it's not that easy. I need employees and I want them to be happy. It's expensive when they quit. But I can only pay them so much or the whole thing isn't even worth it anymore. And I have tried everything I can do to increase sales. The only place left to cut is in what I spend on taxes and regulations.
Your concerns are certainly valid. Pricing out of the market is something that certainly can occur if wages get too high. We'll have plenty of warning before we go too far so long as wage hikes are phased in. We don't want a wage price spiral. It is true that capital drives out labor, just as Marx said it does. How much gets driven out is a complex matter that depends on more than just wages, but wages of course play a role. When wages get very high is when we're most likely to start noticing this. (It was already evident to me at the Toronto airport when I had to order my beer using a touch computer screen.) I wouldn't want to rely on textbook theory here. We should start phasing in a higher minimum and follow the macroeconomic effects as we go . Then adjust or stretch out the target as necessary. Regardless, there is no reasonable justification for a prevailing wage below $10/hr any where in the country. so if we find an area where there are folks working for 8-10 we just have to conclude that it is because their employers can get away with it and not because it makes any economic sense. We know that there are people that would pay their employees 3 bucks an hour if they thought they could get away with it. Microeconomically it can make sense. But if there is very much of this going on, macroeconomically it's a disaster. There are already quite a few areas where the prevailing minimum is well above the official federal minimum. It is 15$/hr in some places already. Those areas seem to be booming economically. The federal minimum in the mid 1960s was $10.60/hr in constant dollars. Check out the links Fred posted.
You won't increase your profits if you are the only one!!! , it is a macroeconomic effect, not a micro. That's why we need a dictated Federal minimum. Actually this is a very important point. I hope it sinks in with everyone. As a business man you can't afford to pay wages above market. The minimum wage has to be raised for everyone at the same time. Then you will be just fine. And because wages are way too low currently, I have little hesitation in telling you that if the minimum is raised to something reasonable, the economy should get a boost. If there is a positive relationship between your profits and the health of the economy, your profits will increase. ______________________ The true cost of minimum wage labor is essentially the cost of living for a minimum wage worker. (It is not an exact number because there is wiggle room in how you calculate it. It can be the same or slightly higher than the poverty level, again depending on how you want to calculate it and what you want to include.)
you may be right. There is power in numbers. But each side must play their cards with skill. Does my employee little good if I go out of business. But he may just like his job for other reasons than the pay (I'm very easy to work for and it's nothing the government would ever mandate.)
So they're not actually minimum wage earners. Does a true min wage earner make enough to buy your company's products?
I set the minimum wage based on how much they will accept and how much I can afford. And no, they can't buy my products. They are just illegal Portugese immigrants who scrape the barnicles off the yachts we sell.
Nobody that works here can afford to buy the yachts we sell. But we are making a heck of a lot more than the poor guys who actually make them. Took me and my family a long time to finally get out of manufacturing. It aint easy. Now it's China's turn. You gotta be doing something right or you will spend your whole life as nothing more than a manufacturer. Look at the way those poor slobs in Detroit ended up. They never could become anything better than a car builder. In today's world, I would not want to have an economy based on making things.