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Trent posted:Disposable income goes up with minimum wage, so most businesses would benefit. The first thing people would do with their raises is go out to eat and buy poo poo. Ah, the economics of wishful thinking. Money gets transferred to workers, then mostly back to businesses, all while introducing deadweight loss. By what mechanism are "most businesses" supposed to benefit?
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Aug 21, 2015 17:36
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Solkanar512 posted:You see, people have minimum needs to survive - food, shelter, clothing and so on. At current minimum wages, they aren't able to meet those needs. By putting more money in their pockets, they're able to buy more of what they need, or better save for emergencies that may come up, making society more stable over time. And yet, as the real minimum wage has fallen, crime has gone down and corporate profits have gone up. quote:Given that labor costs aren't the total sum of business operating costs means that the increased demand makes more money for the majority of businesses over all. The reductions in turnover and training costs also help a great deal. Money that comes out of profit and goes back in as revenue does not and cannot increase profits. The only plausible way it could work would be turnover and productivity, but those don't appear to be significant factors. From https://www.aeaweb.org/articles.php?doi=10.1257/app.3.1.129 quote:This is consistent with a simple model where wage gains from minimum wages map directly into profit reductions. There is some suggestive evidence of longer run adjustment to the minimum wage through falls in net entry rates.
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Aug 21, 2015 19:05
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