Question about raising the minimum wage.

The point is to get people over the poverty level where they will no longer be eligible for food stamps, free medical care, etc. Theoretically this would save the taxpayer money as he would not have to support all these programs.

XR wrote:

Inflation is not like cancer.

We actually need moderate inflation.

One thing that inflation does is comparably shrink your debt.

Example:

Getting a 30 year mortgage to buy a house.

Your P&I payment stays the same for the 30 years.

In 10-15 years you will have a higher income, partly due to inflation. But with your mortgage staying the same while your income goes up, you will have more buying power.

Of course other thongs will cost more.

You can't just simplify everything and say inflation is bad in all cases.

Higher labor costs is bad in all cases.

There are other factors that get ignored in all of these simplistic arguments that get repeated.

Not just thongs, but everything else, too.

random3 wrote:

In recent times, the minimum wage inches upwards whenever the Republicans concede the raise to the Democrats (who are pandering to their base).

Because the Republicans fight off large wage increases that WILL kill jobs, the concession usually just brings the raise up to a level that doesn't do much of anything. It brings mixed results which confuse the economists (some job losses, some wage increases, some profit losses, some Revenue gains, etc..).

So all of the politicians get to claim victory and the economy carries on.

You left out the important part: as a result, the government raises revenue without having to vote for any form of a tax increase. This is the real reason politicians are clamoring for a raise in the minimum wage. It would raise revenue (and reduce the deficit for a short while) without raising taxes. Unfortunately, it will raise the cost of goods.

XR wrote:

Steve Martin wrote:

Not exactly. Profit margins of 100% are extremely rare.

Sorry, sales will increase by one dollar for every dollar spent by every low income worker earning one more dollar.

Not net earnings.

But the variable expense of that one dollar of sales by that company becomes income (revenue) to some other company.

So a person gets an extra dollar in his paycheck.

He then goes an buys a candy bar.

The candy bar cost the store 70 cents and they profited 30 cents.

The distributer gets 70 cents but paid the manufacturer 50 cents.

The manufacturer had 30 cents of related cost for chocolate and sugar.

The sugar and chocolate producers got a piece and so on.

All of these companies and individuals got a little bit more and one of them may have bought something from the original employer.

You are still missing important costs, and therefore missing the point. Thanks for playing. Go sit at the kids table.

Chunky wrote:

Fatty R. Belt Buckle wrote:

You can not take money from one segment of the economy and give to another without the first segment being negatively affected.

Exactly. CEOs are against increasing the minimum wage because it will cut into their already hyper inflated income of 370 x the regular wage of workers.

That is a problem, but if you divide the spoils the CEO is earning and divide it amongst the employees, there would not be much per employee.

Liberalism = a mental disorder wrote:

RGLDS wrote:

Paying the workers more leads to higher worker morale and productivity.

If that were remotely true companies could easily be persuaded to raise wages WITHOUT government intervention. That's how the market works.

Your comment is precisely why many consider fiscal liberalism to be a (fortunately sometimes curable) mental disorder.

So you are saying that it is not remotely true that paying workers more leads to higher worker morale and productivity.

Companies DO raise wages ALL of the time without government intervention.

The vast majority workers are not paid minimum wage. It's just that - the minimum you can legally pay someone. And as time goes and things cost more the minimum gets raised periodically.

Here is the OP's question again:

"If minimum wages increase, is it much too simple to state that costs go up with no change in productivity. Thus, the business just nets less profit?"

Yes, that is much too simple.

There may be a change in productivity. Those individuals may produce more or that rate may find a more productive employee.

It may shift economic forces where sales go up. It is not likely to have a one for one effect on net profit.

Any statement of how an across the board change that effects everyone could possibly be pin pointed to an exact expense change is much too simple.

Fat Boy wrote:

The point is to get people over the poverty level where they will no longer be eligible for food stamps, free medical care, etc. Theoretically this would save the taxpayer money as he would not have to support all these programs.

Not true. If you raise the minimum wage, those who calculate poverty will adjust to maintain a certain percentage as included as being "in poverty". This is despite the fact that those considered to be "in poverty" in the US include many who have what would be considered as luxuries in many countries in the world.

There is a huge racket in this country that gets a lot of money from having a large percentage designated as being "in poverty".