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Minimum wage going up in eight states


shalab

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I don't understand how this is "...another shot in the arm for growth...". City workers are paid with money out of taxpayers' pocket (the productive economy/ zero sum game), for services that are non-productive, inefficient, and wasteful. In the private sector these people would not be given a wage increase but would be downsized and streamlined to make operations more efficient and productive. 

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Robert Shiller has commented that tax and spend would be his choice of policy to get GDP growth.  He doesn't like borrow and spend.

 

Investors only invest when final demand is there.  Cutting taxes for capital gains, for example, won't boost investment if there is no increased final demand to invest in. 

 

Raising minimum wage increases final demand because if you are on minimum wage you spend it all.  This encourages investment (to meet that higher final demand).  When state workers wages are raised you can't make an argument that their wage will leave them unemployed (as is made in the case of minimum wage).

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Robert Shiller has commented that tax and spend would be his choice of policy to get GDP growth.  He doesn't like borrow and spend.

 

Investors only invest when final demand is there.  Cutting taxes for capital gains, for example, won't boost investment if there is no increased final demand to invest in. 

 

Raising minimum wage increases final demand because if you are on minimum wage you spend it all.  This encourages investment (to meet that higher final demand).  When state workers wages are raised you can't make an argument that their wage will leave them unemployed (as is made in the case of minimum wage).

 

What would the consequences be if the minimum wage were raised to $50.00/hour?

 

$40.00/hour?

 

$20.00/hour?

 

$10.00/hour?

 

If a minimum wage is a good thing at $10.00/hour, wouldn't it be an even better thing at $20.00/hour or higher?

 

If a minimum wage of $10.00/hour is a good thing in San Francisco, wouldn't it be an even better thing in a small town in the Midwest where the wages and cost of living are only half as much?

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>What would the consequences be if the minimum wage were raised to $50.00/hour?

 

 

Runaway inflation.

 

Au contraire.  There would be massive unemployment and deflation if the minimum wage were set at a level higher than current average wages.  Where would the extra money needed by private employers to more than double the average payroll come from?

 

When the minimum wage is set at a level only slightly above the previous rate, there is only a very slight effect on current employment.  The main effect is a drag on future employment, especially on the young and unskilled entering the workforce and those with rusty skills trying to reenter the jobs market

 

These young job seekers who lack the minimal skills needed to earn the minimum wage then drift  into the underclass to gain by other means than employment.

 

It's a sad story of unintended consequences.

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Which country of the three has the lowest minimum wage?

A)  United States

B)  Canada

C)  Australia

 

Now, using your theories above, tell me which of the three has the most unemployment?

 

Now predict what would happen if we merely raised it to meet the levels seen in Canada.

 

Here they are:

http://en.wikipedia.org/wiki/List_of_minimum_wages_in_Canada

 

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>What would the consequences be if the minimum wage were raised to $50.00/hour?

 

 

Runaway inflation.

 

Au contraire.  There would be massive unemployment and deflation if the minimum wage were set at a level higher than current average wages.  Where would the extra money needed by private employers to more than double the average payroll come from?

 

When the minimum wage is set at a level only slightly above the previous rate, there is only a very slight effect on current employment.  The main effect is a drag on future employment, especially on the young and unskilled entering the workforce and those with rusty skills trying to reenter the jobs market

 

These young job seekers who lack the minimal skills needed to earn the minimum wage then drift  into the underclass to gain by other means than employment.

 

It's a sad story of unintended consequences.

 

There's a bit more to the story than that.  The main reason that there is some utility in a minimum wage is that the labor market is *far* from efficient.  There is an information asymmetry from the employers to the employees; a person would have to spend a few hours working a day just to find the "best" opportunities for them elsewhere.  So there's a reasonable amount of stickyness in jobs, and difficulty in finding a new one, even if you are very qualified for it.

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"If a minimum wage is a good thing at $10.00/hour, wouldn't it be an even better thing at $20.00/hour or higher?"

 

So, do you live your life this way?  Eating 2500 calories a day is much better than eating 500 calories a day, so you try to eat as much as possible every day, often exceeding 10,000 calories?

 

There are plenty of things in life where the maximum benefit doesn't come at the minimum possible value nor the maximal possible value.  It seems very clear to me that minimum wage is likely one of those things.

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