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Shock News! Republicans Oppose Minimum Wage Boost

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Jocko's Rocket Ship2/13/2013 12:21:57 pm PST

Recalling that Labor Economics 340 class I took 25 years ago informs me that because the higher cost would affect all competitors basically equally, it can easily be passed on the the consumers in the form of prices increases. Those price increases should be barely noticeable and result in very little substitution effect by consumers. Pretty standard low-pay operation scenario: ($Payroll/$TotSales) x ($MinWages/$TotPayroll) x (%WageIncrease) = %HigherCost; 0.25 x 0.40 x .24 = 2.4% cost increase => ~2% price increase.

And because these are (still) very low-pay/skilled jobs by definition, there is little (additional) incentive to invest in automation or ship operations to lower pay areas.

So even the “economic theory” these guys are touting doesn’t hold up to scrutiny.