# Minimum wage (split from, "Humbling and Hofstra")

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3. Hilary Clinton pi***d me off whe she talked about minimum wage, which is why I created this thread. I've studied economics and equilibrium dynamics. From a hard stance, no, there is nothing that can be changed. From a soft stance, raising the minimum wage is going to simply create a lag, whereby it will take price setters time to re-adjust their prices a proportional amount that minimum wage was increased. So, it's really a moot point that creates annoyances for price setters and a quick luxury for those able to take advantage of the lag time. Donald Trump didn't appear to say anything about minimum wage.

I don't think that's how it works. Minimum-wage labor costs are not 100% of the cost of any product. Take someone flipping burgers or making subs getting an extra dollar or two per hour. They make dozens of that product in that time, so the cost is spread out.

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I don't like the thread title.

This is in relation to Hillary Clinton saying she wanted to raise the minimum wage and response to my economic views from what was said in the debate.

Anyway, my view is like this:

Let's imagine that federal minimum wage is $7.50 and hour and the price of a Little Debbie Zebra Cake that you can buy in a convenience store is$0.50 USD. This is the actual case, at least as I observe in Illinois. Let's futher assume that the price of a Little Debbie Zebra Cake is actually $0.50 anywhere you go in the nation. When you buy it at a store, it costs$0.50 to buy it.

Now, let's imagine that the federal government works together to raise the minimum wage to $15.00. IF the United States of America is the setter of the international price floor of a standard minimum wage throughout the world, then the price of a Little Debbie Zebra Cake ought to cost to$1.00 USD. That would be a proportional adjustment. Any convenience store selling it still at $0.50 would be in the lag period, whereby they have yet to change the price of Zebra Cakes accordingly to the change in federal minimum wage. If the world governments had their stuff together, even if the U.S. were to change the federal minimum wage, ideally they too would up the price floor of their "minimum wage" a proportional amount. They ought to, anyway. It's not good financial sense not to. And if you don't know what a Little Debbie Zebra Cake is, you're missing out. I use Little Debbies as an economic indicator for myself. Zebra cakes used to cost about$0.25 in 2009 (last federal minimum wage change?) but now they're $0.50 and the federal minimum wage hasn't changed. Something has changed, and I'm determined to eventually figure it out. The Illinois wage is surely a dollar more than federal minimum wage: Illinois has$8.25 an hour. But I don't think that has been the biggest factor. And considering the Malthusian crisis that could happen to food, it appears that investment has off-set any troublesome food shortage issues.

Edited by Genecks

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Now, let's imagine that the federal government works together to raise the minimum wage to $15.00. IF the United States of America is the setter of the international price floor of a standard minimum wage throughout the world, then the price of a Little Debbie Zebra Cake ought to cost to$1.00 USD.

That makes approximately zero sense.

1. The USA doesn't determine wages internationally.

2. Why would international minimum wages be relevant anyway

3. Your calculation could only be correct if the only cost of production were labour. I can't think of a single product that is true for.

4. You are ignoring margins (as well as costs of raw materials, distribution, sales and marketing, and many other fixed and variable costs).

I can only assume you know even less about economics than I do (which is close to nothing).

I use Little Debbies as an economic indicator for myself. Zebra cakes used to cost about $0.25 in 2009 (last federal minimum wage change?) but now they're$0.50 and the federal minimum wage hasn't changed.

Which confirms that your analysis is totally wrong.

Or alternatively, he does know all this and insinuated that Japan doesn't contribute to US military efforts because he didn't think the voters would know he was lying, and thought it would score points?

Whether he knows or not (and it hardly matters) this is certainly the motivation.

Edited by Strange

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I don't like the thread title.

This is in relation to Hillary Clinton saying she wanted to raise the minimum wage and response to my economic views from what was said in the debate.

Anyway, my view is like this:

Let's imagine that federal minimum wage is $7.50 and hour and the price of a Little Debbie Zebra Cake that you can buy in a convenience store is$0.50 USD. This is the actual case, at least as I observe in Illinois. Let's futher assume that the price of a Little Debbie Zebra Cake is actually $0.50 anywhere you go in the nation. When you buy it at a store, it costs$0.50 to buy it.

