Minimum Wage

[Superman]

In another thread, we got started with an interesting min wage discussion. Gaijinda and John were good enough to share some significant observations:
_______________________________________________
Gaijinda
Supe - I do think your heart is in the right place. A working person, no matter how humble their job should be able to support themselves. But this is impossible to put on the backs of employers. Burger flippers making $15 per hour?? Make way for automated-burger-making machines. Look around your world and see all the folks making the minium wage - push that too high and you are looking at all those folks not being employeed at all. So a kid living with their parents, let them make the $5 or whatever. And someone with a family and other deductions (healthcare, rent, college loans), let them get an "earned income" tax rebate. All should work and all work should be respected. This is a basic rule for any society to florish. We kind of forget these things some times..
Well spoken Gaijinda. People tend to forget all kinds of things when their clarity of thought is obscured by the miasma of Socialism.

"Why not just make the minimum wage $50 per hour?"

Well, in order for wages to increase, productivity has to increase by a corresponding amount.

Let's take Jim's example of a fast-food place in Oregon, which has a state minimum wage of $7.05 per hour.

Now, McDonald's corporation serves 47 million people per day at over 30,000 restaurants globally. That's an average of 1,566 customers per restaurant per day, or 130 customers per hour. (You have to figure that the majority of customers are in the USA, but that's the only data in the Annual Report and I'm not spending any more time on this example than absolutely necessary to destroy the argument) Let's further assume that the average size "crew" consists of two burger flippers (anecdotal data gathered by ME) or 65 burgers flipped per hour.

Now, if you want to double the minimum wage for those flippers (let's euphamistically call them Meat Inversion Technicians) without increasing the cost of the burger, then you have to have each do double the work. If their PRODUCTIVITY increases to 130 burgers per hour, then you can afford to pay them double. But in the absence of increasing demand for burgers, you only need ONE M.I.T. So you fire the other one.

Next time you're at a high-volume McD's, look behind the counter. It's entirely possible that you will see the substitution of CAPITAL for labor in the form of an automated soda-filling machine. There's an equilibrium point where the cost of wages rises to the point where substituting a machine is more efficient than hiring a marginal worker. (Which has NOTHING to do with the worker's productivity, it's an economics term).
__________________
John Cramer

__________________________________________________

[Superman]

Also, Ron threw in an observation that during recent increases in minimum wage, the predicted reduction in jobs did not materialize. Many of you are aware of my belief (observation, really) that some government things are counterintuitive, and I'm not surprized by Ron's report. Indeed, in the New Deal era we found that a dollar spent creating public works jobs not only reduced public assistance costs, but actually resulted in several dollars of sales volume in the economy, and that the taxes from those sales (and incomes) more than covered the initial outlays by the federal government that created the jobs (due to the multiplier effect).

There is almost no question that the same would be true of a hike in minimum wage now, to $15 per hour. that's at least a "living" wage, so public assistance costs would fall. Now, let's look at the cost of a burger, based on John's findings:

65 burger per hour, per Meat Inversion Technician. If their wage increased an additional ten dollars per hour and we amortize that over the 65 burgers, then each burger would need to cost another 15.38 cents. It is WAY more than possible (kinda impossible for it not to) that the employer will MAKE money doing this (assuming all other employers must also pay a living wage to their workers) by selling plenty enough burgers to offset this 15.38 cents. In other words (and many of you who do not understand the power of government, or who choose to cover your ears will not understand), this action might LOWER the cost of the burger while increasing both revenue and profits to the employer, increase revenue to the government, decrease welfare costs and give millions of workers some needed dignity.

[island911]

Supe, it must really chap your hide that Cramer (or anyone) can so totally, and effortlessly, OWN your game.

[Superman]

Huh? Are you and I reading the same stuff?

Back to reality: Another thing mentioned is the substitute of machines for labor (and the substitute of offshore labor, except that for Meat Inversion Technicians and many other service jobs, that's not a reasonable substitute). But for many jobs, "replacement" with something other than American labor is a legitimate possibility. Yep, that's a problem, though many service-sector minimum wage jobs, capital investment is less likely than in higher paying jobs, and in manufacturing. Still, outsourcing is a real problem. Or at least, the movement to a "world" economy where wages will seek an equilibrium where outsourcing is an option (ummmm, we have pretty darned high wages here, and everywhere else is cheaper).

