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I don't claim to be an expert or anything, but I believe either everything would get much more expensive over night or many people would lose their jobs. Production is finite. If you want people to have more stuff you have to produce more stuff. This is one of the main reasons I believe the pro living wage arguments are nonsense. Why stop with a living wage? Maybe we should all have cell phones, three story houses and Ferraris. Some people might suggest that if we set a living wage we should try to pass another law simultaneously, setting salary caps on other segments of the population, paying the other laborers less than they're worth. The intent of such a law might be to divert labor from production of luxuries to production of low income housing and so on, since the people who got capped would have less to spend. I think this would also have negative consequences.
You might want to pick up a copy of Economics in One Lesson by Henry Hazlitt. It's easy to read and provides plenty of examples. It also has chapters on wage laws and price-fixing. From the preface, "This book is an analysis of economic fallacies that are at last so prevalent that they have almost become a new orthodoxy."
I don't claim to be an expert or anything, but I believe either everything would get much more expensive over night or many people would lose their jobs. Production is finite. If you want people to have more stuff you have to produce more stuff. This is one of the main reasons I believe the pro living wage arguments are nonsense. Why stop with a living wage? Maybe we should all have cell phones, three story houses and Ferraris. Some people might suggest that if we set a living wage we should try to pass another law simultaneously, setting salary caps on other segments of the population, paying the other laborers less than they're worth. The intent of such a law might be to divert labor from production of luxuries to production of low income housing and so on, since the people who got capped would have less to spend. I think this would also have negative consequences.
You might want to pick up a copy of Economics in One Lesson by Henry Hazlitt. It's easy to read and provides plenty of examples. It also has chapters on wage laws and price-fixing. From the preface, "This book is an analysis of economic fallacies that are at last so prevalent that they have almost become a new orthodoxy."
Well, in theory, haven't we already seen this? Fannie and Freddy pushing people who couldn't afford homes into them because it was their "right" to the American Dream. What was the result? Skyrocketing housing costs and values, and the eventual implosion of the whole deal.
In theory, there is no need for any inflation to occur at all. You are merely affecting the shares of return on the production of GDP. There are just four...
GDP = W + R + I + P
W = Wages, which are the return to labor. R = Rent and I = Interest, each of which is a return to capital. P = Profits, which is the return to entrepreneurship.
Introducing a living wage would require that one of two things occur. First, relative wage rates could change, such that the total for W remained constant, while some income earned by high-wage workers was diverted to low-wage workers in order that they could earn a living wage. Second, relative wage rates could remain constant, while the total for W increased so as to bring low-wage workers up to a living wage. This would require one or more of R, I, and P to be reduced.
In the real world, the labor share of GDP (namely, W) has been declining since Bush took office, this after rising over the latter half of President Clinton's term. A substantial part of the recent decrease in W has gone over to P. There has been little if any inflation caused by this. The process could be reversed with the same effect.
Last edited by saganista; 10-31-2008 at 02:02 PM..
what would the US look like if it was mandated, by law, that every full time working person in the US was paid a living wage for their area.
As an example, a burger flipper at BK would prob make in the 50's in San Fran
how would that effect this country?
If you look at it from an economic perspective, places like BK would shut their doors in San Fran. area. For one, the cost associated with giving an average worker 50K for a low skilled position wouldn't be worth it. They'd have to offset their cost somehow by either firing workers, and/or cutting cost in other ways in addition to increasing the cost of the food which in itself would decrease sales. Americans are driven by low prices, we want as much food as possible for the least amount of money. Increase cost (according to economics principles) would more than likely decrease demand... which would have a rippling effect.
If this was done on a mass scale it would essentially effect everyone. For example, why is food cheaper in many parts of the midwest vs. California? The cost of living is higher in California so, we don't pay the same for a gallon of milk as they do in the Midwest - the pay scale is different so someone has to pay for that difference.
Ultimately, we can support forced living wage increases but it's naive for anyone to think that the consumer isn't the one who ultimately pays for it. We can see it in union grocery stores that pay better wages vs. non-union grocery stores (pay attention to the prices, there is a difference - non-unions stores tend to be cheaper... can you guess why?). It just comes down to cost - if you increase the labor cost, eventually the prices will rise to make up for it.
if someone is making $6.50 an hour working a job, they are getting a living wage. they are paid a wage, and they are alive. hence, living wage.
Burger King isnt a livable wage. It is a job for teens, college students, and second incomes. I worked at Burger King in high school and took as many hours as I could get.
If you can live off 6.50 an hour, more power to you, but you should aspire to something more.
people who make $6.50 an hour are alive. they make a living wage. if you make minimum wage and you are in your 30's, then there is a problem. only time I ever made minimum wage or less was waiting tables and delivering pizza in college.
Quote:
Originally Posted by nebulous1
Burger King isnt a livable wage. It is a job for teens, college students, and second incomes. I worked at Burger King in high school and took as many hours as I could get.
If you can live off 6.50 an hour, more power to you, but you should aspire to something more.
It makes no difference if my wage goes up if everything I need in life goes up even higher. Then I'm just back where I started and nothing has been accomplished.
with all respect to your post, laws do not bring labor equity, labor unions do that.
how long before my countrymen catch on to this simple fact.
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