Now, let's imagine that the federal government works together to raise the minimum wage to $15.00. IF the United States of America is the setter of the international price floor of a standard minimum wage throughout the world, then the price of a Little Debbie Zebra Cake ought to cost to$1.00 USD. That would be a proportional adjustment. Any convenience store selling it still at $0.50 would be in the lag period, whereby they have yet to change the price of Zebra Cakes accordingly to the change in federal minimum wage. I disagree. Your calculations assume that labor wages are the sole cost of producing Little Debbie Zebra Cakes, which they are definitively not. Assuming that$0.50 includes a profit margin of 20% that suggests total expenses in cake production is about $0.30 per cake. That$0.30 includes ingredient costs, advertising, transit, utilities, labor, and various other miscellaneous costs. Actual wages, excluding benefits, may not amount to more than 2-3% of the overall cost of producing that Little Debbie cake. Furthermore, that full minimum wage increase would only apply to new hires rather than established workers who likely make higher wages thus requiring a lesser jump to the new minimum. New hires may amount to no more than %10 of the entire work force. Essentially, minimum wage increases for large manufacturers may result in only a fraction of additional production costs leading to fractional increases in sales prices. An increase in the minimum wage is affordable to businesses both big and small. The only obstruction to businesses is the perception of a lower profit margin due to negligible wage increases--businesses would still remain profitable.

NOTE: Having just now notices Strange's comments, I agree you should know all this already--if you've truly studied economics.

Edited by DrmDoc

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As already noted the calculations do not make any sense. However, the underlying assumption seems to be even worse. It implies that in order to have a competitive product, the US market needs to undercut foreign wages (and again, there are a lot of reasons why it is often not the case). Considering a decrease in buying power (looking e.g. at housing cost vs wage development) that would likely mean that one would support the creation of a permanently impoverished work force as it would become almost impossible to accumulate wealth.

Actual economic studies, both theoretical as well as empirical ones (the latter based on states or countries with minimum wage) indicate at best moderate effects on product prices and, at least in newer papers, almost no effect on employment (automation is likely to take care of that at some point). A paper by Neumark (2015) looked closely at the employment data and concluded that, in aggregate there may be a net job loss. However, that one should be carefully weighed against the rise in income. After all, the point of the whole exercise is to address inequality and poverty.

If the only goal is to make companies happy without regard for society we should implement serfdom again.

I think it's a bit of both, really, but mostly he's just clueless on policy (and has bad advisers who give him crap advice).

You cannot give advice to someone who does not want to take it.

Edit: Gosh, Englishing is hard.

Edit2: forgot to mention that for fast food (which is one of the largest employer for below-minimum wage workers) the minimum wage was associated with a likely ~4% increase in price. Some estimates go as high as 10% but obviously both are far from the examples provided.

Edited by CharonY

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Anyway, my view is like this:

Let's imagine that federal minimum wage is $7.50 and hour and the price of a Little Debbie Zebra Cake that you can buy in a convenience store is$0.50 USD. This is the actual case, at least as I observe in Illinois. Let's futher assume that the price of a Little Debbie Zebra Cake is actually $0.50 anywhere you go in the nation. When you buy it at a store, it costs$0.50 to buy it.

Now, let's imagine that the federal government works together to raise the minimum wage to $15.00. IF the United States of America is the setter of the international price floor of a standard minimum wage throughout the world, then the price of a Little Debbie Zebra Cake ought to cost to$1.00 USD. That would be a proportional adjustment. Any convenience store selling it still at $0.50 would be in the lag period, whereby they have yet to change the price of Zebra Cakes accordingly to the change in federal minimum wage. If the world governments had their stuff together, even if the U.S. were to change the federal minimum wage, ideally they too would up the price floor of their "minimum wage" a proportional amount. They ought to, anyway. It's not good financial sense not to. And if you don't know what a Little Debbie Zebra Cake is, you're missing out. I use Little Debbies as an economic indicator for myself. Zebra cakes used to cost about$0.25 in 2009 (last federal minimum wage change?) but now they're $0.50 and the federal minimum wage hasn't changed. Something has changed, and I'm determined to eventually figure it out. The Illinois wage is surely a dollar more than federal minimum wage: Illinois has$8.25 an hour. But I don't think that has been the biggest factor. And considering the Malthusian crisis that could happen to food, it appears that investment has off-set any troublesome food shortage issues.

