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Post by LibSlayer on Jan 24, 2007 15:55:48 GMT -6
"If a business is profitable, and maximum profit is achieved with 100 workers @ $5.15/hour, the employer will hire 100 workers. if the business is still profitable, and maximum profit is still achieved with 100 workers @ $7.25/hour, the employer will still employ 100 workers. All that changes is his profit margin. "
And the business will lay off workers to improve the profit margin.
"A minimum wage increase causes total employment to increase. And the statistics verify this. "
Raising minimum wage only increases unemployment.
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Post by blueneck on Jan 24, 2007 17:41:34 GMT -6
Again, the statistics and past history do not support this assertion.
You might see some temporary delays in hiring plans for minimum wage jobs, and as UC says you might see some marginal businesses slow or stop hiring, but by the definition of marginal- if it weren't wages some other issue could push them over the edge - if they're that close to the edge they have deeper issues than wages.
But again, these types of jobs we are talking about, dishwashers, lawn mowers, bus boys, hamburger flippers do not go away.
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Post by LibSlayer on Jan 24, 2007 18:24:58 GMT -6
"Again, the statistics and past history do not support this assertion." Historically, the main impact of the minimum wage has been on black teenage males, and this continues to be the case. In September 1996, the unemployment rate for this group was 36.6%. After the minimum wage rose from $4.25 to $4.75 on October 1, their unemployment rate jumped to 38.6% and to 41.1% in November 1996." www.findarticles.com/p/articles/mi_qa3827/is_199802/ai_n8803128The history and statistics OVERWHELMINGLY prove raising the minimum wage puts people out of work.
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Post by ig on Jan 25, 2007 11:36:29 GMT -6
The workers you use as examples are not paid for piece work, they are paid by the HOUR. So here are the numbers for you: Small business, 1 owner, 10 minimum wage employees. The 10 employees cumulatively work 400 hours a week. The owner presently pays $2020 a week in wages to the employees at $5.15 hour. If minimum wage is raised to $7.15 hour then the 400 hours will cost the owner $2860. That is a definite increase in labor costs. Where does that money come from? 1. From the owner's profits - not going to happen 2. Raised prices 3. Reduced hours 4. Some combination of 2 and 3. If prices are raised that increases inflation, and those who pay the prices now have less money to buy other things. If hours are reduced it increases unemployment. suppose the owners profits have increaded because his output per employee has increased. If prices are raised that increases inflation, and those who pay the prices now have less money to buy other things. if there is pricing power prices will rise but considering there is a glut of these types of businesses I highly doubt they will. data doesnt support it. Recent data show higher wholesale prices. PPI hasnt translated to higher CPI. we recently witnessed the largest increase in 20 years yet no spike in core CPI
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Post by LibSlayer on Jan 25, 2007 13:02:51 GMT -6
"If prices are raised that increases inflation, and those who pay the prices now have less money to buy other things."
Which is why raising the minimum wage will increase production costs which will be translated into higher prices which translates to higher inflation which robs the buying power.
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Post by ig on Jan 25, 2007 14:29:00 GMT -6
not true. In an AD=AS environment, the owner could increase output per hour without increasing labor. essentially dividing the labor cost over an increasing output. This is how Friedman avoids crowding out. The internal sustainable rate of growth of a firm increases as productivity increases. Profits increase and prices RARELY fall.
There are times when prices do fall in the case of gains in productivity such as computers where tech innovation drove the price of chips and the like down. Wafer tech greatly improved and this can create a supply shock.
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Post by ig on Jan 25, 2007 14:43:21 GMT -6
in addition:
It is true that an owner can increase wages and profits without increasing prices. by increasing output per employee.
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Post by LibSlayer on Jan 25, 2007 14:52:21 GMT -6
in addition: It is true that an owner can increase wages and profits without increasing prices. by increasing output per employee. Not in a service business which is where the bulk of minimum wage earners work. As for non-service, they will already have been doing all they can to increase productivity. Raising wages either decreases profits or increases prices.
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Post by ig on Jan 25, 2007 15:30:53 GMT -6
that flies in the face of supply side theory where the formation of capital "K" ultimately increases employment. Plowback into capx improves "P" productivity making the ROI on "K"
It also does not agree with greenspans calculation of service based productvity gains.
Fast food, drycleaners, etc all took advantage of the computer tech boom yet wages remained low and there was a huge influx into these businesses IE supply shock that should never have happened.
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Post by LibSlayer on Jan 25, 2007 15:54:28 GMT -6
Fast food, drycleaners, etc all took advantage of the computer tech boom yet wages remained low and there was a huge influx into these businesses IE supply shock that should never have happened. Yes wages remained low because even after productivity gains due to technology profits did not increase because competition kept prices low.
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Post by blueneck on Jan 25, 2007 20:14:42 GMT -6
Depending on which poll you see, those in favor of increasing the minimum wage range from 60-75%. Several states already have raised theirs on their own, not waiting for the federal gubmint. Hardly a fringe or radical liberal position. It crosses party lines as well, even though the republican senators are blocking it with a filibuster threat - remeber the filibuster? something the republicans tried to take away when they had the majority. The fringe and out of the mainstream position is the one against raising the minimum wage which coincidently is around 30% - just like Bush supporters and supporters of the radical right agenda - they are the nutcases, not the vast majority.
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Post by unlawflcombatnt on Jan 25, 2007 20:44:13 GMT -6
"If a business is profitable, and maximum profit is achieved with 100 workers @ $5.15/hour, the employer will hire 100 workers. if the business is still profitable, and maximum profit is still achieved with 100 workers @ $7.25/hour, the employer will still employ 100 workers. All that changes is his profit margin. " And the business will lay off workers to improve the profit margin. No, the business will not lay off any workers if it decreases total profits to do so. If the business achieves its greatest profit with 100 workers, even after the wage increase, there's no reason to lay off workers. It will reduce profits. If the business lays off workers, it's reducing its own income in this case. Are there a lot of businesses that lay off workers when it reduces their profits to do so? No, it only decreases business profit margins. And if doesn't change the number of employees needed for maximum profits, it doesn't decrease employment any. Employers hire workers to produce goods and provide services. They hire the optimal number to achieve the maximum profit. If the level of optimal profit is achieved with the same number of employees, even after a wage increase, they'll continue to employ the same number of workers. They'd lose money and reduce profits if they laid off workers.
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