3 ms·

It would cause wage growth leading to a lower percent (but an increase) increase in other prices (housing, etc).

by lesuorac 3y ago

RicDan 3y ago
So things that are happening regardless?
- lesuorac 3y ago
  Sure but it would be worse. You see this all the time when the minimum wage is increased by say 10% then there is a general inflation of 1%. General inflation lags wage increases although at a reduced effect.
  - kasey_junk 3y ago
    That’s not what the empirical evidence suggests (though it’s a big topic of study). It’s closer to 0.4% for every 10% increase and the inflation happens almost immediately. https://research.upjohn.org/up_workingpapers/260/ https://research.upjohn.org/up_workingpapers/260/
    - lesuorac 3y ago
      0.4% you say but that paper says 0.7%. However, lets be real 10% to 1% vs 10% to 0.7% still gets the same message across. But I'm still really not sure what you're trying to argue. My claim is that a X% wage increase will be followed by an <X% increase in inflation and so far all anybody has done is backed up my claim. This isn't even rocket science. For any product you'll spend say $10 on labor, $15 on marketing, $5 on parts for a total of $30. If your labor costs goes up to say $20 then the total cost is $40 and one could expect the price that the 200% increase in wages lead to a 25% increase in the products price (inflation). > In the base specification (p. 162), which included only monthly and yearly controls, the cumulative wage-price elasticity from three months before up to three months after a minimum wage hike was estimated at about 0.07, meaning that a 10 percent increase in the minimum wage is associated with a 0.7 percent increase in FAFH prices. Aaronson, French, and MacDonald (2008) used microlevel restaurant price data for the period 1995–1997, during which two changes to the federal minimum wage were implemented, to generate a wage-price elasticity of, again, about 0.07. 3 Though the empirical literature is somewhat limited outside of these two formative works (see Lemos [2008] for a review), other studies have found similar results in other countries and other cases.
      - kasey_junk 3y ago
        I don’t particularly have a claim other than you can’t use minimum wage causes inflation as an axiom because it is theoretically contentious and doesn’t hold very strongly empirically. The claim that it lags behind the wage change is empirically also not found.
        lesuorac 3y ago
        > The claim that it lags behind the wage change is empirically also not found. That's within the quote on the comment that you are responding to ... "cumulative wage-price elasticity from three months before up to three months after a minimum wage hike was estimated at about 0.07". They found that increasing the minimum wage lead was followed by a 0.7% increase in prices 3 months later. 3 months later is "lagging".
raincole 3y ago
No? This is such a random comment I don't know how to respond to besides a "No?"
- lesuorac 3y ago
  Maybe ask ChatGPT since you clearly can't Google it. There's plenty of research on this topic [1] and it all agrees that an increase in the minimum wage is followed by an increase in costs of goods. [1]: https://www.google.com/search?q=effect+of+minimum+wage+increase+on+inflation https://www.google.com/search?q=effect+of+minimum+wage+incre...
  - raincole 3y ago
    Maybe you should use ChatGPT to write your comments, since the logic connection between them are so weak. Now it's about minimum wage? Perhaps revisit what this thread is about and the comment you replied to? Do you even know what minimum wage is? I won't reply someone who just spew random words any further, sorry.
    - lesuorac 3y ago
      Ah, very true "minimum wage" has nothing to do with "wage". I'll remove it from the Google search since you aren't able to. https://www.google.com/search?q=effect+of+wage+increase+on+inflation https://www.google.com/search?q=effect+of+wage+increase+on+i...

It would cause wage growth leading to a lower percent (but an increase) increase in other prices (housing, etc).

RicDan 3y ago

So things that are happening regardless?

lesuorac 3y ago
Sure but it would be worse. You see this all the time when the minimum wage is increased by say 10% then there is a general inflation of 1%. General inflation lags wage increases although at a reduced effect.
- kasey_junk 3y ago
  That’s not what the empirical evidence suggests (though it’s a big topic of study). It’s closer to 0.4% for every 10% increase and the inflation happens almost immediately. https://research.upjohn.org/up_workingpapers/260/ https://research.upjohn.org/up_workingpapers/260/
  - lesuorac 3y ago
    0.4% you say but that paper says 0.7%. However, lets be real 10% to 1% vs 10% to 0.7% still gets the same message across. But I'm still really not sure what you're trying to argue. My claim is that a X% wage increase will be followed by an <X% increase in inflation and so far all anybody has done is backed up my claim. This isn't even rocket science. For any product you'll spend say $10 on labor, $15 on marketing, $5 on parts for a total of $30. If your labor costs goes up to say $20 then the total cost is $40 and one could expect the price that the 200% increase in wages lead to a 25% increase in the products price (inflation). > In the base specification (p. 162), which included only monthly and yearly controls, the cumulative wage-price elasticity from three months before up to three months after a minimum wage hike was estimated at about 0.07, meaning that a 10 percent increase in the minimum wage is associated with a 0.7 percent increase in FAFH prices. Aaronson, French, and MacDonald (2008) used microlevel restaurant price data for the period 1995–1997, during which two changes to the federal minimum wage were implemented, to generate a wage-price elasticity of, again, about 0.07. 3 Though the empirical literature is somewhat limited outside of these two formative works (see Lemos [2008] for a review), other studies have found similar results in other countries and other cases.
    - kasey_junk 3y ago
      I don’t particularly have a claim other than you can’t use minimum wage causes inflation as an axiom because it is theoretically contentious and doesn’t hold very strongly empirically. The claim that it lags behind the wage change is empirically also not found.
      - lesuorac 3y ago
        > The claim that it lags behind the wage change is empirically also not found. That's within the quote on the comment that you are responding to ... "cumulative wage-price elasticity from three months before up to three months after a minimum wage hike was estimated at about 0.07". They found that increasing the minimum wage lead was followed by a 0.7% increase in prices 3 months later. 3 months later is "lagging".

raincole 3y ago

No? This is such a random comment I don't know how to respond to besides a "No?"

lesuorac 3y ago
Maybe ask ChatGPT since you clearly can't Google it. There's plenty of research on this topic [1] and it all agrees that an increase in the minimum wage is followed by an increase in costs of goods. [1]: https://www.google.com/search?q=effect+of+minimum+wage+increase+on+inflation https://www.google.com/search?q=effect+of+minimum+wage+incre...
- raincole 3y ago
  Maybe you should use ChatGPT to write your comments, since the logic connection between them are so weak. Now it's about minimum wage? Perhaps revisit what this thread is about and the comment you replied to? Do you even know what minimum wage is? I won't reply someone who just spew random words any further, sorry.
  - lesuorac 3y ago
    Ah, very true "minimum wage" has nothing to do with "wage". I'll remove it from the Google search since you aren't able to. https://www.google.com/search?q=effect+of+wage+increase+on+inflation https://www.google.com/search?q=effect+of+wage+increase+on+i...