Re: The minimum wage was $8 an hour in 1968

From: William F Hummel (wfhummel_at_comcast.net)
Date: 10/22/04 

Date: Fri, 22 Oct 2004 05:08:01 GMT

On Fri, 22 Oct 2004 04:04:16 GMT, Socialism is a Mental Disease
<root@localhost.> wrote:

>On Fri, 22 Oct 2004 03:42:25 GMT, William F Hummel
><wfhummel@comcast.net> wrote:
>>
>>On Fri, 22 Oct 2004 01:05:19 GMT, Socialism is a Mental Disease
>><root@localhost.> wrote:
>>
>>>On 21 Oct 2004 15:02:04 -0700, economist101@lycos.com (Senior
>>>Economist) wrote:
>>>>
>>>>In 1968 the Minimum Wage was $1.60. That is the equivalent of $8 an
>>>>hour in 2004 dollars. Given that we are a richer society 35 years
>>>>later, the minimum wage should now be close to $12 an hour.
>>>>
>>>This would be a prescription to export more work (and, therefore jobs)
>>>to lower cost producers. Unemployment would rise as a consequence.
>>
>>No, most of the jobs are unskilled to semi-skilled labor in various
>>services like serving up hamburgers or mowing lawns. Those kinds of
>>jobs cannot be exported.
>>
>But you cannot assume those companies would survive the higher labor
>costs.

I don't agree at all. Their prices would have to increase along with
increases in the minimum wage. But the price increases would be
fairly small percentage-wise except in those companies in which almost
all of the operating costs are in minimum wage labor. Other operating
costs include materials, rent, utilities, insurance, and taxes.

I suspect that in a Mac franchise, for example, involving say eight
employees working at minimum wage, an extra dollar per hour (costing
the business an extra $64 per day) would be relatively modest in
comparison to other operating costs. It might have to increase the
cost of a hamburger by 10% or so -- big deal.

Most of those who can afford their products now would still be able to
afford them at a slightly higher price. They would soon come to
accept the higher prices as the norm. The basic effect would be to
redistribute a relatively small amount of financial wealth from their
current customers to those working at the ridiculously low minimum
wages now in effect.

California currently has a minimum wage of $6.75 per hour. In my
view, that should be increased by say $1 per hour every year until it
has reached about $11 per hour. Thereafter it should be adjusted
annually according to the cost of living, just as social security is
now adjusted. That modest increase each year would hardly be noticed
in prices, and surely would not drive companies out of business, since
the increase would apply to all the competition.

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