If decreasing taxes encourages people to spend more money, doesn't minimum wage increase?

Question

also put money back into people's pockets?

Some of you are speaking out both sides of your mouth. the point is that the economy and business will improve, if people have mare to spend. So no, prices won't increase. That ios the premise of supplyside economics...unless you don't believe in this type of economics...

Tax decreases for the rich put the squeeze on the working middle class. I'm enjoying the explanations...

I thought only a small level of entry level positions were minimum wage earners? So my grocery baggers wages will affect the entire US economy? LMAO!

Johnny, my degree is in language and culinary arts. And I worked a job going to both schools, full time. But I guess only single moms deserve to be able to pay the rent, not working college kids. I'm so glad that you learned alot about economics, and had your parents pay for your college...I learned an economics lesson in REAL LIFE.

Answer 1

Increasing the minimum wage puts more money in the pockets of people who spend all of their money in the US. It's a good investment in the American economy with a negligible impact on inflation.

Answer 2

No

Your premise on cutting taxes is correct.

The problem with raising the minimum wage is it does 2 things

1. It increases the costs to do business. Therefore, prices go up, so people have less to spend.

2. It violates the principle of free markets. If a market will pay $6 an hour (it costs the employer about $9 with all the taxes), then that is what the job is worth.

Answer 3

Some would argue that decresing taxes and not increasing the minimum wage are in essence doing the same thing: letting the market work.

Higher taxes and an artificially high minimum wage both serve to distort the situation - creating artificial incentives and disincentives. People invest less, and hire less.

If people's labors are worth more than the minimum wage (whatever it is), they will receive a higher wage.

If not, then the person will probably not be hired at all.

Answer 4

Actually if we lower the minimum wage it will improve the economy.

If lowering the taxes and raising the debt is better for America Then lowering wages and increasing credit card debt must be good for Americans.

All those executive cigars cost a lot of $$$ and minimum wage earners are lowering the quality of cigars available.

Go big Red Go

Answer 5

The major problem with minimum wage is that it causes costs to rise. Ignoring all of the economists who point out that minimum wage actually reduces employment opportunities, imagine that you are Joe Worker.
Joe Worker has been makes between 7.75 and 8.00 per hour for the past year, a meager living, but he has been able to get by because his wife works too.
Now that minimum wage has been raised to 7.00 he is effectively making minimum wage, but now the cost of everything he has to buy from food to diapers rises as busiesses are forced to raise prices to stay in the black.
All of this so that Jim College can pocket an extra 2.00 an hour while his dad pays for his college.
A majority of people who work minimum wage jobs are not supporting a family. They are either retired looking to bring in a little extra income or living under their parents roof.

Question Heidi, what is your degree in? Mine is in economics. Come talk to me after you examine the tenets of supplyside economics.
Also, regardless of how the economy is doing, businesses that pay minimum wage typically operate on razor thin margins, meaning that they will pass on their increased costs to consumers.

Heidi, I paid my own way through college; and economic lessons learned from one person's life experience is a pretty small sample size. Essentially, you are shaping your opinon of strong economic policies based on one person's experience(yours), whereas I am basing mine on the experiences of thousands of individuals.
Maybe minimum wage will help your condition, but I promise that it hurts alot more people than it helps.

Answer 6

This is really a question that speaks to the conflict between liberal and conservative economic positions.

Conservatives have (lately) argued supply-side economics, which means that they believe the part of the supply-demand equation that matters more is the supply. So, they seek to do things that put the most money into the hands of those who control supply -- namely corporations and the very rich.

Liberals have traditionally been demand-side economists. They believe that if there is a market, someone will supply it, and so their policies seek to increase the size of the market for products by increasing the number of average people who can afford to buy them.

Personally, I think the booming economy and balanced budget under Clinton speaks to the superiority of the second method. Supply certainly matters, and taxes can (theoretically) be so high as to be crippling to industry, but we're nowhere near that now. So let's help out the little guy and we'll all benefit!

Answer 7

Yes it does. Minimum wage increases costs in the short run, but it also puts more money in the pockets of the people who are most likely to spend it. Give that money to rich people, and chances are that they'll just spend it on some speculative investment like the stock market just to make their pockets fatter. Give it to someone poor, and they'll spend it immediately and it will be right back in the economy where it belongs. Furthermore, that money will presumably go to the businesses that are providing the best goods and services for the best price, further spurring competition.

The people who say that it just raises prices aren't looking at the big picture. And why should they? All their concerned is their own personal pocket books.

As for the idea of allowing the market to be the exclusive force to dictate employee earnings, that's ridiculous. It's not up to the market what people get paid, it's up to employers who will try to screw people out of much money as they possibly can to maximize their own personal income. If we left it up to the market, we'd have child labor and slaves, too. That certainly might cut production costs, but is it morally right? Is it even necessarily better for society as a whole?

The economy works best when everyone can afford to participate in the market rather than just the filthy rich.

Answer 8

Absolutly not. Raising the minimum wage causes businesses to contract which in turn creates less money the business has to create more jobs, which in turn keeps more people towards the minimum level, and with less jobs available and businesses higher costs now, the price of goods rises, the cost of living goes up, and therefore all benifits from the raise in minimum wage are vioded by the higher cost of living

Answer 9

No. increasing wages will improve Inflation. Its all tied mutually you cant impact one without affecting different macro financial factors. basically forcing agencies to pay human beings greater will improve their expenses, so it will make their products greater costly to purchase, so inflation is going up. Oil keeps our socialist economy afloat.

Answer 10

no because taxes are governmental. minimum wage is business related. business pass on cost increases to the public. govt can make spending cuts on thousands of different areas to make up for income deficits but business have but a few areas to recoup income.

tax decreases takes less money away from everyone. minimum wage increases takes money out of the hands of the business. they are mutually exclusive.