Biden

[wufan]

Clearly I'm not supporting Biden, and I think this is a terrible idea, but are they proposing, right now at least, $15/hour for Federal jobs only?

If so, how many jobs would that really affect, and how many of those jobs are in Kansas?

(I'm just curious, and there's a valid discussion to be had that government, tax payer funded, jobs can't pay more than the private sector etc)

I’m now seeing some people claim that the $15 minimum wage is only for federal employees. Not sure now.

[Shockm]

I’m now seeing some people claim that the $15 minimum wage is only for federal employees. Not sure now.

That was true of mask wearing but I don’t think it’s for minimum wage.

[wufan]

That was true of mask wearing but I don’t think it’s for minimum wage.

https://www.americanprogress.org/press/statement/2021/01/22/494957/statement-president-bidens-executive-order-raising-minimum-wage-expanding-paid-leave-will-improve-lives-u-s-working-families/

The executive order is just for federal employees. Not sure if there is more to follow. That makes sense though as you can’t EO the federally mandated minimum wage...yet.

[SubGod22]

https://www.americanprogress.org/press/statement/2021/01/22/494957/statement-president-bidens-executive-order-raising-minimum-wage-expanding-paid-leave-will-improve-lives-u-s-working-families/

The executive order is just for federal employees. Not sure if there is more to follow. That makes sense though as you can’t EO the federally mandated minimum wage...yet.

The EO can't, but you know the Dems are going to try and push it through Congress.

As has been pointed out by others, the Federal Gov't has no business setting a national wage for the States as there are way too many variables that go into cost of living. If there is to be a minimum, the more localized such a wage is set, the better.

Plus, the $15 push will kill a number of small businesses and even more jobs. The large corporations who favor this already aren't paying minimum and can't afford the rise, as well as the automation that comes with it. Plus it will decrease the buying power of millions more than it will help those they claim to be helping.

[SHOXAAC]

The EO can't, but you know the Dems are going to try and push it through Congress.

As has been pointed out by others, the Federal Gov't has no business setting a national wage for the States as there are way too many variables that go into cost of living. If there is to be a minimum, the more localized such a wage is set, the better.

Plus, the $15 push will kill a number of small businesses and even more jobs. The large corporations who favor this already aren't paying minimum and can't afford the rise, as well as the automation that comes with it. Plus it will decrease the buying power of millions more than it will help those they claim to be helping.

So, in other words, my quarter pounder is going up a couple of quarters.

[ShockTalk]

So, in other words, my quarter pounder is going up a couple of quarters.

Not necessarily. They could get rid of the 3 or 4 employees that take your order throughout the week and you then have to use the already existing automated in-store screen, order/pay by phone, or drive through as your only options.

[SHOXAAC]

Not necessarily. They could get rid of the 3 or 4 employees that take your order throughout the week and you then have to use the already existing automated in-store screen, order/pay by phone, or drive through as your only options.

Then what you are saying is my two ex-wives will be without a job.

[MikeKennedyRulZ]

Not necessarily. They could get rid of the 3 or 4 employees that take your order throughout the week and you then have to use the already existing automated in-store screen, order/pay by phone, or drive through as your only options.

This is exactly what will happen and is already happening. It will not result in more employment. It will result in more automation and more people losing jobs, in addition to increased costs for goods. It's simple economics.

[C0|dB|00ded]

The large corporations who favor this already aren't paying minimum and can't afford the rise, as well as the automation that comes with it. Plus it will decrease the buying power of millions more than it will help those they claim to be helping.

I disagree with this. Large corporations will show a little less net profit which will be reflected in less buybacks, dividends and perhaps price appreciation. If the wage raise is broadly applied, there will not be any competitive imbalances.

I also think the impact on buying power will be muted eventually because of the dynamics of free markets. If a law goes into effect you may see prices rise initially, but eventually one competitor will lower their prices in order to gain market share - more will follow to remain competitive. Prices will find a new equilibrium and stock holders will likely bear most of the brunt. I think they/we can handle it.

I understand clearly the traditional argument of rising wages and the effect on available jobs, but that is academic theory and it is very simplistic. We have learned with monetary policy and other economic forces that "there's many a slip twixt the cup and the lip".

[pinstripers]

Large corporations are not going to take less profit. They will ALL raise prices and would be stupid not to.

[wufan]

I disagree with this. Large corporations will show a little less net profit which will be reflected in less buybacks, dividends and perhaps price appreciation. If the wage raise is broadly applied, there will not be any competitive imbalances.

I also think the impact on buying power will be muted eventually because of the dynamics of free markets. If a law goes into effect you may see prices rise initially, but eventually one competitor will lower their prices in order to gain market share - more will follow to remain competitive. Prices will find a new equilibrium and stock holders will likely bear most of the brunt. I think they/we can handle it.