Why is this a reasonable example? Where are you getting the $1.00 value? The only way to arrive at this number is if you assume the entire cost of the snack is the labor. As I stated before, this is not the case. It's not anywhere close to the case. It's ludicrous. IMO it can't even be called an example because it's completely made up. What's changed since 2009 is probably inflation and the cost of the ingredients. Ingredients, which probably comprise the bulk of the cost of the product. ——— McKee foods, who make Little Debbie products, employs about 5200 people. There are executives and foremen, etc, so for round numbers lets assume 5000 factory workers working 2000 hours. If they all make$7.50 an hour, that's a labor payroll of $75 million. Their annual sales are$1.3 billion.

They ship more than 900 million packages of the Little Debbie products each year.

http://www.timesfreepress.com/news/edge/story/2016/jul/01/brand-little-debbie/372603/

The cost of some of these products has to already be over $1.00 for that annual sales number to be true. But, at 900 million packages a year, that would mean an average price bump of 8.3 cents. If this bump is proportional to the existing price, that means the Zebra cakes price will go up by less than a nickel. edit: in reality even less, because they already pay higher than minimum wage e.g. packaging technician wages are already$12-15 an hour. Process operator $12-$19

https://www.glassdoor.com/Salary/McKee-Foods-Salaries-E3287.htm

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Minimum wage would make sense if we didn't live in a static universe. Otherwise, the communist manifesto is pretty much on par. It wants the abolishment of all "private" property, thus getting people to lose their delusion that anything can really be independent.

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Just a quick observation from "across the pond".

We only adopted a minimum wage relatively recently. When it was proposed, the Right wing opposition at the time said that it would destroy small businesses, cripple the economy and generate plagues of frogs- in the same way they complain always complain about anything that might help people.

Obviously it turned out they were completely wrong.

The interesting point about a minimum wage is that, if you set it low enough, it's actually a way to take money from middle earners and hand it to the rich (at least in most societies) .

If the minimum wage isn't enough to live on then people earning it will still need benefits from the state to survive.

So, if I set up a factory that makes widgets, but I sell them at a low price I can only "afford" to pay my staff minimum wage.

If I charged an economically viable price for the widgets (one where i could afford to pay a living wage) I'd go bankrupt.

But, because of the state picking up the difference between a living wage and the minimum wage ( the state pays them benefits of some sort), I can run my business and make an apparent small profit and pay myself a good salary.

Why am I in a position to do this?

Because I'm rich enough (or well enough connected-which is often the same thing) to set up a factory.

I'm only getting a profit because middle earners are picking up the difference between the living wage and the minimum wage.

It's the strangest thing, but since the Right worked this out, they dropped their opposition to a minimum wage- they just made sure it''s not enough to live on.

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Yeah, but you guys voted to leave the EU.

Obviously you guys don't know economics from a hole in the ground.

How can we take you seriously ?

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Since September, I am making wine from my black grapes.

It requires cutting branches with fruits.

In my case it's not, and I am doing 3.5 kg of branches with fruits in 10-15 minutes. Mass of fruits on single branch is 95% or so.

So one person doing it, in one hour could cut 14 kg-21 kg.

(I asked one drone making scientist to make drone which will find fruits by camera and cut them, and fly to container with branch and drop it)

Then there is the most time consuming step: wash and remove fruits from branches.

I calculated that these 3.5 kg can be processed in 1 hour.

At least it's mine speed..

From 1 kg of fruits, there can be extruded 600-650 mL of juice for pink wine,

and slightly more for red wine (because of several days in container fermenting together with fruit mash).

Let's say 750 mL from 1 kg of fruits.

(I was couple times measuring mass of fruits, and then juice)

So from 3.5 kg of fruits there can be 2.6 L of red dry wine which is 3.5 bottles of wine each with 750 mL.

Now tell me yours country minimum wage per hour of work.

And then confront it with amount of wine one person can make in one hour, in stated above numbers...

I have no idea how on the Earth "Thracian Quest" red semi-dry wine from Thracia (now Bulgaria/Greece/Turkey),

can be sold in the shop for $1.5 per 750 mL in promotion, and$2.5 regular price?!