But you know the head of GM once conducted a tour of a new automated robotic car assembly plant, and the sightseer was the head of the UAW. When the GM of GM boasted, grinning, that the robots do not ask for raises, the head of UAW said "Yeah, but just try to sell a Chevrolet to one of them."

So you see, economics is interesting. It's one of those places where one plus one can be eight.

But then supporting its power not a good idea if your goal is very narrow. Harnessing the potential for a minimum wage hike to create jobs and reduce government costs only makes sense if your goal is the greatest good for the greatest number (yeah, total socialism, hahahahaha). If your goal is to keep the pond small enough so that your position on the food chain is assured, then tides that raise all boats might not be as attractive.

[gaijinda]

One significant problem with high mandated wages is absenteeism. Look at the problems in Sweden. Iron rice bowl work rules, and very high wages. So what happens? Han and Petar are out ice fishing 45% of the time..

Many, many folks (a few of them my friends) make little and live on even less. They only want to make enough to get by.. $15 an hour and your not suddenly giving them a living wage, you are giving them lots of time off!

In today's market, the defference between minimum wage and $15 an hour can be large. Significant differences in the difficulty of the work (ever work in construction, in the summer?) besides skill sets and experience. Why work harder and learn things, when you could just kick back at the easiest job you could find and make the same money??

We need to respect all work, we need to let adults continue their educations and move up the skill latter, we need more "earned income" tax credits to reward work, and we need to think how we pit our least educated against illegal immigrants. (Not too many undocumented lawyers, doctors and Indian Chiefs out there...)

Raising the minimum is a tempting fix, but I am still not sure it would work..

[cowtown]

Originally posted by Superman
65 burger per hour, per Meat Inversion Technician. If their wage increased an additional ten dollars per hour and we amortize that over the 65 burgers, then each burger would need to cost another 15.38 cents. It is WAY more than possible (kinda impossible for it not to) that the employer will MAKE money doing this (assuming all other employers must also pay a living wage to their workers) by selling plenty enough burgers to offset this 15.38 cents

Why do you assume that higher-priced goods will INCREASE sales? Burgers have positive elasticities of demand. Therefore, rising price brings lower unit sales. If you're thinking that the percentage unit sales dropoff will be less than the percentage price increase, I'd like to see some evidence that that will work.

So that theory's out, IMO. If you're thinking that sales will increase because everyone's income is up due to higher wages, well, that's not how it works. Unless you're using an alternative economic textbook?

. In other words (and many of you who do not understand the power of government, or who choose to cover your ears will not understand), this action might LOWER the cost of the burger while increasing both revenue and profits to the employer, increase revenue to the government, decrease welfare costs and give millions of workers some needed dignity.

Again, please explain how raising labor costs, which are a significant percentage of any "fast food" meal, will LOWER the cost of the burger. You're just not makeing sense here, Superman, and it's not because we "do not understand the power of government." I think you're having some issues with economic concepts....

[304065]

Uhh, well you make a few wild assertions, like raising wages will:

1) Lower the cost of the burger;
2) Increase revenue to the employer;
3) Increase profits to the employer;
4) Increase revenue to the government;
5) Decrease welfare costs; and
6) Give millions of workers "dignity."

Unfortunately you fail to cite any analysis, or evidence, as to WHY any of this will happen. Let's look at each one individually:

1) Lower the cost of the burger. Well, assuming that the MIT flips 65 burgers per hour, and all the other factor inputs (meat, elecricity, etc.) remain the same, the cost looks something like:

Old scale: $7.05 per hour + 38% fringe benefit * 8 hour shift / 520 burgers = $0.15 per burger labor cost.

New scale: $17.05 per hour + 38% fringe benefit * 8 hour shift / 520 burgers = $0.36 per burger labor cost.

