Sup Forums why do people want to raise the minimum wage? Doesn't it just cause inflation to increase...

Sup Forums why do people want to raise the minimum wage? Doesn't it just cause inflation to increase? Or is it to get the minimum wage cucks to stimulate the economy because they spend all their money rather than saving/investing?

tldr; is there actually any argument for increasing the minimum wage?

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it has a small effect on inflation

the real problem is that it stifles entry-level job creation

labour is like everything else, the more it costs the less people buy

Depending on how much you raise it by, it only has a minimal effect on inflation. If the raise is sensible, purchasing power increases overall.

Equilibrium theory is bunk nonsense. It doesn't even hold up to basic scrutiny.

labour is like everything else, the more it costs the less people buy

Nonsense. You cannot simply 'cut back' on labor and continue running operations of a business as normal. If that were the case, it would present a current arbitrage opportunity to be eliminated, and then we're back to square one.

Equilibrium theory is bunk nonsense.

>Nonsense. You cannot simply 'cut back' on labor and continue running operations of a business as normal.
There are plenty of businesses that don't get expanded or never get started in the first place because labour is too expensive.

Some businesses that only need to pay their entry-level workers minimum wage can easily afford the extra costs of labour, but there are others that can't.

The only people who want the minimum wage to increase are people who live on minimum wage and are upset they cant do anything with it.

If you have a minimum wage that people can live on then people will have no incentive to do better.

You're describing a capital formation issue.

Firstly, I don't think that's correct. But let's put that aside because, more importantly, do you have something more to say about it? That statement strikes me to be about as useful to the conversation as "You're typing on a keyboard."

I think he just fucked your wife

wtf, I didn't even get to watch?

That wasn't the deal...

>tldr; is there actually any argument for increasing the minimum wage?

When you want to increase immigration, and shift low wage jobs out of your economy to your neighbors.

>If the raise is sensible, purchasing power increases overall.

This depends on your labor market, and wealth distribution, and the labor market of your neighbors. In the US's case raising minimum wages fuels a huge, black market labor market. If you're Sweden or iceland, by comparison, it's a lot harder to outsource minimum wage jobs because of geography and their neighbors.

What? Labor is not as elastic as some things, but there's definitely responses the market can take. Fast food for example shifts the labor to illegal farm workers, and has partially prepared shipped in rather than doing it on site with price floored workers.

Sorry, I assumed you had a little knowledge on the subject.

A capital formation issue would be one where capital is unable to be formed by way of loans, investment, issuance of securities, etc. to enhance production and acquire new capital goods.

You're describing an issue where businesses and would-be business owners are unable to attain capital to start, expand, or improve their business. This has nothing to do with higher labor costs and everything to do with (presumably) frozen capital and credit markets, along with little-to-no savings of their own.

Higher labor costs merely translate to modestly higher prices, not a meaningful reduction of labor use, and not lower capital formation (in fact, it'd likely be higher).

>labour costs have nothing to do with the viability of a business

youtube.com/watch?v=84t4pTUDFGo&t=1421s
Here are the arguments for it.

You're describing labor arbitrage which adds additional complexity to the issue. There are meaningful limits to domestic immigration to be sure and the use of illegal labor is not considered here because, well, it's illegal. For the purpose of discussing theory, it doesn't make sense to assume that the gov't wouldn't actively try to prevent the use of illegal labor so legal labor has a wage floor of the minimum wage--which is the topic at hand.

I'm assuming the labor in question is some kind of minimum wage low-end service work (which is by far the most common).

Equilibrium theory? It's called supply and demand, otherwise known as the basic rule of economics.It ain't rocket science

Actually you very much can and there's a variety of ways to do it too, like reducing hours and hiring additional part time workers whom are still cheaper than keeping fewer full time workers, automation, raising prices, reduction in services, ect.

in no universe does your fantasy work the way you want it to.

If we're assuming some kind of rational wages without runaway overhead, no, it doesn't.

As the minimum wage increases, so to do local discretionary incomes which means that there is more available capital in the hands of local consumers to spend at your very business.

lol

you're hilarious

Your theory only works under the assumption that prices don't rise with the pay increase or that labor isn't reduced to compensate for the raised costs. The first thing your kind always runs to is the "MORE MONEY EQUALS MORE BUYING" as if the increase in additional costs and its affects don't exist. Or that the owner won't decide to move on to alternatives to avoid said costs. You operate off a utopian fallacy

minimum wage should be abolished, so the market(employment market) controls it, there would be around 0 unemploymen, just like it happens in Indonesia (i guess), products would be cheeper if it happened the same in the economic market

coercius paribus(constant statistics) much by his part

It's archaic nonsense.

Equilibrium theory assumes perfect knowledge and perfect competition--two things which are almost never observed (least of all together) and are no small assumptions. Supply is rarely a factor in price and demand is subject to innumerable 'alterations' and contrived situations.

No, instead we observe monopolistic pricing, oligopolies, monopsony, oligopsony, and reflexivity.

Reducing hours does not change the minimum hourly rate paid, hiring additional staff at the same required minimum would result in more being paid; not less, automation is only as fast as technology allows (and available capital to acquire it), and reducing hours reduces your availability to earn revenue.

