Re: Effects of raising minimum wages in USA

"Wells" <2006wells@xxxxxxxxxxx> wrote in message
news:3u6dnT3SRanxpQPZnZ2dnUVZ_oGdnZ2d@xxxxxxxxxxxxxx

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An increase in minimum wage will not "allow" you to suddenly
increase the price and you know it. Only AFTER people have more
to spend as a result of an across the board increase in wages forced
by a rising minimum wage will you be able to increase prices...
But the prices will FOLLOW the wages only after people get more
money to spend.

It does not follow that an increase in the wage level will necessarily raise
the income level and therefore the spending level of unskilled labor. The
linkage from wages to income depends on the elasticity of the demand for
unskilled labor. For example, capital is a substitute for labor. After a
minimum wage increase, management may opt for more capital intensive methods
of production and this may result in a decrease of income to minimum-wage
earners.

That is an excellent point. Glad to see that there are still intelligent people
posting here. However, that "capital" is not naturally occurring and there
are jobs created to develop capital. All wages increase the
disposable income of the people who actually SPEND. There will be
a SHIFT in minimum wage jobs from one field of endeavor to another.
There may be more service oriented small businesses as there will be an
increase in income for highly paid engineering and technical jobs. If
increasing the minimum wage will cause the development of more capital
then that is probably a good thing. This is something that is purposefully
overlooked by studies that disparage minimum wage increases. The
"data" tend to leave out the new small business creation and the change
in job sector when examining the effects of increasing minimum wage.

--
"I know no safe depository of the ultimate powers
of society but the people themselves; and
if we think them not enlightened enough to
exercise their control with a wholesome
discretion, the remedy is not to take it from
them, but to inform their discretion by
education." - Thomas Jefferson
http://GreaterVoice.org


.

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