone who had to pay his/her employees. And the other thing the gets ignored is that the person working at the MW is not the only one whose wages go up. If you raise the MW from$7 to $15, the people making $8, $9, $10, $11, $12, $13, and $14 must also get raises, and those wages need to go higher than $15. So ultimately everybody's costs go up, and they have no alternative but to pass those costs along. So ultimately everybody's costs go up, and they have no alternative but to pass those costs along.

I would add, the increases in wages do not stop at theose making $15. All the people above them in the hierarchy will need raises too, partially to cover COL increases and partially to main their distance over the lesser workers. I am sure it would not be long before Lad and the other engineers would be demanding substantial raises.

(08-13-2019 09:49 AM)Owl 69/70/75 Wrote: [ -> ]Could someone explain why, if the minimum wage is doubled, the price of virtually everything would not double in very short order?

There was a study which concluded that if the MW, the price of fast food would go up, but only something like 20%. The problem with that study is that it considered only the payroll costs for that particular fast food place. It did not consider the the cost of the hamburger patties would go up and the cost of the buns would go up and the costs of literally everything would go up, because those suppliers would face the same wage increases.

Pretty much all costs are labor costs. The cost of a hamburger patty is not what you paid the steer, but rather what the rancher paid his/her cowboys, plus what the processor paid his/her employees, plus what the transporter paid his/her employees, plus a little margin of profit at each level. And yes, each level paid for things that were not paid directly to its employees, but they were acquired from someone who had to pay his/her employees. And the other thing the gets ignored is that the person working at the MW is not the only one whose wages go up. If you raise the MW from$7 to $15, the people making $8, $9, $10, $11, $12, $13, and $14 must also get raises, and those wages need to go higher than $15. So ultimately everybody's costs go up, and they have no alternative but to pass those costs along. So ultimately everybody's costs go up, and they have no alternative but to pass those costs along.

What % of the labor in any given industry is minimum wage or close to minimum wage and what is well above that? That would go a long way to helping understand the effect that the change of minimum wage would have on the cost of goods.

You're right that someone making $15 per hour would expect a raise if the MW was increased to $15. But a person making a salary and the effective rate of, say, $30 per hour? I would not expect them to receive a raise for a number of reasons (one being that they are salaried).

(08-13-2019 11:20 AM)RiceLad15 Wrote: [ -> ]

(08-13-2019 09:49 AM)Owl 69/70/75 Wrote: [ -> ]Could someone explain why, if the minimum wage is doubled, the price of virtually everything would not double in very short order?
There was a study which concluded that if the MW, the price of fast food would go up, but only something like 20%. The problem with that study is that it considered only the payroll costs for that particular fast food place. It did not consider the the cost of the hamburger patties would go up and the cost of the buns would go up and the costs of literally everything would go up, because those suppliers would face the same wage increases.
Pretty much all costs are labor costs. The cost of a hamburger patty is not what you paid the steer, but rather what the rancher paid his/her cowboys, plus what the processor paid his/her employees, plus what the transporter paid his/her employees, plus a little margin of profit at each level. And yes, each level paid for things that were not paid directly to its employees, but they were acquired from someone who had to pay his/her employees. And the other thing the gets ignored is that the person working at the MW is not the only one whose wages go up. If you raise the MW from$7 to $15, the people making $8, $9, $10, $11, $12, $13, and $14 must also get raises, and those wages need to go higher than $15. So ultimately everybody's costs go up, and they have no alternative but to pass those costs along. So ultimately everybody's costs go up, and they have no alternative but to pass those costs along.

What % of the labor in any given industry is minimum wage or close to minimum wage and what is well above that? That would go a long way to helping understand the effect that the change of minimum wage would have on the cost of goods.
You're right that someone making $15 per hour would expect a raise if the MW was increased to $15. But a person making a salary and the effective rate of, say, $30 per hour? I would not expect them to receive a raise for a number of reasons (one being that they are salaried).

