On Minimum Wage.

[theweaselking]

The cheap-labor people, led by chambers of commerce everywhere, never admit that their motive is to beat down the wages of their lowest-paid workers. Their voices drip with concern as they warn that any increase in the minimum will cost the jobs of the most vulnerable, especially black, workers.

Those arguments happen to not be true. Reputable economists say that a reasonable hike in the minimum wage does not seem to job losses: It may even make businesses healthier.

A recent study by the Fiscal Policy Institute in New York confirms this view. It found that small businesses actually grew faster in states that kept their minimum wages above the federal level. From 1998 to 2003, job growth for small businesses in states with higher minimum wages was 6.7 percent, versus 5.3 percent in states stuck at $5.15 an hour.

Surprisingly, job growth was even more robust in the retail sector, where the wages tend to be low. And the total number of small retail businesses grew 0.6 percent in high-minimum-wage states, while they actually fell 0.3 percent in states that relied on the federal standards.

What is the explanation? Part of it is that higher wages lead to higher productivity. That is, the workers get more done in the same amount of time. The better pay encourages them to stay at the job and gain experience. And employers don’t have to waste resources finding and training new people.

The report also notes what economists call the “Henry Ford effect”: If you pay workers more, they can buy more. That boosts the overall local economy. And the biggest winners are the small retail businesses, who, according to the propagandists, are supposed to be hurt most.

Comments

[waterspyder.livejournal.com]

I think the real winners are the fast food places next to the minimum wage stores and factories

[theweaselking.livejournal.com]

Really, the real winners are *everyone* when wages go up.

Think about it. How many houses and cars and sets of clothes does one absurdly rich family buy? Assume they make, say, $10 million a year. There's a lot of those in the US, which is the topic of the article.

Now, how much do, oh, 100 families making $100,000 a year each buy?

Or 200 families making $50,000?

And yes, the CEO makes less per employee. Of course, all his businesses are now doing better than they were before.

"Trickle-down" is bullshit. The "trickle" is much faster when there are more people buying more things, and that only happens when most of the money isn't being socketed way by rich people who don't throw it back into the economy.

[waterspyder.livejournal.com]

You have to take inflation into account, but raising only minimum wage doesn't have the same impact on inflation as *everyone* getting a raise, which is the scenario "economists" seem to portray.

In fact, low unemployment and rising inflation have a stronger correlation.