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Based on what studies? by lm (2.00 / 0) #9 Thu May 22, 2008 at 07:10:48 AM EST

I've heard the same argument about minimum wage legislation but it turns out that in real life, it seldom works that way.

There is no more degenerate kind of state than that in which the richest are supposed to be the best.
Cicero, The Republic
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The reason the minimum wage didn't drive up by ObviousTroll (2.00 / 0) #15 Thu May 22, 2008 at 11:11:28 AM EST

inflation was because it affects a tiny number of people. Offering to pay all the unemployed, forever, is a rather different kettle of fish.

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Has anybody seen my clue? I know I had it when I came in here.
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Odd how that works by lm (2.00 / 0) #16 Thu May 22, 2008 at 11:35:23 AM EST

Most studies suggest that raising the minimum wage creates a rise in wages for most workers, not just the ones that get minimum wage.

A guaranteed minimum income isn't all that different. The US already does it for large swaths of the populace: Social Security, ADC, etc.

There is no more degenerate kind of state than that in which the richest are supposed to be the best.
Cicero, The Republic
[ Parent ]

You'll have to provide cites on that. by ObviousTroll (2.00 / 0) #18 Thu May 22, 2008 at 12:10:55 PM EST

Why would boosting minimum wage have any affect at all on people who make more?

And, if it does, how could that possible not trigger inflation?

--
Has anybody seen my clue? I know I had it when I came in here.
[ Parent ]

Wages are a cost to producers by lm (2.00 / 0) #19 Thu May 22, 2008 at 01:08:51 PM EST

Rising wages only cause inflation when workers (a) don't increase productivity proportionately or (b) the firm is in a market segment where they can pass the increased cost along to consumers without losing market share. The largest effect of increasing the minimum wage is usually to lower net profits. Besides, a guaranteed minimum income wonn't increase costs to employers if it is funded by a death tax.

The last three hikes in the US minimum wage were 1991, 1997 and 2007. The inflation rate of 92-95, 98-01, and in the present year is truly impressive, no?

There is no more degenerate kind of state than that in which the richest are supposed to be the best.
Cicero, The Republic
[ Parent ]

Inflation is a function of the money supply. by ObviousTroll (2.00 / 0) #20 Thu May 22, 2008 at 01:21:35 PM EST

It doesn't mater who is providing the money. A broad based increase in wages - whether the funds come from producers or from the government - will increase the money supply, driving up prices.

--
Has anybody seen my clue? I know I had it when I came in here.
[ Parent ]

: It does matter who is providing the money by lm (2.00 / 0) #33 Thu May 22, 2008 at 04:31:16 PM EST

Decreased profits (or even a government payout) doesn't increase the money supply in the same way that printing new money (or issuing new government bonds or increasing or decreasing the federal funds rate) does. We're talking about the particulars of alternatives with regards to how existing money is being redistributed within the system.
On the face of it, redistributing existing money from the top to the bottom of the consumer chain will only cause inflation in those goods where there is some sort of scarcity. I suppose that in some cases, the equilibrium prices of some goods might shift if more people have more money to spend on discretionary goods, but I think you're overestimating how much more money would actually be out there.
Do you know if increases in the earned income credit in the US were followed by increased inflation? I don't know one way or the other, but I suspect that they weren't.
There is no more degenerate kind of state than that in which the richest are supposed to be the best.
Cicero, The Republic
[ Parent ]

Hmmm... I should admit, however... by ObviousTroll (2.00 / 0) #22 Thu May 22, 2008 at 01:28:38 PM EST

that driving up employer costs does also cause inflation.

Also...

The last three hikes in the US minimum wage were 1991, 1997 and 2007. The inflation rate of 92-95, 98-01, and in the present year is truly impressive, no?

This is completely consistent with my claim that the minimum wage affects a tiny number of people.

--
Has anybody seen my clue? I know I had it when I came in here.
[ Parent ]

BTW, according the the dept of labor... by ObviousTroll (2.00 / 0) #23 Thu May 22, 2008 at 01:50:26 PM EST

Only 2.2% of all workers earn minimum wage. and most of them are in food service, which means they supplement their pay with tips. (Often to the tune of an addition $20-$30 per hour at a typical cheap family restaurant...)

Why would a 0.50 cent raise for 2% of workers affect the over all pay scales?

--
Has anybody seen my clue? I know I had it when I came in here.
[ Parent ]

: rationale by lm (2.00 / 0) #32 Thu May 22, 2008 at 04:21:39 PM EST

A worker has a choice between working at an above minimum wage job or working at several minimum wage jobs at a lesser wage. The minimum wage goes up. Minimum wage jobs now pay the same rate. The worker now has a more freedom of movement within the labor pool with regards to wages. If the employer wants to keep the worker, something needs to be done to make the present job more attractive than the minimum wage jobs that are available. The end result is that the worker is either offered a wage increase or some other benefit to stay in the present position.
Of course, the above does assume that the average worker who is working near minimum wage is a rational agent in the economic sense of the term. That assumption may not hold.
But the other thing is that the 2% number, correct me if I'm wrong, only tells how many workers are working at minimum wage. It doesn't say how many workers are working at employers where the pay scales are defined by minimum wage + x which is a pretty common corporate policy for low skill jobs.
There is no more degenerate kind of state than that in which the richest are supposed to be the best.
Cicero, The Republic
[ Parent ]