Strange. The cost of everything is rising and you don't expect a raise? Really?

(08-13-2019 11:23 AM)Owl 69/70/75 Wrote: [ -> ]

(08-13-2019 11:20 AM)RiceLad15 Wrote: [ -> ]

(08-13-2019 09:49 AM)Owl 69/70/75 Wrote: [ -> ]Could someone explain why, if the minimum wage is doubled, the price of virtually everything would not double in very short order?
There was a study which concluded that if the MW, the price of fast food would go up, but only something like 20%. The problem with that study is that it considered only the payroll costs for that particular fast food place. It did not consider the the cost of the hamburger patties would go up and the cost of the buns would go up and the costs of literally everything would go up, because those suppliers would face the same wage increases.
Pretty much all costs are labor costs. The cost of a hamburger patty is not what you paid the steer, but rather what the rancher paid his/her cowboys, plus what the processor paid his/her employees, plus what the transporter paid his/her employees, plus a little margin of profit at each level. And yes, each level paid for things that were not paid directly to its employees, but they were acquired from someone who had to pay his/her employees. And the other thing the gets ignored is that the person working at the MW is not the only one whose wages go up. If you raise the MW from$7 to $15, the people making $8, $9, $10, $11, $12, $13, and $14 must also get raises, and those wages need to go higher than $15. So ultimately everybody's costs go up, and they have no alternative but to pass those costs along. So ultimately everybody's costs go up, and they have no alternative but to pass those costs along.

What % of the labor in any given industry is minimum wage or close to minimum wage and what is well above that? That would go a long way to helping understand the effect that the change of minimum wage would have on the cost of goods.
You're right that someone making $15 per hour would expect a raise if the MW was increased to $15. But a person making a salary and the effective rate of, say, $30 per hour? I would not expect them to receive a raise for a number of reasons (one being that they are salaried).

Strange. The cost of everything is rising and you don't expect a raise? Really?

I don’t expect a raise because someone below me received one, which is what you were talking about.

If you’re talking about a wage increase due to cost of living increases, do you think that happens across the board right now?

edit: and this isn't to say that an increase in the minimum wage would have zero inflationary effects. But the exact effects are up for debate, as real data doesn't conclusively prove that they are economy killers or savers. Example: https://www.forbes.com/sites/adammillsap...0c86cf1e7d

(08-13-2019 11:43 AM)RiceLad15 Wrote: [ -> ]

(08-13-2019 11:23 AM)Owl 69/70/75 Wrote: [ -> ]

(08-13-2019 11:20 AM)RiceLad15 Wrote: [ -> ]

(08-13-2019 09:49 AM)Owl 69/70/75 Wrote: [ -> ]Could someone explain why, if the minimum wage is doubled, the price of virtually everything would not double in very short order?
There was a study which concluded that if the MW, the price of fast food would go up, but only something like 20%. The problem with that study is that it considered only the payroll costs for that particular fast food place. It did not consider the the cost of the hamburger patties would go up and the cost of the buns would go up and the costs of literally everything would go up, because those suppliers would face the same wage increases.
Pretty much all costs are labor costs. The cost of a hamburger patty is not what you paid the steer, but rather what the rancher paid his/her cowboys, plus what the processor paid his/her employees, plus what the transporter paid his/her employees, plus a little margin of profit at each level. And yes, each level paid for things that were not paid directly to its employees, but they were acquired from someone who had to pay his/her employees. And the other thing the gets ignored is that the person working at the MW is not the only one whose wages go up. If you raise the MW from$7 to $15, the people making $8, $9, $10, $11, $12, $13, and $14 must also get raises, and those wages need to go higher than $15. So ultimately everybody's costs go up, and they have no alternative but to pass those costs along. So ultimately everybody's costs go up, and they have no alternative but to pass those costs along.

