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What will stop us from reaching back to a zero sum game, when The minimum wage goes up, but then the price of everything goes up, including rent and food, So th

What will stop us from reaching back to a zero sum game, when The minimum wage goes up, but then the price of everything goes up, including rent and food, So that the increase in income will be negated by the increase the prices?

aidenn0 5y ago
If we e.g. double the minimum wage, then you at most double the labor cost (at most because the higher wage may make some forms of automation more financially reasonable, and not all labor costs are subject to minimum wage). The cost of labor is not always a large fraction of the per-unit cost of an item. Low-wage labor-intensive industries (e.g. low-skill services) will see the most effects. I would expect that machine-harvested bulk foods will see very little price increases, while fast-food and fast-casual dining will go up, to the extent that they aren't already priced in.
- underseacables 5y ago
  that’s interesting, i’m still very curious especially in smaller markets, that if you raise the minimum wage to $15 an hour, why would a rental company for example, not raise the price of their apartments to take advantage of the increased income of the residents? There’s no law against it. They could make the argument that because of the increase in minimum wage, their costs have gone up, so they are raising everyone’s rent by 30%. So now your rent is instead of $900 its $1170. While your income went “up” so did costs, that’s leaving you back to where you started as if you never got an increase in minimum wage to begin with. To me this just makes economic sense. If there’s more cash in the system, raise prices to take advantage of that cash, especially if it’s food, housing, auto repair whatever that you really can’t go without.
  - aidenn0 5y ago
    > that’s interesting, i’m still very curious especially in smaller markets, that if you raise the minimum wage to $15 an hour, why would a rental company for example, not raise the price of their apartments to take advantage of the increased income of the residents? There’s no law against it. They could make the argument that because of the increase in minimum wage, their costs have gone up, so they are raising everyone’s rent by 30%. So now your rent is instead of $900 its $1170. While your income went “up” so did costs, that’s leaving you back to where you started as if you never got an increase in minimum wage to begin with. Because if they do that, you will move to an apartment that only raises the rent by 15%.

aidenn0 5y ago

If we e.g. double the minimum wage, then you at most double the labor cost (at most because the higher wage may make some forms of automation more financially reasonable, and not all labor costs are subject to minimum wage). The cost of labor is not always a large fraction of the per-unit cost of an item. Low-wage labor-intensive industries (e.g. low-skill services) will see the most effects. I would expect that machine-harvested bulk foods will see very little price increases, while fast-food and fast-casual dining will go up, to the extent that they aren't already priced in.

underseacables 5y ago
that’s interesting, i’m still very curious especially in smaller markets, that if you raise the minimum wage to $15 an hour, why would a rental company for example, not raise the price of their apartments to take advantage of the increased income of the residents? There’s no law against it. They could make the argument that because of the increase in minimum wage, their costs have gone up, so they are raising everyone’s rent by 30%. So now your rent is instead of $900 its $1170. While your income went “up” so did costs, that’s leaving you back to where you started as if you never got an increase in minimum wage to begin with. To me this just makes economic sense. If there’s more cash in the system, raise prices to take advantage of that cash, especially if it’s food, housing, auto repair whatever that you really can’t go without.
- aidenn0 5y ago
  > that’s interesting, i’m still very curious especially in smaller markets, that if you raise the minimum wage to $15 an hour, why would a rental company for example, not raise the price of their apartments to take advantage of the increased income of the residents? There’s no law against it. They could make the argument that because of the increase in minimum wage, their costs have gone up, so they are raising everyone’s rent by 30%. So now your rent is instead of $900 its $1170. While your income went “up” so did costs, that’s leaving you back to where you started as if you never got an increase in minimum wage to begin with. Because if they do that, you will move to an apartment that only raises the rent by 15%.