>in no universe does your fantasy work the way you want it to.
I was thinking the same to your rebuttal.

>No, instead we observe monopolistic pricing, oligopolies, monopsony, oligopsony, and reflexivity.
in a complee free market (without patents, state privileges to certain entreprises)this would be dulled down, due to a fearce competition on every economic sector, since this is unataineblle well just have to content with unti-trust laws, the equilibrium theory works just needs the right conditions to strive

>the use of illegal labor is not considered here because, well, it's illegal.
If we're talking about the US, there's about 12 million illegal immigrants, about 10 percent of the workforce in the most heavily affected states, and being at the low end of the pay scale, have a disporportionate impact on minimum wage economics.

But even if we ignore the black market, there's a hell of a lot of space for labor arbitrage when there's a 300 percent difference in legal minimum wage in neighboring countries. US urban areas are 10, pushing to 15 vs the $4.15 current minimum in Mexico.

>For the purpose of discussing theory, it doesn't make sense to assume that the gov't wouldn't actively try to prevent the use of illegal labor so legal labor has a wage floor of the minimum wage--which is the topic at hand.
In this case, we have sanctuary cities, where the government explicitly says that it will not attempt to prevent the use of illegal labor, so it's not a safe assumption.

Nice rebuttal.

No, I already said multiple times that raising the minimum wage leads to modest inflation. However, there is no 1:1 correlation to increased wages and increased prices because wages are not 100% of COGS.

If wages are 50% of the cost of making a $1.00 bottle of Coke and you decide to raise their wages by 10%, does the Coke now cost $1.10 (assuming you want to maintain the same nominal profit for simplicity)? No, because labor is only 50% ($0.50) of the cost for a $1.00 Coke, the Coke is now $1.05 ($0.50+10%=$0.55). This issue with raising wages ad infinium is that at some point, even with monopolistic pricing, consumers will likely turn to alternatives when the price gets high into absurdity.

and it also leads to inequallity inequalitty in the country due to geographic diferences, and the unemployment will go up, just like the taxes correlated to the minimum wage

I need more money, give more money, print more money

There isn't much to say to someone that doesn't understand that labor costs affect the viability of a business.

The underlying assumption behind everything you write (and which you often expect your reader to just assume along with you) is that everything, from labor to the cost of goods, is a perfectly inelastic demand, which is obviously not true. If labor costs more it's not good enough to say that the business can just raise prices to make up for it, those prices might now be too high to make any sales.

This is unobservable. Market fundamentalism ironically only leads to market consolidation, not more competition. No patents would make this even worse because the inevitable monopolies could, and would be freely able to steal anyone's idea and produce it for less than the inventor could initially on account of already being at economies of scale. The 'little guy' gets thoroughly raped in that scenario.

It seems like you're trying to pain the exception as the rule, rather than the other way around.

If there's a burgeoning illegal labor market, that speaks to a failure of government to eliminate it rather than a failure of other policy.

Like I said though, I'm assuming that we're discussing the typical minimum wage job here (which isn't factories or farming by the way). You cannot outsource the waiter at a restaurant or the janitor of a grocery store.

Honestly, I'm not sure of your point here.

>doesn't understand that labor costs affect the viability of a business
>If labor costs more it's not good enough to say that the business can just raise prices to make up for it, those prices might now be too high to make any sales.
As I said, *if the price increases are in the realm of reasonability*, there is no meaningful impact. A company raising prices 100% to accommodate raising wages for employees by 150% is indeed likely to have a meaningful decline in adjusted sales whereas a company raising prices by 5% may even have their increase go unnoticed by consumers. The details matter here.

>The underlying assumption behind everything you write is that everything, from labor to the cost of goods, is a perfectly inelastic demand, which is obviously not true

No, you're considering theory in pure abstractions, not as it resembles reality. Because of monopolistic pricing (a company has a meaningfully unique product which the particulars of, they have a monopoly on), imperfect understanding, and imperfect competition, a company can raise prices and see no meaningful decline in sales. I can think of Starbucks as a great example of this, where they raise prices every year and more often than not see same-store sales increase. Sure, I can get coffee elsewhere (which I do), but I won't be getting Starbucks coffee. Coke is another great example.

>refuses to acknowledge the black market labor problem
>"you're not dealing in reality"

Raising the value of our dollar by building wealth in our country is obviously better.

Why would there be a need to raise the minimum wage when our money would go farther and buy more??

It does increase spending but it also increases the prices of goods and services and makes it harder to get a job. The Northern European model is actually the way to go with IR laws; unionise everything and get the government out of it!

>"problem"
A relatively minor nuisance at best.

>a company can raise prices and see no meaningful decline in sales
Only if by "a company" you mean "some companies but not all companies"

Not all businesses are Starbucks

Labour is like everything else, the more it costs the less people buy.

Some business might still buy the same amount, but others won't.

You know that the statement is true because you have to keep adding the condition of "reasonable limits" to how much the cost of labor gets raised by. Well what's reasonable for one business might not be reasonable for another.

The point where Starbucks is no longer a viable business is much higher than, say, a one-man gardening business that is considering hiring a young lad after school as a helper.