What % of the labor in any given industry is minimum wage or close to minimum wage and what is well above that? That would go a long way to helping understand the effect that the change of minimum wage would have on the cost of goods.
You're right that someone making $15 per hour would expect a raise if the MW was increased to $15. But a person making a salary and the effective rate of, say, $30 per hour? I would not expect them to receive a raise for a number of reasons (one being that they are salaried).

Strange. The cost of everything is rising and you don't expect a raise? Really?

I don’t expect a raise because someone below me received one, which is what you were talking about.
If you’re talking about a wage increase due to cost of living increases, do you think that happens across the board right now?

No, I am not necessarily saying you expect a raise simply because people below you got one. What I am saying is that people below you got a raise, so the cost of everything you buy went up, so now you are worse off unless you get a raise. So if you want to call it a cost of living raise, fine, I don't care about terminology.

But if you raise the minimum wage, that's going to trigger a bunch of other wage increases, and that's going to drive up costs, and in response to that further wages and salaries are going to have to go up, and eventually that will drive prices up further. You double the minimum wage, and the price of everything is going to double.

Keynesian economics does a great disservice IMO by doing a poor job of teaching how the supply side reacts to costs. I think that's one reason why there is a disconnect between micro and macro, which are almost two separate disciplines. It's like we teach micro as a theoretical construct, then we try to derive macro from empirical results, and that leads to conclusions which make no sense from the micro perspective.

The only economic theory I am aware of that deals with the supply side, and also ties micro to macro effectively, is Austrian economics--Crusoe and his coconuts. I'm not saying I am a full-blown Austrian economist--they have things that I question--but I do think it merits consideration. The failure to understand how producers react to stimuli is a big reason why our tax and spending policies seldom achieve desired results.

(08-13-2019 11:20 AM)RiceLad15 Wrote: [ -> ]What % of the labor in any given industry is minimum wage or close to minimum wage and what is well above that?

Exactly the attitude I am talking about when I say the left thinks this happens in a vacuum.

(08-13-2019 12:50 PM)OptimisticOwl Wrote: [ -> ]

(08-13-2019 11:20 AM)RiceLad15 Wrote: [ -> ]What % of the labor in any given industry is minimum wage or close to minimum wage and what is well above that?

Exactly the attitude I am talking about when I say the left thinks this happens in a vacuum.

How does that indicate, in any way, that I think this happens in a vacuum?

Logically, if I'm asking what percent of the work force would not be directly affected by the minimum wage, isn't that acknowledging that there are other parts to the equation?

In fact, I'd argue that, with your singular focus on the increase in operating expenses resulting from an increase in MW, y'all are the ones who are approaching this from a vacuum-like position.

(08-13-2019 12:08 PM)Owl 69/70/75 Wrote: [ -> ]

(08-13-2019 11:43 AM)RiceLad15 Wrote: [ -> ]

(08-13-2019 11:23 AM)Owl 69/70/75 Wrote: [ -> ]

(08-13-2019 11:20 AM)RiceLad15 Wrote: [ -> ]

(08-13-2019 09:49 AM)Owl 69/70/75 Wrote: [ -> ]Could someone explain why, if the minimum wage is doubled, the price of virtually everything would not double in very short order?
There was a study which concluded that if the MW, the price of fast food would go up, but only something like 20%. The problem with that study is that it considered only the payroll costs for that particular fast food place. It did not consider the the cost of the hamburger patties would go up and the cost of the buns would go up and the costs of literally everything would go up, because those suppliers would face the same wage increases.
Pretty much all costs are labor costs. The cost of a hamburger patty is not what you paid the steer, but rather what the rancher paid his/her cowboys, plus what the processor paid his/her employees, plus what the transporter paid his/her employees, plus a little margin of profit at each level. And yes, each level paid for things that were not paid directly to its employees, but they were acquired from someone who had to pay his/her employees. And the other thing the gets ignored is that the person working at the MW is not the only one whose wages go up. If you raise the MW from$7 to $15, the people making $8, $9, $10, $11, $12, $13, and $14 must also get raises, and those wages need to go higher than $15. So ultimately everybody's costs go up, and they have no alternative but to pass those costs along. So ultimately everybody's costs go up, and they have no alternative but to pass those costs along.