I understand clearly the traditional argument of rising wages and the effect on available jobs, but that is academic theory and it is very simplistic. We have learned with monetary policy and other economic forces that "there's many a slip twixt the cup and the lip".

You doing oppositional research in an attempt to play devils advocate? You need to do more reading. MMT is a crock of ****, and your over-simplification of the literature is transparent.

Be careful wading into CRT. The tactics to appear to win the argument are outstanding, but the reality is a slap in the face. Be weary of the seductiveness of the dark side.

[ShockerFever]

I disagree with this. Large corporations will show a little less net profit which will be reflected in less buybacks, dividends and perhaps price appreciation. If the wage raise is broadly applied, there will not be any competitive imbalances.

I also think the impact on buying power will be muted eventually because of the dynamics of free markets. If a law goes into effect you may see prices rise initially, but eventually one competitor will lower their prices in order to gain market share - more will follow to remain competitive. Prices will find a new equilibrium and stock holders will likely bear most of the brunt. I think they/we can handle it.

I understand clearly the traditional argument of rising wages and the effect on available jobs, but that is academic theory and it is very simplistic. We have learned with monetary policy and other economic forces that "there's many a slip twixt the cup and the lip".

A conservative viewpoint.

[C0|dB|00ded]

Large corporations are not going to take less profit. They will ALL raise prices and would be stupid not to.

You don't understand free market competition. Consumers can't be forced to purchase goods. Most goods don't have inelastic demand.

[C0|dB|00ded]

You doing oppositional research in an attempt to play devils advocate? You need to do more reading. MMT is a crock of ****, and your over-simplification of the literature is transparent.

Be careful wading into CRT. The tactics to appear to win the argument are outstanding, but the reality is a slap in the face. Be weary of the seductiveness of the dark side.

I'm not doing oppositional research. My background is Economics, remember? I don't think I even know anymore when I'm playing devil's advocate on this board. I flip a coin and hope it lands on the path of most resistance.

“The definition of genius is taking the complex and making it simple.” ― Albert Einstein

[CBB_Fan]

An increase in the minimum wage will absolutely increase consumer prices. The question is not the direction of the movement, but the degree. The idea is basic enough that is has a name, cost-push inflation: prices increase (inflation) due to increases in the cost of wages and raw materials. This is contrasted by demand-pull inflation, which is inflation due to a reduction in supply.

We have had a once in a lifetime chance to study cost-push inflation in the real world with the enormous amount of coronavirus stimulus funding that flooded the market throughout 2020. Nearly $20 trillion globally was spent to combat the economic consequences of the virus, with the US total being around $3 trillion. My understanding is that our inflation went from 1.9% in 2019, to 2.3% in 2020. If we abstract this out, we could make the hypothesis that $3T in additional spending caused an additional 0.4% rise in consumer prices. Probably grossly too simple, but at least it gives a ballpark figure.

This figure is important, because an increase in wages is also likely to cause the same sort of inflation: cost-push. How much money does a $15 minimum wage put into the economy? I've heard around $600 billion per year. If this has the same effect as the coronavirus stimulus in a smaller scale, we'd expect it to be equivalent to an additional 0.1% inflation rate which may be unevenly distributed; the cost of a new commercial jet may not rise the same percentage as the cost for a burger made by minimum wage employees. But still, even doubling the minimum wage will result in a smaller ripple than what a lot of people might believe.

There are other concerns however. Doubling a minimum wage worker's hourly pay may lead to a relatively small increase in inflation, but as they economically associate largely with businesses that employ minimum wage workers like retail stores and fast food joints they will experience the majority of the increases in cost. They also are affected by all the negative consequences of such a change: employers demanding higher entry-level skills, lower hours, less overall youth employment, etc. Taken altogether, while doubling hourly pay will not double costs to compensate (or anything close to it), it also won't double take-home pay. Even if the net benefit is positive for minimum wage workers, the results will be uneven. Some will lose their job entirely, some will see a smaller gain due to cutbacks to hours, some already at $15/h will see costs rise with no increased pay, and a few will keep their job and hours and see their purchasing power increase significantly.

Now a better question might be if there are solutions to the issues of income inequality that do not have the same issues. Most economists agree that the Earned Income Tax Credit (EITC) is a near ideal solution that addresses inequality efficiently. In this case, efficiently means a lot of things: evenly, without the risk of an inflationary cycle, without overly affecting employment, etc. However, the EITC in a simple model does have the ability to reduce wages by encouraging work and devaluing labor. A combination addresses poverty from both ends and puts less pressure on businesses.

To be honest, I don't think the minor increase in prices is a major factor against raising the minimum wage. I'd argue that the best solution is increasing both the minimum wage and the EITC, and if I were applying a price tag to each I'd probably go with $600B for the minimum wage and $1.2T for the EITC at a maximum and $300B / $600B at a minimum. This would address the bigger problems raising the minimum wage raises, while probably doing a better job at stabilizing the economy during the recession and working to actively reduce poverty.