my two cents (and if my upvotes are any indication my two cents is worthless) the real problem is that when you raise the minimum wage, you build an opportunity for companies to raise the prices on everything, and then we get into an inflation problem.
Example, my home state can raise minimum wage from 9 to 12 dollars an hour, but that 25% increase in pay would be all the excuse Walmart would need to jack up the prices to cover their loses;
Not saying we shouldn’t have a working/livable wage, but we gotta do something that forces companies to pay the workers more, and the owners/CEO less some how. Like an inverse tax calculation that benefits the company for paying lots of people more, instead of just the few at the time a premium.
We find that a 10% minimum wage hike translates into a 0.36% increase in the prices of grocery products. This magnitude is consistent with a full pass-through of cost increases into consumer prices.
Yeah, but note that if the supermarket pays its employees 25% more, that does not mean that the costs for the supermarket rise by 25% overall, since wages are only a small part of total expenses. The cost of products would rise way less than 25%.
Do you also have a paper about the wage increase in things where the price of the employees is a bigger part of the total costs (restaurants, accountants, notaries, etc)?
In a restaurant, the costs of the wages (plus social security and pension payments) are often as much as the costs of the food itself.
This would assume that these same businesses wouldn’t raise prices regardless, which is what they have already been doing, without the wage increase.
A higher minimum wage is how you force companies to pay employees more. There’s no real way to limit ceo pay that they won’t find loopholes for, but you could try to tie the max to some upper percentage of employee median pay
I think a potential solution to CEO pay and inflation, would be to set absolute income tiers for UBI and jobs. Work as a waitress? You get $40k a year, no more or less. Don’t work? Just $10k, plus everyone gets universal benefits such as free food packages, universal healthcare, and utilities. The highest paying job? $100k. This isn’t considering taxes, which effectively turn the $40k to $30k, and the $100k to $60k. This essentially means that a CEO is only twice the income of a clerk, so the market will be forced to set pricing of goods and services to reflect that.
Of course, advocates of malicious capitalism would scream bloody murder, talk about how some people deserve 1,500x the wage of an average person, and so forth.
Bluntly, I hate the excessively wealthy and want their excess to cease existing. They are a distortion that destroys lives. If there are distortions, they should be the kind that benefit EVERYONE. Not just Bezos, Musk, or Trump.
I think especially in New York going after landlords, both housing and commercial, would do a great job at making it so smaller businesses (which New York has a ton of) don’t have to raise prices and to make it so the minimum wage doesn’t have to be as high. That’s why I think his rent freeze policy and whatever else he is going to do against land lords will help a lot.
You’re not wrong that it can be inflationary, but the inflation has already happened. Besides, productivity is so high these business could afford to pay more with out a price increase, but they want to keep their margins.
Productivity is irrelevant if you sell hours, if a notary works 1 hour they invoice 1 hour most of the time f.e.
The bigger companies and a lot of companies like tech companies will have the margin to increases prices without it hurting their bottom line.
But what about the local restaurant around the corner? Or the mom and pop electronic store with a couple people working there.
I don’t have an answer to that to be fair.
That’s one argument against, but it’s not proven true anywhere it’s been tested. Shoppers at Walmart have a price point they expect. They can only raise prices so much before sales begin to falter, and their labor costs are not the most significant cost in their stores. Think about how few Walmart employees you see in their massive stores. Real estate, fixtures, even the utility bills are going to outpace the labor increases. Plus, the additional costs are typically offset by the additional sales that happen because everyone has a little more disposable income.
Chain stores and restaurants charge roughly the same amounts regardless of the local labor rates. Things that do affect local prices are the things that affect unit costs, like tariffs, taxes, and transport costs.
You are completely correct that corporations will use any excuse to raise prices, but they’re going to raise prices as high as the market will bear regardless. That’s not a reason to depress demand by keeping wages too low to survive.
my two cents (and if my upvotes are any indication my two cents is worthless) the real problem is that when you raise the minimum wage, you build an opportunity for companies to raise the prices on everything, and then we get into an inflation problem.