What % of the labor in any given industry is minimum wage or close to minimum wage and what is well above that? That would go a long way to helping understand the effect that the change of minimum wage would have on the cost of goods.
You're right that someone making $15 per hour would expect a raise if the MW was increased to $15. But a person making a salary and the effective rate of, say, $30 per hour? I would not expect them to receive a raise for a number of reasons (one being that they are salaried).

Strange. The cost of everything is rising and you don't expect a raise? Really?

I don’t expect a raise because someone below me received one, which is what you were talking about.
If you’re talking about a wage increase due to cost of living increases, do you think that happens across the board right now?

No, I am not necessarily saying you expect a raise simply because people below you got one. What I am saying is that people below you got a raise, so the cost of everything you buy went up, so now you are worse off unless you get a raise. So if you want to call it a cost of living raise, fine, I don't care about terminology.

But if you raise the minimum wage, that's going to trigger a bunch of other wage increases, and that's going to drive up costs, and in response to that further wages and salaries are going to have to go up, and eventually that will drive prices up further. You double the minimum wage, and the price of everything is going to double.

Keynesian economics does a great disservice IMO by doing a poor job of teaching how the supply side reacts to costs. I think that's one reason why there is a disconnect between micro and macro, which are almost two separate disciplines. It's like we teach micro as a theoretical construct, then we try to derive macro from empirical results, and that leads to conclusions which make no sense from the micro perspective.

The only economic theory I am aware of that deals with the supply side, and also ties micro to macro effectively, is Austrian economics--Crusoe and his coconuts. I'm not saying I am a full-blown Austrian economist--they have things that I question--but I do think it merits consideration. The failure to understand how producers react to stimuli is a big reason why our tax and spending policies seldom achieve desired results.

I'm shocked that you think that doubling the minimum wage would result in the costs of everything doubling. That is such an astoundingly bold and all encompassing claim, that I'm really surprised you made it. There are so many different forces at play in the macro-economic world that it clearly is not as simple as "double the minimum amount labor can be paid - double the cost of goods."

For example:

Quote:By looking at changes in restaurant food pricing during the period of 1978–2015, MacDonald and Nilsson find that prices rose by just 0.36 percent for every 10 percent increase in the minimum wage, which is only about half the size reported in previous studies. They also observe that small minimum wage increases do not lead to higher prices and may actually reduce prices. Furthermore, it is also possible that small minimum wage increases could lead to increased employment in low-wage labor markets.

https://www.upjohn.org/research-highligh...her-prices

(08-13-2019 01:10 PM)RiceLad15 Wrote: [ -> ]

(08-13-2019 12:50 PM)OptimisticOwl Wrote: [ -> ]

(08-13-2019 11:20 AM)RiceLad15 Wrote: [ -> ]What % of the labor in any given industry is minimum wage or close to minimum wage and what is well above that?

Exactly the attitude I am talking about when I say the left thinks this happens in a vacuum.

How does that indicate, in any way, that I think this happens in a vacuum?

Logically, if I'm asking what percent of the work force would not be directly affected by the minimum wage, isn't that acknowledging that there are other parts to the equation?

In fact, I'd argue that, with your singular focus on the increase in operating expenses resulting from an increase in MW, y'all are the ones who are approaching this from a vacuum-like position.

Not directly affected does not equal unaffected. The entire hierarchy of wage earners is eventually going to be affected - even people who work for businesses without a single MW employee.

I guess you are one that thinks tripling the number of wolves in Yellowstone has no effect on the elk. Why would it?

An economy, like an ecology, is a network of related groups. You cannot change one without invoking change in the whole.