Now, the average burger costs $1.00, so one of three things happens, either:

a) the price of the burger increases to $1.21, to reflect the higher cost. This is unlikely, though, because the pricing of the burger is based on competition and the elasticity of demand-- I won't go into a complex explanation but you can figure that the burger corp has done extensive market research to ensure that their burger price is at the level where it will maximize profits, which is defined as the maximum point on a curve whose points are a plot of the price per burger versus the quantity consumed. In simpler terms, the burger price CANNOT rise or fall from this equilibrium point, because a price change would mean less profit;

b) the price of the burger remains the same, which erodes the margin from $0.85 to $0.79, or a 7% decrease in gross margin; or

c) the price of the burger goes DOWN, because with increased wages, more people have discretionary income to spend on luxury items like burgers, and there are more dollars available to purchase burgers in the economy, resulting in startup competition that floods the market with burgers, resulting in a price decrease, and a further erosion of gross margin.

Which is most likely, in your educated opinion?

But we already know that the burger is priced at the optimum level, so any decrease in price results in less profit to the burger firm, which may mean they stop producing burgers entirely, and focus on other things with higher margins and lower-cost factor inputs, like salads. Which may mean that they don't need EITHER burger-flipper, because salads can be packaged by automated machinery in a processing plant, resulting once again in the substitution of capital for labor.

Now, let's look at the "increase revenue to the government" claim. The government ALWAYS gets their piece, remember.

$7.05 * 40 hours * 50 weeks = $14,100 gross. Standard deduction of $9,700 = $4,400 AGI, 10% tax rate, total federal tax = $440. Effective rate 3%. Weekly take-home pay $262.

$17.05 * 40 hours * 50 weeks = $34,100 gross. Standard deduction of $9,700 = $24,400 AGI, 15% tax rate, total federal tax $3,302. Effective rate 9.6%. Weekly take-home pay $608.

Well, you just put another $2,682 in the government's pocket, and another $346 per week in the employee's.

Now, according to the Department of Labor, there are approximately 612,000 fast food cooks (MITs') in the United States. http://www.bls.gov/news.release/pdf/ocwage.pdf

Since you raised wages without raising productivity, we know that the businesses can't continue to employ those workers. So half of them get fired. Nice job, Superman. You'll be busy writing 306,000 notes of apology for a while, might just cut down an entire timber forest for the paper. Each fired worker goes on welfare.

So your precious government made $2,682 * 312,000 or $836,784,000 in additional tax revenue. You LOST $137,280,000 in revenue from the job losses. That's about $700 million in higher revenue for government. Now, the maximum food stamp benefit in Oregon is $160 per household per month. Let's generalize that to the rest of the country. . . you pay out $599 million in food stamps, leaving you with $101 million in incremental revenue. Divide that by the rest of the population you abandoned: $27 a month left over for housing assistance and job retraining. That's not going very far, so my guess is you end up spending more.

DIGNITY? You did a NICE job on the dignity of those people. Empower some at the expense of others, raise living standards for half the population and make the other half wards of the state.

Why do you pro-government types get off on doing that to people?

Does it give you a sense of power over peoples lives?

You can't even do simple math, you want to have power over the lives of people who have nothing to sell but the labor of their hands?

You know, as a Capitalist I believe in RESPONSIBILITY to workers. I believe that the decisions I make have a genuine impact on peoples lives, and I put everything I can into making smart, rational, economically sound decisions so that businesses can grow, wages can rise, and people can move up from generation to generation.

YOU, on the other hand, believe that you can compel people with force or violence (don't believe me, watch what GOVERNMENT does when someone doesn't pay their taxes) to work to fund YOUR stupid social experiments and budget initiatives.

Well guess what? The Great Society ISN'T. All your attempts to drive up wages here have resulted in the OFFSHORING of manufacturing jobs to lower-wage economies! By raising taxes and increasing wages without corresponding increases in productivity, you have contributed to the United States being at a competitive disadvantage with regard to the rest of the industrial world!

The economy was not created as a toy for you to play with. Stay the hell out of our business.