Example, my home state can raise minimum wage from 9 to 12 dollars an hour, but that 25% increase in pay would be all the excuse Walmart would need to jack up the prices to cover their loses;
Not saying we shouldn’t have a working/livable wage, but we gotta do something that forces companies to pay the workers more, and the owners/CEO less some how. Like an inverse tax calculation that benefits the company for paying lots of people more, instead of just the few at the time a premium.
I’m sure an economist can explain this better.
Then explain the following to me, please:
In the 1960s, families had enough income that they could easily afford food, housing, and much more.
Why didn’t that immediately lead to an inflationary spiral, as you have described? Why did living conditions remain stable for 20 years or more?
Science and reality disagree with your feelings. Do not parrot the disingenuous spam from the oligarchs.
Yeah, but note that if the supermarket pays its employees 25% more, that does not mean that the costs for the supermarket rise by 25% overall, since wages are only a small part of total expenses. The cost of products would rise way less than 25%.
Holy crabapples! Thank you for that link!
Do you also have a paper about the wage increase in things where the price of the employees is a bigger part of the total costs (restaurants, accountants, notaries, etc)?
In a restaurant, the costs of the wages (plus social security and pension payments) are often as much as the costs of the food itself.
This would assume that these same businesses wouldn’t raise prices regardless, which is what they have already been doing, without the wage increase.
A higher minimum wage is how you force companies to pay employees more. There’s no real way to limit ceo pay that they won’t find loopholes for, but you could try to tie the max to some upper percentage of employee median pay
I think a potential solution to CEO pay and inflation, would be to set absolute income tiers for UBI and jobs. Work as a waitress? You get $40k a year, no more or less. Don’t work? Just $10k, plus everyone gets universal benefits such as free food packages, universal healthcare, and utilities. The highest paying job? $100k. This isn’t considering taxes, which effectively turn the $40k to $30k, and the $100k to $60k. This essentially means that a CEO is only twice the income of a clerk, so the market will be forced to set pricing of goods and services to reflect that.
Of course, advocates of malicious capitalism would scream bloody murder, talk about how some people deserve 1,500x the wage of an average person, and so forth.
Bluntly, I hate the excessively wealthy and want their excess to cease existing. They are a distortion that destroys lives. If there are distortions, they should be the kind that benefit EVERYONE. Not just Bezos, Musk, or Trump.
I think especially in New York going after landlords, both housing and commercial, would do a great job at making it so smaller businesses (which New York has a ton of) don’t have to raise prices and to make it so the minimum wage doesn’t have to be as high. That’s why I think his rent freeze policy and whatever else he is going to do against land lords will help a lot.
You’re not wrong that it can be inflationary, but the inflation has already happened. Besides, productivity is so high these business could afford to pay more with out a price increase, but they want to keep their margins.
Productivity is irrelevant if you sell hours, if a notary works 1 hour they invoice 1 hour most of the time f.e.
The bigger companies and a lot of companies like tech companies will have the margin to increases prices without it hurting their bottom line. But what about the local restaurant around the corner? Or the mom and pop electronic store with a couple people working there. I don’t have an answer to that to be fair.
This is just false. Even hourly have KPIs and if you don’t do enough you will be fired.
Well yes for that, but not for the whole 32 hour a week dicussion. If you make 32 hours you can only sell 32 hours
That’s one argument against, but it’s not proven true anywhere it’s been tested. Shoppers at Walmart have a price point they expect. They can only raise prices so much before sales begin to falter, and their labor costs are not the most significant cost in their stores. Think about how few Walmart employees you see in their massive stores. Real estate, fixtures, even the utility bills are going to outpace the labor increases. Plus, the additional costs are typically offset by the additional sales that happen because everyone has a little more disposable income.
Chain stores and restaurants charge roughly the same amounts regardless of the local labor rates. Things that do affect local prices are the things that affect unit costs, like tariffs, taxes, and transport costs.
You are completely correct that corporations will use any excuse to raise prices, but they’re going to raise prices as high as the market will bear regardless. That’s not a reason to depress demand by keeping wages too low to survive.