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I know you're joking. But it's not true that rising the minimum wage would immediately be cancelled out by inflation. That would be true only if everybody was

I know you're joking. But it's not true that rising the minimum wage would immediately be cancelled out by inflation. That would be true only if everybody was earning minimum wage. Increasing the minimum wage from 5 to 50 dollars is unlikely to cause a 10x inflation, it more likely would cause a 3x or 5x inflation. The poor would have more and the rich would have less. It would likely reduce the spread of wealth in the society, improve social cohesion and in general may turn out to be a good thing.

dsfyu404ed 8y ago
High minimum wage doesn't hurt the "rich" it hurts everyone who's making just more than minimum all the way to the upper middle class because their cost of living either increases or their standard of living decreases. The "rich" are rich enough that it's just a drop in the bucket. Edit: I don't mean to say that minimum wage isn't worthwhile, just that framing it in terms of a rich to poor wealth transfer is somewhat dishonest.
- jacquesm 8y ago
  Well, if that reasoning were true we should just get rid of the minimum wage, surely that will lead to an increase in the standard of living and a decrease in the cost of living. Really, some of the stuff you read on HN is just mind-boggling. In spite of the gig economy trying hard to erase decades of stability for millions of people even the smallest attempt at reductio-ad-absurdum would show that there is an optimimum somewhere and that there is absolutely no law of nature that dictates that that optimum lies at $2.75, $7, $15 or anywhere in particular. Whatever you make the minimum, there will always be people who earn just a bit more and of course it will lead to some inflation but the end result will be a higher standard of living for those for whom the change is the most important. For all the laughter about the EU from the US when it comes to social security I'd like to point out that Amazon already operates here and has to pay the local minimum wage and that consumers are still buying their products.
  - GrumpiNerd 8y ago
    Being part of the gig economy has brought me the best income I've ever had. And a flexible schedule so I get plenty of time with my kid. If I was still forced to look for a 9-5 based on traditional hiring practices I'd be making much less and miserable.
    - jacquesm 8y ago
      As long as it works... and then when you get ill or something else happens suddenly you find out that all that freedom translates into a complete lack of a safety net. Unless you live somewhere in Europe. Keep in mind that 'flexible contracts' and 'zero hour contracts' already existed before the Gig economy, and that they still came with all the good stuff that comes with employment. For the US, where a lot of people were already under the perpetual Sword of Damocles waiting to be told they are no longer required the situation is maybe not all that different. But not all of the world is like that. The better way to run a life that is free and where you get plenty of time to arrange as you wish is to have a consultancy company where you hire yourself out at a high rate during a few months of the year to take it easy during the remainder.
      - refurb 8y ago
        a complete lack of a safety net Nearly 2/3rd of the federal budget is for social programs. What do you mean a "complete lack of a safety net"?
        jacquesm 8y ago
        Try applying for it when you really need it. Bankruptcy due to medical emergencies is unfortunately pretty common. I've done my bit of social security for the United States all the way from where I'm sitting, it's that good.
        dragonwriter 8y ago
        > Nearly 2/3rd of the federal budget is for social programs. Not all social programs are safety net programs; notably age- and work-related public healthcare isn't, and neither is work-qualified public pension. And also a lot of the social spending (safety net or not) is the public portion of the US’s stupendously inefficient hybrid public/private health care system, so even the safety net portions of that (mainly Medicaid) give very little safety net for the money. By the standards of the developed West, the US has a very weak safety net, however much money it might spend on public social programs.
bufferoverflow 8y ago
The rich will not have less, they will have a lot more (in dollars at least), because they are mostly storing wealth in inflation-proof assets. And businesses owners will make more than 10x, because when you increase the wages from $10/hr to $50/hr, the amount of spare (fun) money actually grows much more than 5x. That will hurt the current middle class the most, those earning close to $50/hr. These are skilled professionals who will get equalized with someone who dropped out of high school. It's actually a good example of why socialism is such a dumb idea.
badpun 8y ago
> Increasing the minimum wage from 5 to 50 dollars is unlikely to cause a 10x inflation, it more likely would cause a 3x or 5x inflation. I' guessing it would rather create massive unemployment, and subsequently be cancelled. Think about it - middle-class people are ok with paying $4 for their Starbucks coffee, but if they were to pay say $10 (because the baristas salaries just tripled), probably a lot of them would cut back on them. Maybe even Starbucks would disappear altogether. Multiply that effect across all industries hiring minimum-wage workers. It would be a train wreck.
- hexane360 8y ago
  Most of Starbuck's cost doesn't come from paying baristas. It comes from coffee, real estate, utilities, and corporate. Here's some real world evidence: https://www.washington.edu/news/2016/04/18/early-analysis-of-seattles-15-wage-law-effect-on-prices-minimal-one-year-after-implementation/ https://www.washington.edu/news/2016/04/18/early-analysis-of... https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5615576/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5615576/ https://en.wikipedia.org/wiki/Minimum_wage#Empirical_studies https://en.wikipedia.org/wiki/Minimum_wage#Empirical_studies

dsfyu404ed 8y ago

High minimum wage doesn't hurt the "rich" it hurts everyone who's making just more than minimum all the way to the upper middle class because their cost of living either increases or their standard of living decreases. The "rich" are rich enough that it's just a drop in the bucket. Edit: I don't mean to say that minimum wage isn't worthwhile, just that framing it in terms of a rich to poor wealth transfer is somewhat dishonest.