[Superman]

Now yer talkin' Gaijinda. I'm not sure the absenteeism thing would be such a problem. Yes, it might happen but it's not like workers would be unavailable to work the remaining hours. And unreliability is grounds for dismissal, of course. And perhaps there'd be no public assistance for folks who are part time by choice.

But you also touched, I think maybe accidentally, on a real potential problem. Yes, there would need to be a re-shuffling of wages in other occupations because comparative equity would still need to remain. Journey construction workers would still need to earn a multiple of the folks earning min wage. But that's still not the problem. MAny more workers would have disposable income, so the volume of consumer spending would rise. Perhaps substantially (minimum wage workers are frugal, and an extra several hundred dollars per month would be real money, and much would be spent). And in the combination of these, we'd have inflation. That, in my view, would be one of the more damaging arguments against my suggestion. There would be demand-push inflation, and there would be wage-pull inflation. both.

Colin, the price of burgers is determined by both supply and demand. In a society where 20% of workers cannot afford to buy (except very occasionally) fresh-cooked food, if that 20% were suddenly added to the population of people who can afford to eat out, then demand would rise and potentially economies of scale would cancel out the increase in cost (the $0.15 per burger) that would occur in the static example. In the static example, the cost of producing a burger is raised but demand for the burger does not. In reality, demand would certainly rise. That's what they found when all those unemployed workers started earning money back in the Great Depression. They bought all sorts of stuff, and paid taxes on that stuff, and paid taxes on their incomes, and the merchants they rescued paid taxes on their increased incomes, and the government MADE money, even though it was simply creating a bunch of government jobs and paying for them outright.

Gaijinda, the problem with earned income credits, in my humble view, is that this is still an example of the government paying for something that is a cost incurred by business. It's still government subsidizing something that I don't know why we just don't make industry pay for. There's lots of stuff that taxpayers pay for that industry gets a pass on. Pollution, for example. It's nice to pretend that business can have stuff for under-market, but I'm tired of picking up the difference.

[Superman]

Fascinating. So, you think that:

* Changes in the COGS cannot change selling price. (This is truly a revolutionary concept.)


and just before you went on the emotional tirade, you mentioned that you felt the net effect would be to increase unemployment. Well, that;s the same "sky is falling" shout that we hear from you capitalists each time minimum wage increases are discussed and you know what? Like Ron reported, those increases in unemployment simply do not materialize. And it's because of the concepts that you even mentioned, and which we observe in markets, but that conservatives for some reason are not willing to acknowledge. And that's the stuff like the impact to the economy of having six hundred thousand workers suddenly able to afford a car.

Despite all your gloom and doom analysis, here is what could happen:

* The price of burgers rises fifteen cents or so (I said $15 MW, not $17, and I said nothing of fringe benefits, and if you think minimum wage workers get 38% of their wage in benefits then you don't understand the fast food industry. And BTW, they prefer to be called the "quick service" industry, if that ain't a riot)

* The volume of burgers to be inverted rises, because there are suddenly millions (not just MIT's, but many other min wage workers) that can now afford burgers).

* Sales volumes and resultant profit margins rise on the strength of the additional cash flow through the economy. Remember, even in a slow economy, each additional dollar counts as five.

* Government welfare payments are reduced substantially, saving taxpayers money and further stimulating the economy.

* Government tax revenues rise on the strength of the more robust economy.

Now, I'm not pretending that all this surely will happen, but there have been many instances of government spending and government regulation that have had a WAY more positive effect on the economy than capitalists predicted. In fact, the classic model is where the capitalists say the economy will SPIN WAY OUT OF CONTROL, or maybe REVENUES WILL DRY UP AND WE WILL BECOME A THIRD WORLD COUNTRY, but the government takes the action anyway, and prosperity flourishes.

We liberals are getting a lot of heat for talking gloomy, but we're really brining a message of optimism and hope. With a little more confidence and faith, you too could understand macroeconomics. When we created the minimum wage law, and overtime for hours over forty, and removed the children from the workforce, you'd have thought the sky was going to fall if you'd listened to the capitalists. What actually happened was robust prosperity.

So, have a little faith, look at the broader picture and imagine being an American.