It does not make any sense..

3.5 bottles of wine with price $2.5 is$8.75.. Remind me: what is minimum wage in your country?

If we have minimum wage, it's simply not possible to make this wine, as it should be couple/dozen times more expensive..

Work price is more than cost of ready product.. Even without any taxes or other costs..

(While making ethanol/vodka it's exactly reverse. We have pretty cheap alcohol from west world standards point of view. But the real cost of production is 10% or so from regular price in the shop. ~ $1.25 per 1 L of ethanol 100%) There are jobs which can be easily optimized by automation (and it often leads to even more unemployed people), and there are jobs which cannot be optimized. If producer cannot increase price of ready product, because of higher work cost, without drop of sales, has to shutdown entire business, and then nobody will earn, neither minimum wage, nor any wage. Edited by Sensei #### Share this post ##### Link to post ##### Share on other sites On the other hand, if a business requires someone to work full time for pay that they can't survive on without government assistance, perhaps that shouldn't be a business. Edit: Or at least not a private sector business. Edited by Delta1212 #### Share this post ##### Link to post ##### Share on other sites On the other hand, if a business requires someone to work full time for pay that they can't survive on without government assistance, perhaps that shouldn't be a business. Now local business owners have to compete with business owners from around the entire world. In some areas they can compete by quality of product, in others, only price. (now this thread will turn to discussion about protectionistics custom duties..) Edited by Sensei #### Share this post ##### Link to post ##### Share on other sites Yeah, but you guys voted to leave the EU. Obviously you guys don't know economics from a hole in the ground. How can we take you seriously ? Folks in the US have been voting against their economic interests for ages. On the other hand, if a business requires someone to work full time for pay that they can't survive on without government assistance, perhaps that shouldn't be a business. Edit: Or at least not a private sector business. It was Wal Mart's business plan for a long stretch. Minimum wage would make sense if we didn't live in a static universe. Otherwise, the communist manifesto is pretty much on par. It wants the abolishment of all "private" property, thus getting people to lose their delusion that anything can really be independent. Your previoud model of how this works was shown to be horribly wrong, so why should your judgement on it making sense carry any weight? #### Share this post ##### Link to post ##### Share on other sites Since September, I am making wine from my black grapes. It requires cutting branches with fruits. It's reasonably fast stage, if there is easy access to them. In my case it's not, and I am doing 3.5 kg of branches with fruits in 10-15 minutes. Mass of fruits on single branch is 95% or so. So one person doing it, in one hour could cut 14 kg-21 kg. (I asked one drone making scientist to make drone which will find fruits by camera and cut them, and fly to container with branch and drop it) Then there is the most consuming step: wash and remove fruits from branches. I calculated that these 3.5 kg can be processed in 1 hour. At least it's mine speed.. From 1 kg of fruits, there can be extruded 600-650 mL of juice for pink wine, and slightly more for red wine (because of several days in container fermenting together with fruit mash). Let's say 750 mL from 1 kg of fruits. (I was couple times measuring mass of fruits, and then juice) So from 3.5 kg of fruits there can be 2.6 L of red dry wine which is 3.5 bottles of wine each with 750 mL. Now tell me yours country minimum wage per hour of work. And then confront it with amount of wine one person can make in one hour, in stated above numbers... I have no idea how on the Earth "Thracian Quest" red semi-dry wine from Thracia (now Bulgaria/Greece/Turkey), can be sold in the shop for$1.5 per 750 mL in promotion, and $2.5 regular price?! It does not make any sense.. 3.5 bottles of wine with price$2.5 is $8.75.. Remind me: what is minimum wage in your country? If we have minimum wage, it's simply not possible to make this wine, as it should be couple/dozen times more expensive.. Work price is more than cost of ready product.. Even without any taxes or other costs.. (While making ethanol/vodka it's exactly reverse. We have pretty cheap alcohol from west world standards point of view. But the real cost of production is 10% or so from regular price in the shop. ~$1.25 per 1 L of ethanol 100%)

There are jobs which can be easily optimized with automation (and it often leads to even more unemployed people),

and there are jobs which cannot be optimized.

