> I'm just curious how all of this is going to end. People aren't going to pay 8 dollars for a big mac, and people aren't going to work at McD for minimum wage.
Research on the effect that raising minimum wages has on prices, specifically fast food prices, found that for every 10% increase in wages, some prices increase by 0.36% and other prices decrease[1].
We're in a weird world where it's hard to find roots and causes. All I know is that wages in the lower end are way up, and so are prices for -everything-. A simple minded person may link the two.
But I'm not going so far as to call the research wrong, as wage increases have been caused by a worker shortage and not legislation.
That's always been my fear, in a way. I've long been a proponent for higher minimum wages, and met with folks telling me it would raise the price of everything. On paper, they were wrong.
Today we see it play out, and they are right. But not because they were strictly right, but by happenstance inflation hit everything.
>That's always been my fear, in a way. I've long been a proponent for higher minimum wages, and met with folks telling me it would raise the price of everything. On paper, they were wrong.
Even on paper, they were not wrong. The point of raising minimum wages (which has not happened federally in the US), is to transfer wealth from those who have it to those who do not.
The goal would be for labor prices at the the low end to increase faster than prices, so that the people who were previously consuming more have to consume less, and the people who had to consume minimally can consume more.
When the poor kid who has to work at burger king doubles his wage, the hope is that he can have enough money to save for a somewhat reliable car, at the expense of a richer kid being unable to eat burger king as often.
>The goal would be for labor prices at the the low end to increase faster than prices, so that the people who were previously consuming more have to consume less, and the people who had to consume minimally can consume more.
You're right but the real problem is that those who have the money don't actually spend it on consumption. If they did then you wouldn't need to raise the minimum wage as there would be enough well paying job opportunities for everyone.
A lot of other people have pointed out the current circumstances are extraordinary and possibly not a good read through for a legislative minimum wage increase.
Another POV, anecdotally, from the article:
> Matt and his best friend from McDonald’s, David Putnam, were making $12 an hour at Tim Hortons doughnut shop. The extra money meant David, who was raising his 2-year-old son on his own, no longer needed donated food from the “Blessing Box” near his house. He had recently even been able to treat his mother and stepfather to dinner at the Hunan Buffet across the parking lot from his new job.
Everyone shouts how adding more money will make everything more expensive. In some countries the added dollars don't even circulate once. Inflation is dead.
It seems like you're ignoring that we're coming out of a global pandemic which has led to reduced productivity and efficiency resulting in a goods shortage.
Or, you know, the (global) supply chain is clogged.
> It’s been a troubled few months on the economic front. Inflation has soared to a 28-year high. Supermarket shelves are bare, and gas stations closed. Good luck if you’re having problems with your home heating system: Replacing your boiler, which normally takes 48 hours, now takes two or three months. President Biden really is messing up, isn’t he?
> Oh, wait. That inflation record was set not in America but in Germany. Stories about food and gasoline shortages are coming from Britain. The boiler replacement crisis seems to be hitting France especially hard.
[…]
> In other words, the problems that have been crimping recovery from the pandemic recession seem, by and large, to be global rather than local. That’s not to say that national policies are playing no role. For example, Britain’s woes are partly the result of a shortage of truck drivers, which in turn has a lot to do with the exodus of foreign workers after Brexit. But the fact that everyone seems to be having similar problems tells us that policy is playing less of a role than many people seem to think. And it does raise the question of what, if anything, the United States should be doing differently.
> So why does the whole world seem to be running on empty?
I wouldn't trust any minimum wage research in today's politicized academic climate. These are all models of a complex nonlinear system, it's trivially easy to build a model that will back fit your selection of target data while simultaneously outputting any future results that the modelers want (intentionally or otherwise).
If you can raise wages without any damaging effects that just means you were underpaying your workers. In other words, raising a low minimum wage just works by accident. It's not a very reliable policy tool.
You didn't set a time bound on "today's politicized academic climate," so I had to guess. There's always a new conservative bugaboo with some aspect focused on schools, and it tends to come on 5-10 year cycles.
It's CRT today, teaching about gay people existing around then (post-Obergefell v. Hodges), Sharia law allegedly taking over communities not that long ago. It seems the merits and hazards of paying people enough to live is next with this new labor movement frustrating people who are used to abusing lopsided power relationships.
It's dishonest to dismiss valid concerns as "conservative bugaboos". Pew surveys have consistently shown that the majority of global muslims, for example, support establishing Sharia Law and placing it above local laws in foreign countries. I won't get into the issues with CRT but they're not nearly as cut and dry as you are implying. Nor is your interpretation over labor law. I'm at least willing to acknowledge that the progressive aspect is not entirely without merit; are you truly so arrogant as to blithely dismiss the views of about half the country in their entirety?
Half the country? No, of course not. A quarter at best, and I charitably assume most voting Republicans (the quarter) are as concerned about what's happening to their party as the other ~75% of the country. Some of its leadership, most now dead, decided to lean hard into extremist evangelical beliefs some decades ago and people who took up the reins after are still dealing with the fallout.
But it's incontrovertible this class of bugaboos is almost exclusively shared among people who self-identify as conservative. I didn't say all conservatives; you read that into my comment. I have other criticisms for liberal, leftist, Democrat, etc bugaboos. I'm talking about your comment. You do not represent half the country.
Research on the effect that raising minimum wages has on prices, specifically fast food prices, found that for every 10% increase in wages, some prices increase by 0.36% and other prices decrease[1].
[1] https://research.upjohn.org/up_workingpapers/260/