[ubiquity0]

Don’t you have to take into account the numerous other employees’ wage increases that will affect the price of the burger in order to make any valid assumptions?. From the farmer to meat processor, to distributors, the guy that mops the floor and the duty manager? Those same burgers would need to be price-adjusted to cover all of those wage increases, in addition to our flipper.

[ubiquity0]

I’m not so sure we should promoting a minimum wage increase on the grounds that it will allow more Americans to ‘feast’ on McDonald’s burgers more frequently. That could have an undesireable social cost.

[Superman]

Right on both counts, Man Who Is Everywhere.

[304065]

Fascinating. So, you think that:

* Changes in the COGS cannot change selling price. (This is truly a revolutionary concept.)

You clearly don't have the faintest clue about elasticity relationships. ANY burger shop is not a monopoly, and even if it were, there are thousands of available substitutes. You cannot simply pass through a COGS increase (I'm frankly shocked that you know ANY of the language of accounting because so little has apparently sunk in) in the form of higher prices.

Every Freshman economics student understands that if cost of labor rises, demand for labor falls. YOU haven't shown how you can alter those relationships.


You do call for "equity" which means raising everyone elses wages also, which would have only the effect of raising relative wage and price levels, resulting in the identical conditions that prevailed before the wage increase.

Despite all your gloom and doom analysis, here is what could happen:

Actually, we know their federal fringe is at least 7.5%, and if you factor in overtime and holiday pay, plus whatever discounted meals they get that's probably close to the right number.

Thanks for expanding my lexicon of politically correct euphamisms.

* The volume of burgers to be inverted rises, because there are suddenly millions (not just MIT's, but many other min wage workers) that can now afford burgers).

* Sales volumes and resultant profit margins rise on the strength of the additional cash flow through the economy. Remember, even in a slow economy, each additional dollar counts as five.

* Government welfare payments are reduced substantially, saving taxpayers money and further stimulating the economy.

* Government tax revenues rise on the strength of the more robust economy.

How about the more likely scenario: that your minimum wage increase will:

1) Result in the prices of basic commodities skyrocketing. Every farm worker, meat packer, ranch hand, grocery worker and everyone else involved in factor input production gets a DOUBLING of their hourly wage, while doing exactly the same job as before. Every single commodity just got more expensive by a factor of about 1/3.

2) Right away, you get substitution for these now more expensive goods. Imported agricultural products just got relatively cheaper, which means that domestic production falls. But because you're running the Socialist playbook, you decide to slap import quotas and tariffs on, which just increases domestic prices more, exacerbating the problem. With no economically efficient alternative, businesses MUST consume domestic goods, the supply of which is inelastic, resulting in a price increase.

The increased prices of factor inputs make American goods more costly relative to those in other countries, so Exports fall dramatically. This has an additional ripple effect throught the economy, resulting in even more layoffs. Except that the effects of this wholesale price increase are felt through the ENTIRE economy! The "middle class" and the "rich" begin to suffer! Nice work again.

3) Also . . .Fast food is an INFERIOR GOOD: As income rises, demand for burgers falls. So your Utopian scenario, where the entire world eats Burgers, has yet another flaw. For the portion of the population you've advantaged, many of them begin to eat at home, because the cost of groceries, while higher under your regime, is cheaper because there's no included labor cost.

Also, for the rest of the population you've thrown into unemployment, they aren't eating out, they're eating whatever their Food Stamps can buy them, in whatever Section 8 housing they can afford.

Now, I'm not pretending that all this surely will happen,

So you admit that it won't. Now we're getting somewhere.

but there have been many instances of government spending and government regulation that have had a WAY more positive effect on the economy than capitalists predicted.

You have an annoying habit of wrapping a Socialist platitude around an acknowledged fact and then generalizing that to a policy statement.

Child labor laws, and the original incarnation of the Fair Labor Standards Act went a long way toward FACILITATING Capitalism in this country, by curbing its abuses. But you want to take it beyond that, and use government regulation of the cost of labor as a means of improving the economy.

The problem with that is that you cannot create something out of nothing. I am all for an increase in everybody's wages, so long as their productivity increases. If they want to make ten bucks more an hour, let them produce fifteen bucks more in gross profit.

