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PostPosted: Mon Jun 01, 2015 2:36 pm    Post subject: 1111 Reply with quote

PeakTrader:

It seems, top economists, e.g. Robert Solow, are aware of biases, because he stated the effect on employment is small.

It may be negative. However, the positive effects on productivity and income may be greater.

Therefore, government will have more money to pay the people who lost their jobs.

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Are you surprised, since the country was at full employment with a much higher teen labor force participation rate, the real minimum wage fell 25 percent, while productivity in the fast food industry, for example, rose 25 percent, real per capita income doubled, and profits as a percentage of GDP almost doubled?

If the minimum wage, since 1968 (when the unemployment rate was under 4 percent and the teen labor force participation rate was much higher), kept up with productivity growth, it would be over $12 an hour today.

The economy has the capacity to easily ďabsorbĒ a higher minimum wage.

One mechanism how the economy adjusts to a higher minimum wage is weak firms will lose business or fail and stronger firms will gain their business and gain from the increase in demand.

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Thereís a TV show called ďKitchen NightmaresĒ that reveals with a little more training, some capital spending, and a little more work, a restaurant can turn from a money losing operation to a highly profitable business.

Low-skilled workers can easily rise to a higher standard and be more productive.

Unfortunately, many businesses shouldnít be in business, because the quality, and/or quantity, of their goods or services are low. However, well-managed businesses can easily pay a higher minimum wage.

****

A higher minimum wage can raise demand for fast food.

The increase in demand can be greater for low-wage workers than the decrease in demand for high-wage workers.

An increase in demand can cause prices to rise.

****

Itís likely, low-wage workers are more sensitive to price hikes than high-wage workers.

A $15 an hour minimum wage will result in a greater increase in wages than prices for a lot of workers.

****

A $50 minimum wage is suboptimal like a $5 minimum wage.

Is it optimal to pay high-skilled workers the same as low-skilled workers?

And, is it optimal to exploit low-skilled workers?

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If $7.25 an hour is suboptimal, there are people working at $7.25 per hour Patrick.

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If the marginal productivity of labor is or can be higher than the minimum wage, then thatís suboptimal.

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The demand for steak may rise and the demand for hamburger may fall.

Sales may rise at the Sizzler and the Outback, and fall at Burger King and McDonalds, resulting in better jobs.

****

How would price controls help anyone? It would lead to scarcity.

A higher minimum wage can lead to a rise in real income, and consumption, for low-wage workers that exceeds the loss in real income, and consumption, of high-wage workers.

Moreover, a higher minimum wage can increase productivity and produce better jobs through more capital spending.

Wages donít equal prices. A wage is also an input and income.

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Patrick:

A wage is a price, guy.

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PeakTrader:

When you pay more for a box of cereal, does it become more productive, raise its quality, or improves its life?

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Rick Stryker, how can you conclude, in your last paragraph, the minimum wage does more harm than good based on your statement?

How do you know the positive income and multiplier effects donít exceed the negative employment effect, up to $15 an hour?

How do you know the substitution effect, to more skilled work, isnít positive for both unskilled and skilled labor (given a higher educated workforce, e.g. from the education boom)?

****

Rick Stryker, citing a couple of papers and a poll doesnít explain much.

The labor economics literature shows a minimum wage affects the economy in many ways.

Iíve concluded a minimum wage can have a net positive effect on the economy.

However, employment isnít the most important factor. There are more powerful factors that can create employment.

****

I think, a worker would rather work 30 hours a week at $15 an hour with a shovel than work 40 hours a week at $8 an hour with a spoon (to paraphrase Milton Friedman). Smile

Raising the minimum wage will deploy some idle or unproductive capital and employ some idle or little used skills of labor.

****

I guess, some people believe without any labor standards, including a minimum wage, everything will work out well, for everyone, like it did in the 19th century Smile

----

Up to Pompeii on SF Bay?

==
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