Do Liberals not understand Economics?

Question

OK, let's give a little lesson here.

Minimum wage is $5.15 an hour. Let's say we DOUBLE it (I know you guys aren't doubling it, but the math is easier)

OK, the guy at the grocery store was formerly paying about $100 a week to his cashiers. Now, he has to pay closer to $200 a week. That is a lot more money!

When he sells some fruit, he adds a $1.00 profit to every piece of fruit. So, to make up for the increased minimum wage, he now adds $2.00 to every piece of fruit.

So what happens? ALL THE PRICES DOUBLE! If you raise the minimum wage, it will only raise prices, and drive up inflation.

It sounds like a good idea, if you never took an economics class.

Answer 1

Minimum Wage is an idea whose time has come and gone. There's no need for a minimum wage. Let the market drive the wages.

Answer 2

OK, look at it like this. The guy bagging groceries is making $5.15 an hour. He's been making $5.15 an hour since 1997. In those ten years, the price of that fruit has gone up 50% while his wages have remained flat. Also, the price of gas and tripled, the price of milk has doubled, and the price of corn-fed beef and poultry is up 30% because of all the corn that's being used to make ethanol. The grocer, out of the goodness of his heart, has done nothing - he's still paying his cashiers $5.15 an hour, so they are losing buying power every day.

Here is what really happens, though. Minimum wage gets raised to $7.50 an hour, so the grocer buys a bunch of machines where the customers can scan, bag, and pay for their own goceries, fires half his cashiers and bagboys, and is able to maintain his prices at normal levels of inflation.

Answer 3

Except that your very simplistic example doesn't represent the reality in most cases.

It's true for small businesses, and most liberals agree with that. Once you start dealing with markets that are larger, the distribution of corporate cost changes.

Edit: And as others have done an excellent job of pointing out, the economy doesn't stop at the door of your store in your example. That money gets spent, and minimum wage earners always spend the vast majority of their money (and frequently beyond)...

Raising the minimum wage is a win/win scenario in an economy already embattled with inflation due to other factors and costs, which are outpacing wages in some instances. That is if you're not relying on the flawed logic of voodoo economics for your thinking...

...there is, after all, a reason why it's called "voodoo" economics.

Answer 4

How about a better example?

A local sweatshop pays its workers minimum wage for a 40 hour work week. The sweatshop makes t-shirts for Tommy Hilfiger. The average worker can sew a t-shirt every two minutes. If, in addtion to the minimum, the sweatshop give the worker 25 cents for every t-shirt that they make and pass the cost onto the customer, what has been accomplished?

The worker now makes twice as much money and now lives above the poverty level. You pay an extra quarter for your designer shirt.

Labor is only a part of the cost of doing business, not all of it.

Answer 5

in the process the ceiling talks, Boehner stormed out, Mcconnell could not comprehend why taxes have been even on the table and the two republicans and Tea social gathering favourite a credit downgrade than certainly pay a bill. it truly is secure to assert Liberals comprehend while a bill must be paid. Republicans call that wealth redistribution. if it truly is the case my "wealth" gets redistributed to my own loan business organization each month. yet i don't think of they had get exhilaration from if I instructed them i'm able to spend my money extra appropriate than they are in a position to. specific i could desire to apply the money for something else rather on an identical time as the pastime and arrears acquire till i'm getting kicked out. Then carry a "debt ceiling communicate" on an identical time as my credit status takes efficient. it is economics. money is scarce and it may want for use for the two one element or the different. not the two. it is the classic "weapons as against butter" concept. And it works. See a liberal does comprehend economics.

Answer 6

In reality what happens is that minimum wage increases make jobs go bye bye. What matters is increased productivity in return for increased wages. No increased productivity in exchange for increased wages? Bye bye job.

Where I live we have an interesting dynamic. Do gooder voters of course voted in a "compassionate" minimum wage increase last November, no exceptions. Whoops. Now a bunch of places who employ the handicapped and were able to pay a lower wage are laying them off. After talking about reinstating relief for these organizations, clueless politicians said "no deal", law is good and just and applies everywhere. So a lot of handicapped people got their self worth kicked to the curb so a bunch of clueless do gooders could show their "compassion".

I'm shocked at the number of people who think you can wave a magic wand and cure all ills, real or perceived.

Answer 7

All prices would double ONLY IF all people earned minimum wage, and all other costs doubled, too (raw materials, overhead, etc.).

In other words, no, all goods and services would NOT double -- in fact, only those that exclusively relied on minimum wage labor (with no other costs, and no other employees) would double.

What is it conservatives don't understand about people's needing to eat, AND have a roof over their heads?

What is it that you don't understand about people needing to be able to live?

Answer 8

"So what happens? ALL THE PRICES DOUBLE! If you raise the minimum wage, it will only raise prices, and drive up inflation."

Economics lesson number one: Wages are not the only factor affecting prices. Learn about economics before you try to teach it.

Answer 9

That's a great example, but it's only part of the story. Our economy is incredibly complex and can't be reduced to one simple factor. For instance, you also doubling the employees' buying power. For another instance, many employers are smart enough to reduce their expenses in some other area to offset the increase in wages (e.g., WalMart is going "green").

Please don't use a simplified example to slam people who hold different political beliefs than yours. The world is not "black" and "white"--there is nuance, detail, complexity and analysis needed in almost every issue.

Answer 10

Just like the economic nightmare the last time the minimum wage was raised in 1997. Wait, that was the middle of an economic boom that lasted for three more years.

Answer 11

since you are so good at math lets look at both extremes.. what if minimum wage is a penny an hour.. do you think your doctor is going to charge any less? do you think rent will go down? you wouldn't be able to survive.. so what's the correct answer? balance.. there needs to be a minimum that reflects what it would take for a hard worker to survive.. and it had fallen behind.