(08-13-2019 01:17 PM)OptimisticOwl Wrote: [ -> ]

(08-13-2019 01:10 PM)RiceLad15 Wrote: [ -> ]

(08-13-2019 12:50 PM)OptimisticOwl Wrote: [ -> ]

(08-13-2019 11:20 AM)RiceLad15 Wrote: [ -> ]What % of the labor in any given industry is minimum wage or close to minimum wage and what is well above that?

Exactly the attitude I am talking about when I say the left thinks this happens in a vacuum.

How does that indicate, in any way, that I think this happens in a vacuum?

Logically, if I'm asking what percent of the work force would not be directly affected by the minimum wage, isn't that acknowledging that there are other parts to the equation?

In fact, I'd argue that, with your singular focus on the increase in operating expenses resulting from an increase in MW, y'all are the ones who are approaching this from a vacuum-like position.

Not directly affected does not equal unaffected. The entire hierarchy of wage earners is eventually going to be affected - even people who work for businesses without a single MW employee.

I guess you are one that thinks tripling the number of wolves in Yellowstone has no effect on the elk. Why would it?

An economy, like an ecology, is a network of related groups. You cannot change one without invoking change in the whole.

I'm not sure where I've once said there would be not effects outside of the MW earners. If you want to point me to that language, I would appreciate it.

What I've done is pushed back on the idea that it will lead to a doubling in costs, that raising the MW to $15 is equivalent to $100, and so on. Basically, I've pushed back against many of the dooms-day scenarios, and pushed for using quantitative evidence from cities that have increased the MW to $15 to see what has happened.

(08-13-2019 01:58 PM)RiceLad15 Wrote: [ -> ]

(08-13-2019 01:17 PM)OptimisticOwl Wrote: [ -> ]

(08-13-2019 01:10 PM)RiceLad15 Wrote: [ -> ]

(08-13-2019 12:50 PM)OptimisticOwl Wrote: [ -> ]

(08-13-2019 11:20 AM)RiceLad15 Wrote: [ -> ]What % of the labor in any given industry is minimum wage or close to minimum wage and what is well above that?

Exactly the attitude I am talking about when I say the left thinks this happens in a vacuum.

How does that indicate, in any way, that I think this happens in a vacuum?

Logically, if I'm asking what percent of the work force would not be directly affected by the minimum wage, isn't that acknowledging that there are other parts to the equation?

In fact, I'd argue that, with your singular focus on the increase in operating expenses resulting from an increase in MW, y'all are the ones who are approaching this from a vacuum-like position.

Not directly affected does not equal unaffected. The entire hierarchy of wage earners is eventually going to be affected - even people who work for businesses without a single MW employee.

I guess you are one that thinks tripling the number of wolves in Yellowstone has no effect on the elk. Why would it?

An economy, like an ecology, is a network of related groups. You cannot change one without invoking change in the whole.

I'm not sure where I've once said there would be not effects outside of the MW earners. If you want to point me to that language, I would appreciate it.

What I've done is pushed back on the idea that it will lead to a doubling in costs, that raising the MW to $15 is equivalent to $100, and so on. Basically, I've pushed back against many of the dooms-day scenarios, and pushed for using quantitative evidence from cities that have increased the MW to $15 to see what has happened.

This does not qualify as qualitative evidence, all of which will come after the fact of the MW increase, but...

Suppose you are person in your company/department who is in charge of setting wages/salaries, and Fred comes to you and says "I used to make $7/hour more than Bill. Now I only make $2/hour more. He doesn't provide any more value to the company than he used to, and I am his boss. I think I need to be restored at least to my previous $7 margin. Do you say no? If so, what is your rationale?

Then after you give Fred the raise, here comes his boss, Dave, who says, I used to make ...

And Ricardo, who comes in and says, I need a raise. My rent is up, groceries are up, everything is up.

Pretty soon, you are the last guy in the company without a raise. So you give yourself one, to keep you relative position.

Now this cannot be quantified until it has happened. So take it for what you want.

