Difference between revisions of "Myths/raising the minimum wage would raise prices"
< Myths
Jump to navigation
Jump to search
m (moved subpage) |
|||
Line 10: | Line 10: | ||
** the prices would not go up if demand did not increase. | ** the prices would not go up if demand did not increase. | ||
** if the price goes up, this indicates an increased demand, which implies greater buying power – a desired goal. | ** if the price goes up, this indicates an increased demand, which implies greater buying power – a desired goal. | ||
+ | * Prices going up – aka inflation – is generally the result of an increase in the money supply. Raising minimum wage does not increase the money supply. | ||
+ | ** One thing that does increase the money supply is easy access to credit – so if inflation is a real concern, perhaps consumer credit should be more tightly regulated. | ||
* And finally, who cares if prices go up a little if this means that more people can make a decent living? If you're getting something at a low price only because someone else has to suffer, then you're essentially stealing their work to save money. | * And finally, who cares if prices go up a little if this means that more people can make a decent living? If you're getting something at a low price only because someone else has to suffer, then you're essentially stealing their work to save money. | ||
==Related== | ==Related== | ||
Line 15: | Line 17: | ||
==Footnotes== | ==Footnotes== | ||
<references> | <references> | ||
− | <ref name=bpundit>'''2015-07-24''' The Bitchy Pundit, comment on [https://plus.google.com/u/0/+Bitchypundit/posts/1hfBE8F4vKH this post], citing [http://www.economist.com/content/big-mac-index The Economist] for prices</ref> | + | <ref name=bpundit>'''2015-07-24''' The Bitchy Pundit, comment on <s>[https://plus.google.com/u/0/+Bitchypundit/posts/1hfBE8F4vKH this post]</s>, citing [http://www.economist.com/content/big-mac-index The Economist] for prices</ref> |
</references> | </references> |
Revision as of 14:05, 16 October 2019
Myth: Raising the minimum wage will result in higher prices. |
Myth
There is a widespread belief that raising the minimum wage will just raise prices. It's not clear whether the unspoken assumption is that the prices would go up enough to negate any wage-gains, but we'll examine that implicit claim too.
Reality
- An examination of fast-food prices in other countries, where the minimum wage is often much higher than in the US, shows this to be a bogus claim: "A big mac in Denmark, where McDonald's employees earn $21.00/hr cost $5.08. Here in the US, where they earn less than $8 an hour, a big mac costs $4.79. In Australia, where the minimum wage is over $15/hr, a big mac costs $3.92."[1]
- The amount by which prices would go up cannot be anywhere near the wage increase, since wages are only a slice of the final retail cost.
- To the extent that prices are determined by supply and demand:
- the prices would not go up if demand did not increase.
- if the price goes up, this indicates an increased demand, which implies greater buying power – a desired goal.
- Prices going up – aka inflation – is generally the result of an increase in the money supply. Raising minimum wage does not increase the money supply.
- One thing that does increase the money supply is easy access to credit – so if inflation is a real concern, perhaps consumer credit should be more tightly regulated.
- And finally, who cares if prices go up a little if this means that more people can make a decent living? If you're getting something at a low price only because someone else has to suffer, then you're essentially stealing their work to save money.
Related
See also /rejected for an argument that makes sense on the surface but doesn't pan out when the numbers are checked.
Footnotes
- ↑ 2015-07-24 The Bitchy Pundit, comment on
this post, citing The Economist for prices