If producer cannot increase price of ready product, because of higher work cost, without drop of sales, has to shutdown entire business, and then nobody will earn, neither minimum wage, nor any wage.

Commercial operations are likely to be using destemmers.

Cut the time and cost down considerably.

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Just a quick observation from "across the pond".

We only adopted a minimum wage relatively recently. When it was proposed, the Right wing opposition at the time said that it would destroy small businesses, cripple the economy and generate plagues of frogs- in the same way they complain always complain about anything that might help people.

Obviously it turned out they were completely wrong.

The interesting point about a minimum wage is that, if you set it low enough, it's actually a way to take money from middle earners and hand it to the rich (at least in most societies) .

If the minimum wage isn't enough to live on then people earning it will still need benefits from the state to survive.

So, if I set up a factory that makes widgets, but I sell them at a low price I can only "afford" to pay my staff minimum wage.

If I charged an economically viable price for the widgets (one where i could afford to pay a living wage) I'd go bankrupt.

But, because of the state picking up the difference between a living wage and the minimum wage ( the state pays them benefits of some sort), I can run my business and make an apparent small profit and pay myself a good salary.

Why am I in a position to do this?

Because I'm rich enough (or well enough connected-which is often the same thing) to set up a factory.

I'm only getting a profit because middle earners are picking up the difference between the living wage and the minimum wage.

It's the strangest thing, but since the Right worked this out, they dropped their opposition to a minimum wage- they just made sure it''s not enough to live on.

The gov't picking up the difference is a great point. Back when the gov't didn't industry resorted to slavery, child labor, indentured severants, and etc. It is a built in flaw of capitalism. In theory if I build a better widget than you I will be more successful but the reality is that the quality (better) of my widget is proportional to its price. Keeping costs down is a easier formula for success than keeping quality up. Keeping quality up, making a better widget, requires innovation and skill that isn't easy to come by. Keeping costs don't is simple as cutting wages, reducig quality, and etc. Many would agrue that there is a penalty for poor quality yet many industries thrive on poor quality. Walmart is the number one employer in the U.S. (2.2 million employees) and their a seller of low quality items. The fast food industry employees 3.5 million people selling low quality. Walmart and the fast food industry also pay their employees the lowest possible wages.

For living wages to be enforced as a minimum wage the policy must be married to quality standards that come in the form of safety, product warranty, copy right infringement, and etc standards.

On the other hand, if a business requires someone to work full time for pay that they can't survive on without government assistance, perhaps that shouldn't be a business.

Edit: Or at least not a private sector business.

Or at least not one which isn't allowed to profit its investors and give bonuses to its board members. Perhaps there should be laws in place that force such companies into a profit nuetral status where their managers and board members earn a federally oulined salary and their shares frozen from public trade until such time the company isn't be supplemented by the tax payers.

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I think minimum wage legislation is only a part solution.

Seattle raised it's minimum wage to $15.00 per hour. Now they have these. No minimum wage, no Obamacare, no sick leave. #### Share this post ##### Link to post ##### Share on other sites We have some here in busier stores and no minimum wage change. #### Share this post ##### Link to post ##### Share on other sites The poor will simply have the same poverty but with more cash which buys less. No. In the limit, they will have exactly the same money- but it will have been paid to the as wages, rather than as dole. It doesn't cost me any more I pay less tax , but more for goods. (BTW, that's a "small government" thing, so I'd expect you to be in favour). "If increasing minimum wages provides so many benefits, why not set the minimum wage at$100.00 per hour? "

Were you not paying attention?

The difference is that the government wouldn't be paying dole to people on $100 an hour.# Nor would they be topping up anyone's$5 per hour to \$100 per hour.

The point I am making is about the problem with a minimum wage set below a living wage in a society where people are not allowed to starve in the street. (A model that works quite well in most of the Western world)

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No. In the limit, they will have exactly the same money- but it will have been paid to the as wages, rather than as dole.

It doesn't cost me any more I pay less tax , but more for goods.

Somehow you will pay more for goods, but minimum wage earners won't? What magic makes that happen?

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Somehow you will pay more for goods, but minimum wage earners won't? What magic makes that happen?

But the amount they'll be paying more by is less than the amount that their income is raised.

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