(08-13-2019 01:58 PM)RiceLad15 Wrote: [ -> ]

(08-13-2019 01:17 PM)OptimisticOwl Wrote: [ -> ]

(08-13-2019 01:10 PM)RiceLad15 Wrote: [ -> ]

(08-13-2019 12:50 PM)OptimisticOwl Wrote: [ -> ]

(08-13-2019 11:20 AM)RiceLad15 Wrote: [ -> ]What % of the labor in any given industry is minimum wage or close to minimum wage and what is well above that?

Exactly the attitude I am talking about when I say the left thinks this happens in a vacuum.

How does that indicate, in any way, that I think this happens in a vacuum?
Logically, if I'm asking what percent of the work force would not be directly affected by the minimum wage, isn't that acknowledging that there are other parts to the equation?
In fact, I'd argue that, with your singular focus on the increase in operating expenses resulting from an increase in MW, y'all are the ones who are approaching this from a vacuum-like position.

Not directly affected does not equal unaffected. The entire hierarchy of wage earners is eventually going to be affected - even people who work for businesses without a single MW employee.
I guess you are one that thinks tripling the number of wolves in Yellowstone has no effect on the elk. Why would it?
An economy, like an ecology, is a network of related groups. You cannot change one without invoking change in the whole.

I'm not sure where I've once said there would be not effects outside of the MW earners. If you want to point me to that language, I would appreciate it.
What I've done is pushed back on the idea that it will lead to a doubling in costs, that raising the MW to $15 is equivalent to $100, and so on. Basically, I've pushed back against many of the dooms-day scenarios, and pushed for using quantitative evidence from cities that have increased the MW to $15 to see what has happened.

This is where I have a problem with the Keynesian approach to macro. If you look at this issue from a micro perspective, clearly the inevitable result is an overall increase in prices and reduction in labor force. But because of the disconnect between micro and macro, you can get answers in macro that are nonsensical from a micro viewpoint. I discuss this frequently with faculty colleagues who teach Econ, and it troubles them but they have no answer. The one theoretical construct where macro follows logically from micro is the Austrian approach—Crusoe and his coconuts. I’m not saying go full Austrian, although it is not without appeal—and this is one such appeal.

(08-13-2019 01:13 PM)RiceLad15 Wrote: [ -> ]I'm shocked that you think that doubling the minimum wage would result in the costs of everything doubling. That is such an astoundingly bold and all encompassing claim, that I'm really surprised you made it. There are so many different forces at play in the macro-economic world that it clearly is not as simple as "double the minimum amount labor can be paid - double the cost of goods."
For example:

Quote:By looking at changes in restaurant food pricing during the period of 1978–2015, MacDonald and Nilsson find that prices rose by just 0.36 percent for every 10 percent increase in the minimum wage, which is only about half the size reported in previous studies. They also observe that small minimum wage increases do not lead to higher prices and may actually reduce prices. Furthermore, it is also possible that small minimum wage increases could lead to increased employment in low-wage labor markets.

https://www.upjohn.org/research-highligh...her-prices

Okay, okay, “double” is probably a bit of an overstatement, but “increase substantially” is not. You have three options when faced with a cost increase such as a higher minimum wage. They are increase prices to the extent the market will bear, cut costs elsewhere, such as by laying people off and/or automating, or simply close down and go do something else.

As someone who has done a lot of litigation involving my expert versus your expert, I am very well aware that you can make a study prove whatever you want it to prove, simply by how you set up your methodology and assumptions. When a “study” reaches conclusions which are that counterintuitive, it provokes the obvious question as to how the data were manipulated. Again, that is my long-held complaint about Keynesian macro. It is just so detached from micro, when macro really is the cumulative effect of many micro decisions. If you want to sell me on that study, you need to explain how the thousands of micro choices produced that result.

