minimum wage?

[QUOTE="SmashBrosLegend"]The national minimum wage is $6.85/hour, and it will go up to $7.25 shortly. It can also vary by state.AmyMizuno

I believe it's only $5.85, and it's hardly hept up with inflation over the years.AmyMizuno

Kept up with inflation? Er... aren't wages a principle driver of inflation? Prices can't be raised too high if the consumer's spending power remains the same.

[QUOTE="AmyMizuno"]I believe it's only $5.85, and it's hardly hept up with inflation over the years.Oleg_Huzwog

Kept up with inflation? Er... aren't wages a principle driver of inflation? Prices can't be raised too high if the consumer's spending power remains the same.

the veracity of that statement aside, everyone's wages =/= the minimum wage. i'd guess a pretty small percentage of the workforce makes the minimum wage, and many of those who do are teenagers who live at home and have no bills and can spend nearly all their money. hwan88

But doesn't an increase to minimum wage cause a chain reaction of sorts? If the burger flipper gets an extra dollar per hour, won't the guy working the cash register want a raise of his own? If the guy at the cash register gets a raise, won't the assistant manager want a little extra?

...or am I way off base?

So what? If they don't make that extra money, someone else will. Probably the people at the top.AmyMizuno

What extra money?

Varies by location.

If the burger flipper doesn't make the extra dollar an hour, someone else will, such as the CEO or investors of the corporation. Minimum wage increases hardly have any effect on inflation, it only increases the fairness of distribution of wealth.AmyMizuno

I'm still confused where this extra dollar an hour came from.

If there is a chain reaction of raises for everyone, then increasing minimum wage does nothing to distribute wealth. All it does is saturate the whole chain with extra cash.

It cuts into the gross profits of the corporation, as do all wages. What you don't seem to understand is that if the burger flipper doesn't get that dollar, then the investors and the higher-ups in the corporation will.AmyMizuno

I do understand the concept that if there is an extra dollar, someone out there will receive it. What I'm not getting is where this extra dollar comes from. If wages stop rising, prices will eventually have to stop rising as well. If prices stop rising, there's no extra dollar for anyone.

If there is a chain reaction of raises for everyone

Oleg_Huzwog

that's not a certainty, though.

Prices rise for lots of reasons, and wages is hardly one of them. One of the reasons for today's inflation is the banking system creating money out of thin air. Here is an explination (copy and paste job from one of my previous posts).AmyMizuno

Wages most certainly impact prices, albeit in a roundabout way. Prices are set to maximize revenue. If I'm selling X number of burgers at the price of Y dollars, and learn that I could be selling the same number if I bump the price up to Z, I'd do it with no hesitation. Naturally, I don't want to raise prices too far so as not to disuade customers from giving me their money. I'll try to find a level where number of burgers multiplied by cost of burger is at its highest.

At the consumer end, if I'm used to buying my burgers for Y, I'd be a bit pissed off at first when I see it now costs Z. But wait! I just got a raise in my paycheck. Y'know what? I can and will still buy that burger for Z.

In my simplified view of economics, I see that wage and price increases are in a perpetual chicken-and-egg cycle. You bump up wages, people have more money to spend. If people have more money to spend, prices will inflate to a level that maximizes revenue. When prices go up, people ask for another increase in wages. And so on...

There's a lot of truth behind what you say, but I think that the prices are generally close to what to is known as a 'market equilibrium' in economics (a balance between supply and demand). All of the major corporations hire economists in order to determine how to make the most profits.

I do not however, agree with you that wage increases will cause inflation. I think the wage increases are very much needed and will bring more balance to an economy gone wrong.

AmyMizuno

Then it looks like we've narrowed it down to the point at which we disagree - whether or not an increase in a customer's cash supply eventually leads to a increase in a seller's price.

I'd love to continue with this topic, but I've got a craving for X number of burgers. Fortunately for me and my stomach, I've got X*Y dollars in my pocket. :P