$10.10... inflationary results?

[Market Harmony]

The increase of the minimum wage to $10.10 is touted by some as a step towards income equality, and others as a net zero effect. Those of the latter viewpoint assume that an increase in income means an increase in demand for the same number of goods and therefore an equal increase in the price of those goods. As long as these are commensurate, then there really is no advancement as the same work output still is able to buy the same basket of goods after a period of inflation.

Which seems more plausible... increase in net income, or net zero? If net zero, then would you expect inflation to be right around the bend. And if yes, then what are your plans to protect your wealth / hedge your dollar assets?

[johnbrickner]

When I consider those who earn minimum wage, I imagine the primary items to buy with the money would be basic needs of food, utilities, communications, clothing, shelter, gasoline, other transportation costs, and lump the rest together as entertainment (popular tech distractions, ETOH, tobacco, etc.). Except for the tech items which we are assured are in deflationary mode, the rest have been, are, and projected to be (continued) inflationary mode. So no real change excepting the possibility if we give more Americans the ability to consume more of these items then there will be less available for the rest of the world that cannot afford it.

What am I doing about it? Same as I've been doing and expressed through out the forum. In other words, no changes except possibly to maintain a more vigilant eye towards price increase predictions on basic needs so as to stock up prior and use less. Same as it ever was. Maintain the value of my hard earned and research the how to of it, all possibilities.

[68Camaro]

Minimum wage is a jobs killer, and creates issues among the young that are most affected by it. Entry level people need to have a longer term plan to improve themselves to where they provide enough value that they become worth more and get themselves out of the low wage jobs so that others can have them. The entry level jobs should be largely for true entry level, or the disabled /impaired (who would presumably have added help). Such a plan means investing in either a valued education, or a tradecraft.

But I digress, because the above is just a dream in the modern USSA.

[wheeler_dealer]

The president said it so it must be true / good.
Dear employee: Congratulations I am pleased to inform that minimum wage increase has impacted you. You're hours will have to be reduced while the same amount of work will still be expected.

Dear customers: We value your business and desire to continue providing the same high quality made in ..... products. With this is mind please understand we are trying to keep our price increases to a minimum (we raise them when store is closed ) as we struggle with these unproductive mandates. Obama care, minimum wage, increased taxes. We hope you understand the president said its good for the nation.

[wheeler_dealer]

SARCASM ASIDE. I can forsee inflation in the pressure cooker. Everything seems to continue to go up except wages. What about people making more than minimum wage. Another attack on us.
I will personally begin to focus more on prepping consumables and stocking up.

[theo]

The small "positive" of an increased min. wage is that it spurs the development of technology. We have the minimum wage to thank for such developments as ATM machines, automatic supermarket checkout machines and self service gas station systems (complete with credit scanner). As "cheap" labor gets more expensive it gets replaced by capital (technology). That is why, as Camaro says, it is a job killer.

It is inflationary because it increases income without increasing productivity. If little Johnny Noskills does manage to keep his job, he gets twenty percent more pay without having to be 20% more productive. He will use the extra money to bid against other income recievers. This excess demand increases the prices of consumer goods. If the business can pass on Johnny's increased labor costs to its customers it will raise prices of its products, if not the business will reduce the number products it offers or go out of business. This decrease in supply also raises prices.

At first blush forcing federal contractors to pay their employees at least $10.10 doesn't sound it will have a huge impact. However, I'm pretty confident that the unions who represent federal workers will use this increase as leverage to force increased wages for their workers across the board. Later pressure will be put on Congress to increase the Federal minimum wage. At the end of the day its just Government using its power to reward its supporters and punish its opponets.

[ScrapMetal]

If raising the minimum wage included the stipulation that the wage earner would not get any government subsidies (food stamps, earn income credit, section 8, etc) then I am all for it. As it stands now, the taxpayer is taking up the slack and is actually helping the greedy businesses that are paying their employees minimum wage.
I don't buy into the scare tactics that are thrown about concerning increasing minimum wage. Look at Costco, they pay every employee a fair wage, and have very good prices at their stores. They have loyal employees and that is reflected in how they treat customers. In contrast, look at Walmart. Stores in disarray with disgruntled employees that really do not care if customers come in or not.
I had a conversation with an acquaintance about minimum wage, and he was convinced that your Big Mac would end up costing $10. We started to discuss food service workers, waiters specifically, that earn maybe $2.50/hour and are expected to earn a living through tips. I said what difference is it to you, if you had a $100 night out and added an extra $20 directly to the waiter, or if the meal actually cost $120, and the employer then made enough to pay his workers, and you didn't need to tip. Bottom line you are out $120 and the waiter makes a decent living.