(08-13-2019 01:13 PM)RiceLad15 Wrote: [ -> ]I'm shocked that you think that doubling the minimum wage would result in the costs of everything doubling. That is such an astoundingly bold and all encompassing claim, that I'm really surprised you made it. There are so many different forces at play in the macro-economic world that it clearly is not as simple as "double the minimum amount labor can be paid - double the cost of goods."

For example:

Quote:By looking at changes in restaurant food pricing during the period of 1978–2015, MacDonald and Nilsson find that prices rose by just 0.36 percent for every 10 percent increase in the minimum wage, which is only about half the size reported in previous studies. They also observe that small minimum wage increases do not lead to higher prices and may actually reduce prices. Furthermore, it is also possible that small minimum wage increases could lead to increased employment in low-wage labor markets.

https://www.upjohn.org/research-highligh...her-prices

a) the left has often argued that the increases in the min wage between 1978 and 2015 hadn't kept up with inflation.... Nobody is currently talking about increases of that magnitude
b) the quality of a 1978 vs 2015 McDonald's burger isn't even debatable so we're not comparing apples:apples
c) the 'service' of a 1978 McDonald's vs 2015 isn't even debatable.
d) technology has come a LONG way since 1978... while technology certainly continues to advance, I don't think 'burger applications' is really the next hot wave of breakthroughs. I think we've seen most of what you're going to get out of burger technology

My point is, while prices may not double, there are other changes that will take place, none of which maintain the standards of quality, the levels of employment, the portion sizes or whatever else they think they can cut.

If min wage prices rose....
you would see a compression of those wages above min wage to the extent that employers could do so
you would see standards of service or quality drop to the extent that employers could do so
you would see technology replace jobs to the extent that employers could do so
to the extent that they can not do so, you would see costs rise to the extent that they must
if they can not raise prices, then you would generally see them close businesses

I hate to be so simplistic, but if you lay a coil of string down on the table and you grab it from the right and pull, you will first leave the left side alone and simply uncoil the string. This is working inefficiency out of your business. Eventually, you move the whole thing to the right. Same with pulling on the left.

Raising the minimum wage is pushing the left edge of the string to the right. It simply increases the inefficiency/the amount of string coiled up until the 'owners' decide that their money is not making their preferred return at which point they either pull on the right, or if they can't... they simply close the business.

(08-13-2019 01:13 PM)RiceLad15 Wrote: [ -> ]

(08-13-2019 12:08 PM)Owl 69/70/75 Wrote: [ -> ]

(08-13-2019 11:43 AM)RiceLad15 Wrote: [ -> ]

(08-13-2019 11:23 AM)Owl 69/70/75 Wrote: [ -> ]

(08-13-2019 11:20 AM)RiceLad15 Wrote: [ -> ]What % of the labor in any given industry is minimum wage or close to minimum wage and what is well above that? That would go a long way to helping understand the effect that the change of minimum wage would have on the cost of goods.
You're right that someone making $15 per hour would expect a raise if the MW was increased to $15. But a person making a salary and the effective rate of, say, $30 per hour? I would not expect them to receive a raise for a number of reasons (one being that they are salaried).

Strange. The cost of everything is rising and you don't expect a raise? Really?

I don’t expect a raise because someone below me received one, which is what you were talking about.
If you’re talking about a wage increase due to cost of living increases, do you think that happens across the board right now?

No, I am not necessarily saying you expect a raise simply because people below you got one. What I am saying is that people below you got a raise, so the cost of everything you buy went up, so now you are worse off unless you get a raise. So if you want to call it a cost of living raise, fine, I don't care about terminology.

But if you raise the minimum wage, that's going to trigger a bunch of other wage increases, and that's going to drive up costs, and in response to that further wages and salaries are going to have to go up, and eventually that will drive prices up further. You double the minimum wage, and the price of everything is going to double.

Keynesian economics does a great disservice IMO by doing a poor job of teaching how the supply side reacts to costs. I think that's one reason why there is a disconnect between micro and macro, which are almost two separate disciplines. It's like we teach micro as a theoretical construct, then we try to derive macro from empirical results, and that leads to conclusions which make no sense from the micro perspective.