But you want to use the power of government to force wage levels higher while letting people do exactly the same jobs. And in the extreme short run, that's a net negative for our economy, and is a careless, thoughtless way to drive unemployment through the roof.

Maybe then you could save it with your big brain and your New Deal policies. Would that give you the precedent to establish a Workers Paradise?

So, have a little faith, look at the broader picture and imagine being an American.

I've been an American all my life and I don't appreciate your Xenophobic allusions. I contribute daily to making America a better place to live. But you want to destroy all that, just so you can get off on the power and control that comes from being a bureaucrat.

You will never stop THE INVISIBLE HAND!

[hoff944]

Whatever happened to free market. The market will determinte how much the burger flipper gets payed. If no one wants to flip burgers for $6.00 per hour then the restaurant would have to fork over more money. The only thing is that pay a burger flipper 8 to 10 bucks per hour won't work as far as getting them to double production. Trust me. I've been there and done that. I don't want to get into it anymore. Bad memories.

[FastDave]

I think the minimum wage should be kept at a minimum. People who work minimum wage jobs are usually people who aren't worth being paid more money. Good help is hard to find and good workers are usually rewarded with better pay. Better pay is the initiative to show improvement to climb the proverbial ladder. How much laziness would be created with minimum wage being doubled?

[cowtown]

Supe, you're all mixed up on the elasticity concept.

Another point about minimum wage that I don't think has yet been made is that it's a horrible market distortion in the age of the global economy. Forget about fast foods and think about basic manufacturing jobs - like those filled by PCB assembly workers.

What's your cure for increased outsourcing when your $15 minimum wage results in even more low-skill jobs heading to China? What's your cure for the resultant unemployment? Sure, those who do hold jobs at your new wage level might spend more, but you've ignored job loss.

I suspect your answer, yet again, is government regulation; we need the government to keep those cold-hearted corporate execs from outsourcing jobs. right?

IMHO, your economics can be summed up with one word:implosion. It may be happening already with unionized labor and imported goods and workers comp costs. But you'd speed it up.

[Dantilla]

Superman's nice little town of Tenino must have an amazing McDonalds. Apparently, the only employee is the burger flipper. No one has to bake hamburger buns, or package them, or deliver them.

No one has to go get lettuce and tomatos from the farmer. No one has to manufacture or buy napkins or straws. The ketchup is just there somehow.

Obviously, the floors clean themselves, because if all of these poeple were making $15/hr, Supermans hamburger would cost a wee bit more than his figures show.

Increasing one persons wage will have no effect on this great nation's economy. But compounding the wages every step of the way will make for a pretty expensive burger.

So if wages go up, and prices go up accordingly, does our meat inversion technician actually gain any buying power, or will he lose buying power now that he is in a higher tax bracket?

[Dantilla]

Let's see now....

Wages go up, prices stay the same. Hmmm.....

Demand for hamburgers falls to zero, while the line to get into Ruth's Chris Steak House is now over three hours.

By the time our favorite technician gets a table, he is unemployed, and there is a "for lease" sign in front of the former burger joint.

[Superman]

John, I'm not amused or impressed by your insults. Before taking my current job in April 2003, I calculated minimum wages to be paid in Washington State. This included the minimum wage which is indexed to inflation (CPI-W index, FWIW), and prevailing wages. I have an MBA degree with emphasis in labor statistics, and supervised economists.

So, ummmm, I think it's fair to say I have a clue. Part of what I am trying to point out here (and I think I'm just about done because it looks like my effective audience has already got it) is that econometric models are not as simple as you think you were taught. For example (and at this point I really am not sure why I am bothering), in the model I have described, ALL minimum wage workers get the raise. So no, I am not assuming a monopoly, but you appear to perhaps be thinking that some restaurants can keep the status quo and pay $5 per hour and leave burger prices alone? Bottom line is that increased costs will drive burger prices up. Again, this is where your simple supply and demand curve, in a perfectly competitive market (which of course does not exist. I assume you got that one right on the quiz.) will not work. The part of the simple curve you recall that works here is that when price changes, a new equilibrium quantity will be reached. But the change will also increase demand, since more people will then be able to afford burgers. In fact, everything shifts. Since those workers will be buying other stuff also, other merchants and their employees will be earning more, and better able to afford burgers. As I've said, another shifting variable is going to be some general inflation. No doubt, what I've suggested would bring a significant economic shake-up, and that's a legitimate basis for criticism. And as I have also said above, other workers will also get raises, who are part of the burger mfg stream, which will also apply upward pressure on burger prices (or, if you have an easier time with this concept, it will squeeze the profit margins of the companies involved (which of course will affect price).