[messymessy]

There will be little to no macroeconomic effect from the "bold" new plan to raise the minimum wage to $10.10 for workers at companies that contract with the federal goverment. For one thing, there are only approximately 2 million workers at federal contractors. Lastly, how many of them are currently being paid less than $10.10? My guess is that there will be less than 50,000 workers getting a pay raise due to this new initiative. Seriously, how many people at Boeing are making less than $10.10/hour?

More hot air from our empty suit/cult of personality president.

[fansubs_ca]

The impact would divide between unemployment and inflation. It's hard to tell
in advance how much of the effect will impact each. In some industries it will
be more of one, in others, more of the other.

Ironically it's not so much what the hourly wage is that impacts whether or not
people are making it but more so the extent to which they are employed.
Underemployement is the biggest problem so reforms that enable people to
work more would do more good than fiddling around with the minimum wage.

Bob makes $8 and hour for 3 hours a week, Bob makes $10.10 an hour 3 hours
a week. Either way Bob is not making it and someone somewhere is subsidizing
Bob or he would starve/freeze to death.

On the government's end it needs to stop things that tend to cap the length of
people's work week. (Overtime law is a pretty universal problem throughout
North America, in the case of the U.S. the Obamacare provisions that discourage
full time hiring). Even in the best case business volume varies so an upper cap
of 40 hours will result in an average of less than 40 hours. That's at companies
that don't do what I adress in the next paragraph.

I'm not sure how to get certain parts of the private sector out of the schedule
people 3 hours a week but want them available 24/7 so you can make it a
different 3 hours each week and they can't even combine multiple part time
jobs into a total of full time work. As the previous paragraph displays it's
hard to craft a regulation that doesn't have unintended consequences. -_-

[Engineer]

I'm not sure how to get certain parts of the private sector out of the schedule
people 3 hours a week but want them available 24/7 so you can make it a
different 3 hours each week and they can't even combine multiple part time
jobs into a total of full time work. As the previous paragraph displays it's
hard to craft a regulation that doesn't have unintended consequences. -_-

The way to get people working longer hours is to get government out of the business of dictating benefits per hour worked. I can see overtime regulations being of benefit, but making employers pay insurance benefits for full time employees just encourages them to hire people for less than the threshold of 32 hours/week.

IMHO, this sort of encouragement toward part time workers is a way to hide true unemployment...but I've been known to be wrong.

[scyther]

We started to discuss food service workers, waiters specifically, that earn maybe $2.50/hour and are expected to earn a living through tips. I said what difference is it to you, if you had a $100 night out and added an extra $20 directly to the waiter, or if the meal actually cost $120, and the employer then made enough to pay his workers, and you didn't need to tip. Bottom line you are out $120 and the waiter makes a decent living.

Even if they were paid full minimum wage, I highly doubt the tipping custom would go away. It's a stupid custom, but it predates minimum wage and it seems it's here to stay.

[johnbrickner]

It took me a while to digest the question and all the answers given. Bottom line, the increase in minimum wage will have nowhere near the effect on the economy and our lives that those in power are having with their easing, manipulations, and all else I may be aware or unaware of. thus making the increase in minimum wage a moot point, smoke and mirrors, the appearence of doing something good, the appearance of doing something bad, a distraction, a way of placating the masses, small potatoes, etc.

[johnbrickner]

Such a plan means investing in either a valued education, or a tradecraft.

This is and should be, simply, the goal of all public education.

[thepmetalstacker]

The president said it so it must be true / good.
Dear employee: Congratulations I am pleased to inform that minimum wage increase has impacted you. You're hours will have to be reduced while the same amount of work will still be expected.

Dear customers: We value your business and desire to continue providing the same high quality made in ..... products. With this is mind please understand we are trying to keep our price increases to a minimum (we raise them when store is closed ) as we struggle with these unproductive mandates. Obama care, minimum wage, increased taxes. We hope you understand the president said its good for the nation.

Exactly! Let's not forget the fact that you're talking a negligible amount of additional take home pay with this increase. So these people are making what? $40 more a week.....and will likely end up getting replaced by automation as a result of this.

burger flippers: We demand $15 an hour to flip burgers.

Employer: "You're all fired and being replaced by a robot"

flippers: "damn...didn't see that one coming"