The only economic theory I am aware of that deals with the supply side, and also ties micro to macro effectively, is Austrian economics--Crusoe and his coconuts. I'm not saying I am a full-blown Austrian economist--they have things that I question--but I do think it merits consideration. The failure to understand how producers react to stimuli is a big reason why our tax and spending policies seldom achieve desired results.

I'm shocked that you think that doubling the minimum wage would result in the costs of everything doubling. That is such an astoundingly bold and all encompassing claim, that I'm really surprised you made it. There are so many different forces at play in the macro-economic world that it clearly is not as simple as "double the minimum amount labor can be paid - double the cost of goods."

For example:

Quote:By looking at changes in restaurant food pricing during the period of 1978–2015, MacDonald and Nilsson find that prices rose by just 0.36 percent for every 10 percent increase in the minimum wage, which is only about half the size reported in previous studies. They also observe that small minimum wage increases do not lead to higher prices and may actually reduce prices. Furthermore, it is also possible that small minimum wage increases could lead to increased employment in low-wage labor markets.

https://www.upjohn.org/research-highligh...her-prices

by golly gee, he did it!!! proved that this stuff DOES happen in a vacuum, that you can increase wages and costs and nothing happens. More employment at higher prices = same ol', same ol'.

Great idea, Lad. Now go double the salaries of all the people in your firm making less than you. (Keep yours the same). Nobody will notice and profits will go up.

Raising/lowering the minimum wage is not an effective tool. Minimum wage workers make up ~2% of the workforce (half of which are younger than their mid-20s), so I have doubts that a raise in the minimum wage is going to be some cure-all for the majority of the population, which is the middle class. The fact is that costs of education, housing and healthcare have completely left wages behind in the dust, which makes it unaffordable for the middle class to live as the middle class did in past decades - Leave it to Beaver has been left in the dust.

A reader comment from the below article sums it up well: "The failure of wages to keep up with expenses is a big problem, but bad choices by consumers is a problem just as big."

https://www.wsj.com/articles/families-go...db89ffb59d

(08-16-2019 10:45 AM)westsidewolf1989 Wrote: [ -> ]A reader comment from the below article sums it up well: "The failure of wages to keep up with expenses is a big problem, but bad choices by consumers is a problem just as big."

This

If you only have the skills for a minimum wage job, you probably shouldn't be trying to live on your own, have a family, have a car, a $1,000 cell phone and a big screen TV

(08-16-2019 12:42 PM)Hambone10 Wrote: [ -> ]

(08-16-2019 10:45 AM)westsidewolf1989 Wrote: [ -> ]A reader comment from the below article sums it up well: "The failure of wages to keep up with expenses is a big problem, but bad choices by consumers is a problem just as big."

This

If you only have the skills for a minimum wage job, you probably shouldn't be trying to live on your own, have a family, have a car, a $1,000 cell phone and a big screen TV

But the reality that conservatives have to acknowledge is that the whole raison d'etre for a minimum wage in the first place -- in the late 19th c. in Australia (or NZ?) -- is that it was, in fact, supposed to guarantee a "living wage." I believe FDR even used that term when signing the FLSA in the '30s.

Now, it was economic madness to let this camel's nose under the tent in the first place (higher wages will always drive up the cost of living in a vicious cycle), but the fact of the matter is that it is pretty much baked into the social compact now that work should yield a living wage. Then, yes, the question becomes how one defines "living" and people certainly are prone to conflate "wants" and "needs" but there isn't much question that the minimum wage in most places isn't enough to cover what most people would agree are the basic necessities.

So conservatives can't just say "no" to MW increases by citing economic theory (even if correct); as a practical matter there has to be an alternative plan for seeing that low-wage earners can "live with dignity" or whatever the preferred nomenclature is. Expanding the earned income tax credit is what the Heritage Foundation recommends, I believe.