Post #1862623
2026-04-29 03:01 UTC
Replies (10)
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@Buffalox@lemmy.world 2026-04-29 09:19
The impact of higher minimum wage on prices is way less than most people think. First thing is that wages is only a minor share of the price already, with obviously minimum wage work again being only a minor part of the total. The total of minimum wage workers in most companies is less than what the management makes. Sometimes even less than just the CEO. Have you ever heard fear of inflation or that prices increase because the CEOs are overpaid? I haven't, probably because the narrative is driven by the 1%, and has little to do with real economics.
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@BillCheddar@lemmy.world 2026-04-29 04:18
SIMPLE ANSWER: Companies would learn to accept lower profit. There's no goddamn good reason for companies to "need" 15, 20, 30% profit margins. And there's zero justification for companies to assume (a) every year is a winner and (b) every year, we gotta grow. Every dollar they keep in excess profit is a dollar they stole from you. That extra dollar increases prices, decreases the value of the money you DO get to earn, and increases the political power of the extremely wealthy people who already own the government.
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@wpb@lemmy.world 2026-04-29 10:43
As is tradition in economics, this is an idea someone had at some point, and has been touted as scientific fact and misapplied ever since (see also supply/demand curves, Jevon's paradox, and so on). It has no basis in reality. https://www.cato.org/commentary/wage-price-spiral-explanation-inflation-dangerous-myth Here is an article from the Cato institute disagreeing with the wage-price spiral myth. This is from a libertarian think tank -- even _they_ don't believe it! Of course the article has the usual economics drawback of basically just guesstimating a theory and never looking at any data. Because as soon as you do that you end up with conclusions like "the living standards of Cuba went up faster than those of comparable nations with a capitalist system, even without correcting for the immense blockade by the US" and no one wants to hear that sort of stuff.
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@PolarKraken@lemmy.dbzer0.com 2026-04-29 03:48
Well, regardless, prices increase while wages stagnate regardless, and the federal minimum wage does seem to drive the floor and by consequence probably a lot of the rest of that stagnation. Doesn't seem to me that it makes sense to peg a federal minimum wage that stays the same for long periods of time while also seeing "inflation" constantly drive prices up (I'm using inflation as a catch-all to sum up all flavors of price increase, not just what's strictly meant by the term normally). It's inconsistent - two sides of one coin, but somehow one keeps getting larger while the other remains unchanged...? But beyond that, yes, you're right, it's no panacea of any kind, because the bigger problem is that all markets (including labor markets) are driven and in effect controlled by the largest players. They don't have to collaborate and conspire directly, though of course being above the law they often happily do. But yeah, not necessary, by and large they merely have to act in their own self-interest to produce the system of advantages for them causing the accompanying monstrosities we see everywhere for everyone else (us). Raising the minimum wage is good but it isn't anything close to a solution, the spiraling problems keep spiraling. But remember, that's constantly, always happening, in directed ways, regardless. Bad idea to worry over downstream effects of things that clearly help folks struggling the ~worst. Address the actual problem, leave those folks out of it, I say. [Edit: if you'd like a real-time example of price changes and govt relief being solidly one-sided - watch what happens as companies fight for and receive the court-approved reversals of collected tariffs. You'll see some token price decreases and a few more strident responses, I expect, but by and large companies will have raised their prices to keep their profit margins intact, having a hateable president to blame and garner acceptance among consumers - and then they'll get back the money they did send for the tariffs, then keep prices high because that's how it works when people accept new normals (and boyyy have we Americans proven great at accepting new normals). Then fund some campaigns/events/PACs/whatever with a slice of the money as thanks, keep the good times rollin.] [Edit edit: looks like when this would take effect is spread out so long anyway that it just gives plenty of time to do what I'm describing and I guess you were worried about too maybe. Lovely.]
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@1D10@lemmy.world 2026-04-29 04:01
It does tend to be a push pull system, but with capitalism it is really the only thing that can be done, inflation will always go up and wages will always follow, often there is a lot of lag though. It's kinda like playing catch up, if we find a living wage that works it will only work for a while then the purchasing power of that wage will slip. What we need is a system that adjusts every year that way the corporations would have to find a more sustainable method to address earnings, because they would not have the lag between cost of living and minimum wage.
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@Croquette@sh.itjust.works 2026-04-29 11:12
Payroll is only the fraction of the price for any product or service. If you raise your payroll, it only raise the price for your product or service by the percentage of the payroll cost for your product or service. So yes, things will cost more, but the employees pay will raise more than the price of the product or service, giving more buying power to the employees. This is a really dumbed down explanation. There are other factors to consider when pricing something. But considering that payroll is only a portion of the price equation, any increase in dollar per hour is beneficial to the employees and will outpace the increased cost of the product or service.
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@Mulligrubs@lemmy.world 2026-04-29 21:14
The USA is a consumer economy. Consumption is good. Higher wages, more consumption. Businesses are ALWAYS raising prices, we've had 20 years with seven bucks an hour minimum, and that sure as Hell didn't keep prices the same.
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@GoofSchmoofer@lemmy.world 2026-04-29 13:36
A question to add on to yours is: If inflation is defined (simplistically) as too much money in the system chasing too few products, then wouldn't taking money out of the system via taxes have a rate limiting effect on inflation? Being that if minimum wage increases would an increase on taxes for wealthy citizens slightly offset this increase?
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@mrgoosmoos@lemmy.ca 2026-04-29 11:01
if companies chase the same profit levels, then yes. that is the inherent flaw with the state of capitalism in today's world. it requires the working class to get exhausted so the rich can have a greater unnecessary level of wealth and corporations can return profit to shareholders.
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@wewbull@feddit.uk 2026-04-29 08:49
Yes it may have an effect on prices, but there are second order effects. One example is that it would also have an effect on a huge number of people's ability to pay those prices. A customer base that can afford goods will likely increase sales. Increasing sales can increase revenue. Markets are complex dynamic systems and often the key to getting a healthy economy is removing choke points where money doesn't flow. Not paying people enough kills demand. An economy with low demand is dying.