Increasing The Minimum Wage Hurts Businesses? Bulltwaddle.
Here's a well-thought-out fact-based opinion piece on MarketWatch. [Trigger alert: AOC haters please ignore the photo at the top of the article.]
Critics would have you believe that upping the minimum wage in restaurants will lead to massive layoffs and closures. But since raising the minimum wage to $15 per hour nearly a year ago, the restaurant industry in New York City has thrived.
In fact, both restaurant revenue and employment are up. The reason for this is that restaurants don’t have to raise prices very much to pay for a minimum-wage increase.
The focus on single restaurants also ignores the larger economic impact of raising the minimum wage. According to an analysis by the Federal Reserve Bank of Chicago, if low-wage workers have more money in their pockets, they will have more money to spend, potentially expanding the number of consumers who can afford to eat out.
Source: Opinion: The $15 minimum wage was supposed to hurt New York City restaurants — but both revenue and employment are up -- MarketWatch.com 11-2-2019
Granted, this is happening in a relatively robust economy. As the author goes on to say, "if the economy were to go into a recession, business would undoubtedly suffer, though the suffering could hardly be attributed solely or mainly to a minimum-wage increase".
Laffer and Reagan had it wrong. The economy doesn't trickle down. It trickles up. The more workers there are and the more workers are paid, the better off everybody is. Despite his many documented flaws, Henry Ford had it right when he paid workers enough to buy his cars, thus selling more cars and profiting everybody.
Comments
Not exactly
Adding money to the consuming class dos indeed trickle up - this is why UBI is such a bad idea. But raising the minimum wage will not elevate the minimum wage class to the consuming class. It will however eventually require an increase in affordable housing or slumlords will simply eat it all up in increased rents and health care costs will have to be ended or unethical doctors and hospitals and medical office landlords and of course insurance companies will take it all.
On to Biden since 1973
UBI is only useful if it is combined with
confiscatory taxation of high incomes.
The same can be said of just about any attempt to alleviate poverty by spending government dollars.
The earth is a multibillion-year-old sphere.
The Nazis killed millions of Jews.
On 9/11/01 a Boeing 757 (AA77) flew into the Pentagon.
AGCC is happening.
If you cannot accept these facts, I cannot fake an interest in any of your opinions.
To oversimplify for brevity
confiscatory income tax is objectively essential, but is a separate issue. UBI will not work, in fact it will make things worse in any event because:
Prices are set by the ability and willingness of the consumer to spend. Give everyone more money and prices will rise proportionately. But since some things (housing) are necessities, the inflation will not be strictly proportionate. Poverty (the ability to afford essentials) will actually increase, not decrease.
But since people's buying power and preferences are not equal increasing the buying power of the upper middle class will increase lifestyle inequality, not alleviate it.
Also, when people go into debt an increase in income normally results in a proportional increase in debt. The poor will remain poor, the relatively poor will remain relatively poor, and the bankrupt will still go bankrupt.
Increased consumption will lead to increased pollution, more garbage, and accelerated depletion of soil, water, and resources, especially fossil fuels.
Note that this does not apply to raising the minimum wage, or a reverse income tax, or a guaranteed jobs program. Raising the ability of the poor to a level where they will be able to pay present prices for necessities will not be able to inflate the prices of even those necessities.
On to Biden since 1973
I'm not sure we know exactly how UBI will
affect prices. The only significant experiment ever done (Google: "The Dauphin Experiment") seemed pretty successful. Ultimately, though, the difficulty that you identify is that the intersection of the Supply/Demand curves will almost inevitably leave people unable to meet the market price. This is true whether you boost incomes via UBI or via minimum wage increases. Putting more money in the hands of the lowest wage earners will, in the long run, cause the prices of necessities (in particular, food -- the ultimate necessity) to rise until everything that is not an immediate and urgent necessity (medicine, shelter, decent clothing, hygiene, transportation, energy) is out of the budget of those with the lowest incomes.
There are various ways of attacking that fundamental problem, the most obvious and successful being to have the government simply provide the bare minimums of certain things (esp food, medicine, shelter, and transportation).
The earth is a multibillion-year-old sphere.
The Nazis killed millions of Jews.
On 9/11/01 a Boeing 757 (AA77) flew into the Pentagon.
AGCC is happening.
If you cannot accept these facts, I cannot fake an interest in any of your opinions.
Price controls
If we're not going to increase minimum wage or do UBI we need price controls, at least for basic necessities. But with this government that's about as likely to happen as anything else. Sigh.
This shit is bananas.
And yet...
prices keep going up, regardless of peoples' ability to pay or not. (See housing, health insurance)
So let's just keep doing nothing I guess.
This shit is bananas.
Good point. n/t
I'm suprised to hear from someone who isn't tired of
hearing me harping on GMI (guaranteed minimum income, usually mislabeled the reverse income tax) Essentially guarantee that everyone gets say $25,000 (about what someone making $15/hr would keep after taxes) I don't have the time or the energy to extol the virtues, but it will not immediately trickle up to the rich through inflation (though there is food, but nobody will be eating Kobe beef on $25k)housing is money hiding and laundering and health costs are simple extortion and will have to be dealt with separately. It will raise the poor, give the lower working class either a raise or an out, all without more consumerism.
On to Biden since 1973
Um, okay.
I had a strange thought about tipping...
There has been a lot of ink spilled recently over at the Grey lady, most notably a piece by David Brooks that opined that since we can't improve wages we should all start tipping 30%. My thought was that the more employees are forced to rely on tips, the closer they are to "independent contractors" which is the neoliberal wet dream.
We can’t save the world by playing by the rules, because the rules have to be changed.
- Greta Thunberg
And David Brooks is the ultimate neoliberal wet-dreamer.
Only dimwits and ideologues believe that raising the minimum wage is "bad" for the economy, and only self-satisfied over-wealthed jackasses believe that the solution to institutionalized, systemic poverty wages might rest in voluntary contributions handed out at the whim of themselves and their socioeconomic ilk.
The earth is a multibillion-year-old sphere.
The Nazis killed millions of Jews.
On 9/11/01 a Boeing 757 (AA77) flew into the Pentagon.
AGCC is happening.
If you cannot accept these facts, I cannot fake an interest in any of your opinions.
Because that's the sane
and moral thing to do, turn us into a nation of Blanche Duboises - "I've always relied on the kindness of strangers." /s
The smaller the mind the greater the conceit. --Aesop
I was a taxi driver for 29 years
Tipping is dehumanizing, both for the employee and the customer. The worker is no longer an earner, he is a servant, a beggar, and the tipper is no longer participating in an exchange, he is a dispenser of largesse, and it is a small step from feeding your ego by giving to an inferior to feeding your ego by denying an inferior.
On to Biden since 1973
"Harry -- keep the change."
The earth is a multibillion-year-old sphere.
The Nazis killed millions of Jews.
On 9/11/01 a Boeing 757 (AA77) flew into the Pentagon.
AGCC is happening.
If you cannot accept these facts, I cannot fake an interest in any of your opinions.
I had a friend
Who was a taxi driver for a number of years. One of his big complaints was that the cops treated him like scum when he tried to get them to deal with nasty fares. The people who vomit in the cab or pull a gun on you. The cops just assumed he was lying and would just laugh at him.
We can’t save the world by playing by the rules, because the rules have to be changed.
- Greta Thunberg
That would be a little exaggerated for San Francisco
but in SF the police would write accident reports to make the least expensive car at fault (and taxis are always the least) If someone ran a stop sign they would report the taxi ran the sign, etc. I was once declared at fault in an accident because I failed to get out of the way of the SUV that rear ended me.
On to Biden since 1973