The claim that an increase in the minimum wage equals an increase in prices,
and therefore, the poor will not actually be helped, is a bit disconcerting.
The claim supposes that a raise in the minimum wage means that all
prices will raise due to higher labor costs. In actuality, the only
prices directly related to an increase in the minimum wage, are from those
products produced by minimum wage labor (we don't suppose that all labor
is minimum wage labor). To use a previous example, surely the price of
candy bars will go up if candy bars are produced by minimum wage labor,
and the price of that labor increases. Does this mean that those individuals
making candy bars have not been helped in their purchasing power? It depends
on if an individual buys candy bars or not. For those who buy candy bars, they
have perhaps broken even. For those who do not, and instead purchase a good
not produced by minimum wage labor, their purchasing power has indeed
increased (they have been made better off). The link between an increase
in the minimum wage, and the better, or worse, prospects of workers, depends
on what any individual chooses to purchase with his or her wages. For many
goods, those produced by minimum wage labor, workers will break even, while
for many other goods (rent, health care, other basic necessities), the worker
will be better off. My argument fails, if we suppose that an increase in the
minimum wage means that all other wages will also increase, due to the
competition for labor (all prices will go up accordingly on all goods).
However, such a supposition is quite problematic, given the employment
situation in most capitalistic countries, where labor forces are shrinking,
rather than growing. Who need offer an increase in wages in such a
competitive enviornremnt?
One more thing. It's a good thing, as a matter of social policy, if an
increase in the minimum wage causes some industries to leave the American
market. I do not want individuals employed in work that cannot sustain an
acceptable standard of living. If such industries cannot afford to pay
$5.25/hr and remain competitive, then I'm glad to see you go. As a matter of
social policy, and social equity, I would rather have extensive social welfare
than having people work in menial jobs that cannot sustain a decent standard
of living.
Greg Coolidge
Univ. of Calif., Riverside
and therefore, the poor will not actually be helped, is a bit disconcerting.
The claim supposes that a raise in the minimum wage means that all
prices will raise due to higher labor costs. In actuality, the only
prices directly related to an increase in the minimum wage, are from those
products produced by minimum wage labor (we don't suppose that all labor
is minimum wage labor). To use a previous example, surely the price of
candy bars will go up if candy bars are produced by minimum wage labor,
and the price of that labor increases. Does this mean that those individuals
making candy bars have not been helped in their purchasing power? It depends
on if an individual buys candy bars or not. For those who buy candy bars, they
have perhaps broken even. For those who do not, and instead purchase a good
not produced by minimum wage labor, their purchasing power has indeed
increased (they have been made better off). The link between an increase
in the minimum wage, and the better, or worse, prospects of workers, depends
on what any individual chooses to purchase with his or her wages. For many
goods, those produced by minimum wage labor, workers will break even, while
for many other goods (rent, health care, other basic necessities), the worker
will be better off. My argument fails, if we suppose that an increase in the
minimum wage means that all other wages will also increase, due to the
competition for labor (all prices will go up accordingly on all goods).
However, such a supposition is quite problematic, given the employment
situation in most capitalistic countries, where labor forces are shrinking,
rather than growing. Who need offer an increase in wages in such a
competitive enviornremnt?
One more thing. It's a good thing, as a matter of social policy, if an
increase in the minimum wage causes some industries to leave the American
market. I do not want individuals employed in work that cannot sustain an
acceptable standard of living. If such industries cannot afford to pay
$5.25/hr and remain competitive, then I'm glad to see you go. As a matter of
social policy, and social equity, I would rather have extensive social welfare
than having people work in menial jobs that cannot sustain a decent standard
of living.
Greg Coolidge
Univ. of Calif., Riverside