| | Nollie said "The higher wages are, the higher costs of production are. The higher costs of production are, the higher prices are. The higher prices are, the smaller the quantities of goods and services demanded and the number of workers employed in producing them
The net effect of higher minimum wages would be unfavorable for impoverished households, even if there are no job losses. To the extent that some poor households also lose jobs, their net losses would be greater.
If the minimum wage is increased, fast-food restaurants would pass on almost 100% of their increased labor costs on to consumers and that other firms may do the same. " |
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Sorry but you're taking too simple a view of supply and demand. You also have to consider income elasticity. If your income goes up, you are willing to buy more of things (very generally). Higher prices reduce demand at a given level of income. To paraphrase Barenaked Ladies, if I had a million dollars, I'd still eat Kraft Dinner. I'd just eat more.
As long as there is inflation, the only way to keep demand steady is for incomes to increase. Setting reasonable increases to minimum wage is one way to ensure this happens. Really, if wages don't keep up at least somewhat with increasing prices (minimum wages as well as all wages), then we're all collectively not going to be able to keep buying everything our economy produces. This leads to much bigger crisis than the small increase in costs that arise from a change in minimum wage.
The more important discussion that could take place is whether minimum wage should be set around the concept of a living wage. For example, if someone works full time full year at minimum wage, they still earn an income below the poverty level. This isn't right. Why should a job pay so poorly that someone who does it full time cannot live above the level of poverty? Surely 'work' - no matter how unskilled - should still be 'worth' something. If the job exists, it's because it needs someone to do it.