jacquesm 8y ago
Well, if that reasoning were true we should just get rid of the minimum wage, surely that will lead to an increase in the standard of living and a decrease in the cost of living. Really, some of the stuff you read on HN is just mind-boggling. In spite of the gig economy trying hard to erase decades of stability for millions of people even the smallest attempt at reductio-ad-absurdum would show that there is an optimimum somewhere and that there is absolutely no law of nature that dictates that that optimum lies at $2.75, $7, $15 or anywhere in particular. Whatever you make the minimum, there will always be people who earn just a bit more and of course it will lead to some inflation but the end result will be a higher standard of living for those for whom the change is the most important. For all the laughter about the EU from the US when it comes to social security I'd like to point out that Amazon already operates here and has to pay the local minimum wage and that consumers are still buying their products.
- GrumpiNerd 8y ago
  Being part of the gig economy has brought me the best income I've ever had. And a flexible schedule so I get plenty of time with my kid. If I was still forced to look for a 9-5 based on traditional hiring practices I'd be making much less and miserable.
  - jacquesm 8y ago
    As long as it works... and then when you get ill or something else happens suddenly you find out that all that freedom translates into a complete lack of a safety net. Unless you live somewhere in Europe. Keep in mind that 'flexible contracts' and 'zero hour contracts' already existed before the Gig economy, and that they still came with all the good stuff that comes with employment. For the US, where a lot of people were already under the perpetual Sword of Damocles waiting to be told they are no longer required the situation is maybe not all that different. But not all of the world is like that. The better way to run a life that is free and where you get plenty of time to arrange as you wish is to have a consultancy company where you hire yourself out at a high rate during a few months of the year to take it easy during the remainder.
    - refurb 8y ago
      a complete lack of a safety net Nearly 2/3rd of the federal budget is for social programs. What do you mean a "complete lack of a safety net"?
      - jacquesm 8y ago
        Try applying for it when you really need it. Bankruptcy due to medical emergencies is unfortunately pretty common. I've done my bit of social security for the United States all the way from where I'm sitting, it's that good.
      - dragonwriter 8y ago
        > Nearly 2/3rd of the federal budget is for social programs. Not all social programs are safety net programs; notably age- and work-related public healthcare isn't, and neither is work-qualified public pension. And also a lot of the social spending (safety net or not) is the public portion of the US’s stupendously inefficient hybrid public/private health care system, so even the safety net portions of that (mainly Medicaid) give very little safety net for the money. By the standards of the developed West, the US has a very weak safety net, however much money it might spend on public social programs.

bufferoverflow 8y ago

The rich will not have less, they will have a lot more (in dollars at least), because they are mostly storing wealth in inflation-proof assets. And businesses owners will make more than 10x, because when you increase the wages from $10/hr to $50/hr, the amount of spare (fun) money actually grows much more than 5x. That will hurt the current middle class the most, those earning close to $50/hr. These are skilled professionals who will get equalized with someone who dropped out of high school. It's actually a good example of why socialism is such a dumb idea.

badpun 8y ago

> Increasing the minimum wage from 5 to 50 dollars is unlikely to cause a 10x inflation, it more likely would cause a 3x or 5x inflation. I' guessing it would rather create massive unemployment, and subsequently be cancelled. Think about it - middle-class people are ok with paying $4 for their Starbucks coffee, but if they were to pay say $10 (because the baristas salaries just tripled), probably a lot of them would cut back on them. Maybe even Starbucks would disappear altogether. Multiply that effect across all industries hiring minimum-wage workers. It would be a train wreck.

hexane360 8y ago
Most of Starbuck's cost doesn't come from paying baristas. It comes from coffee, real estate, utilities, and corporate. Here's some real world evidence: https://www.washington.edu/news/2016/04/18/early-analysis-of-seattles-15-wage-law-effect-on-prices-minimal-one-year-after-implementation/ https://www.washington.edu/news/2016/04/18/early-analysis-of... https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5615576/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5615576/ https://en.wikipedia.org/wiki/Minimum_wage#Empirical_studies https://en.wikipedia.org/wiki/Minimum_wage#Empirical_studies