Now, even taking all this into account, we're drastically oversimplifying. Different industries have different sensitivities to changes like this. For example, this change might impact cost leaders (like McDonalds) more than differentiated competitors (like Dairy Queen) changing the mix of competitors and market share. But I'm not making this example to illustrate that.

I am making this example for the purpose of illustrating what has been proven before and is not theoretical. By having a minimum wage that earns just over $892 per month (assuming an ordinary, full time month) BEFORE taxes (by the way, payroll taxes are payroll taxes, not benefits. And also, in the "quick service" industry which is the industry's preferred name and not some liberal term, in the "quick service" industry vacations are nearly unheard of. IN fact, full time jobs are not the norm. Paid holidays....give me a break. And those free burgers that keep workers on the premises during breaks and at least ensure they are not working hungry....ummmmm....will not rise by 38%) we are deciding to create a substantial portion of the economy and a substantial proportion of our neighbors either 1) in poverty or 2) working two or more full time jobs in order to make ends meet, which of course creates problems if those workers are also trying to raise children with values learned at home. And I sure don't want to hear someone else's ignorant opinion here that minimum wage workers are single minors being supported by their parents.....this is not the profile of the average miniumum wage worker.

So, anyway, I am certain I am wasting my time, but I'd guess I've already gotten through to the folks who understand that economics is a social science. Economists understand this. And by the way, while I am told there are conservative economists out there, I have yet to meet one.

One more thing (at least). Workers in beef rendering factories who handle hundreds of tons of protein per day are not going to have that much impact on the price of burgers. In fact, in dealing with the "quick service" lobby in our local legislature and the other cheap-labor industry groups, there is an outcry each time wage regulations are under review. And you've apparently received the script from one or more of those associations. The outcry is to pretend that prices will skyrocket. Indeed, that never happens and in fact price increases, on those rare occasions that then even occur at all, are very very slight. In fact, (again, because of some economic forces too complex for Economcs 101) prices fall instead at times when we are warned they will skyrocket. So, try someone else.

And finally, as I have said, I am tired of any industry getting tax credits and tax reductions, and also getting subsidy in the form of being able to employ working single parents at wages WAY too low for subsistence, and having the taxpayer make up the difference. Someone has to, and this is a nice gravy train for minimum wage industries, but it's time for those industries (and those of us who buy burgers) to pay as we go instead of dumping the problem on taxpayers' laps.

Oh, and someone above seems to have a problem with wage regulations in general. I have dealt with folks like that before, though they are never actually in the game of public policy discussion and debate, like in a legislature or Congress. Nobody who thinks actually supports the notion of eliminating laws like this, or anti-trust laws. It's clever-sounding as long as you don't actually think about it. It doesn't pass the "straight face test."

I may not even check this thread again. Economics is a subject that economists agree is up for grabs, and this discussion, if it happened between actual economists, would get really complex really quickly and there'd still be MAJOR disagreement. It so happens that I am not an economist, though again I have worked with them and I find their work interesting. My focus is in labor policy and statistics. So, if you're an economist John, then my hat's off to you. tough stuff, economics. Mental calisthenics. But I would still say your model is too simplistic and does not account for industry-shaping impacts of public policy decisions (regulations if you will) like this one. And to close, here's a story:

One of my economics profs at Gonzaga University used to administer a 10-question T/F quiz each Friday and he'd read the correct answers each Monday. He was reading the questions and providing answers one Monday, and one of the questions started out "Economist agree that...." and he stopped and declared that question obviously false.