are you suggesting the newly-proposed $15 minimum wage will cause inflation so bad it will destroy people's savings?
Nitpick. We have no evidence minimum wage increases are inflationary. (We have evidence it is not [1][2].) But something doesn't have to create new money to be inflationary.
Increasing money velocity causes inflation as much as printing bills. The poor spend their dollars in the real economy (as opposed to the wealthy, who buy GameStock calls). That increases demand for those goods and services, which can result in a price spike.
Again, we don't have evidence of this happening. But theoretically, it's sound. (And less theoretically, it's why central banks can print pots of money while still fighting deflation.)
[1] https://mpra.ub.uni-muenchen.de/36750/1/MPRA_paper_36750.pdf
[2] https://www.econstor.eu/bitstream/10419/20104/1/dp861.pdf
No. Inflation is a "a general rise in the price level in an economy over a period of time" [1]. A single product pricing up is not a "general rise," and a temporary spike before Valentine's Day isn't "over a period of time."
Another potential mechanism would be if unemployment went up high enough due to a minimum wage increase that productivity decreases so much that the same number to dollars are chasing the results of less workers.
That said, with the exception of very rural areas the wage floor for most moderately skilled or unpleasant work is above $15 an hour already, so this will probably not have much of a impact on poverty or inflation.
OK ... but if the money supply stays the same, then all you're doing is just shifting the demand curves from one set of products (stocks) to another (TVs?). Put anther way, some things will go up, and some things will go down because spending habits changed. This happens now. It's not inflation just because the price of roses goes up in February.
A thought experiment, if I printed up a dollar for each one in circulation then put them in a vault that shouldn't cause inflation even though the money supply has doubled, similarly if in a thousand years someone opens the vault and puts those dollars into circulation inflation happens even though the money supply has unchanged.
My thesis is dollars that go between hedge fund to hedge fund are "in a vault" compared to dollars that are buying food at the local Walmart. If some of those hedge fund dollars ends up in the hands of a individual (say a minimum wage increase causes firms to halt buybacks and direct that money toward payroll) that would cause inflation of consumer goods as now we have more dollars chasing the same output.
Since 2009 people on the Internet have been prophesizing about massive inflation and inflation has been extremely low.
Maybe they will one day be right, but like the boy who cried wolf nobody should be listening to warnings about inflation from people on the internet, as a class they don't have any idea what they are talking about.
I'd estimate about a 50% increase in food prices in about the last decade.
I'd also estimate that the asking price of a house was completely out of whack even post the recession in 2008; it _never_ corrected in any of the west coast areas I live in. Still even that price has continued to go up due to inelastic supply and ever growing demand.
It's certainly possible that your expenses went up 50% in your presumably super-affluent area of the U.S. It wouldn't surprise me if booming tech companies in certain regions have caused this- but it is not the effect of monetary policy or government minimum wage policy- and my expenses have not gone up much in the last 10 years in my wealthy-but-not super-affluent east coast suburb.
https://www.bls.gov/cpi/questions-and-answers.htm#Question_3
So if families are buying in lower quantities then yes it would be accounted for.
In other words, the whole point of minimum wage laws is really just grandstanding by politicians?
If someone earns less it should be considered gig not work and basically non even taxed.
Inflation is a boogeyman. I heard a friend of mine not wanting any sort of covid stimulus checks because it would make his and his family's savings depreciate.
B does not follow from A if demand is elastic. Minimum wage proponents assume enough labor demand is elastic.
You don't want cashiers, wait staff, grocery baggers or call center staff? All of these jobs are generally minimum wage.
Low skill call centers are total waste of human time, that's why most of it is outsourced. UX just can get improved instead.
What if they are willing to work for less because it serves their purpose (like a foot in the door in the industry, or something else that you and I can't even think of). For example, we allow unpaid internships because we see the value of it. What about an internship that pays a little? Isn't that better for all?
The problem is you're taking choice away from people who may want it or need it. Why do you think you know better what's good for them than they do?
Basically min wage should be defined as basic needs for individual. I don't think that many people will chose to go for lower than that for future personal gain.
Anyway that's what democracy is for :)
EDIT: example: you don't provide living wage so some/more ppl will chose to steal. This might destroy their family, so social worker is needed, you also need more police, judges, prisons etc. All of them are employed, happily contributing to GDP. Success! Is it better world? I don't think so. It's much cheaper if with offering living wage. (as global optimisation, company owners and individuals do local optimisations)
Just because a few people are willing to work for less - or for free - to get in the door doesn't mean it is just to take advantage of them and pay them less than a living wage. Not everyone will be working x job for opportunity. Some folks need to eat. And yes, it is taking advantage of people - artists and musicians get offers to get paid in Exposure all the time. Which is really, "please work for free!".
The only real exception to this is, perhaps, when the work is actually part of schooling, and that should be limited. Teachers, doctors, and pharmacists come to mind, though we do treat the doctor interns quite horribly. (some pharmacist interns get a bit of pay).
If you want labor, pay a decent wage.
Even after a minimum wage increase, the school will still have to vacuum the floor. I'm guessing it'll just have the other staff do this now, who aren't children.
I can't verify they feel good about getting a paycheck. I have generally been happy to have a bit of money, but I've never cared that it came from a paycheck and realistically, despised that I had to work while going to school (mine was later, in college). I'd have went without if it were a reasonable option.
I realize that folks are different. However, In a lot of places and situations, child labor is illegal - and 14 is considered child labor in so many situations. When they do work, it comes with massive restrictions. This is soley because we, as a society, generally feel that the focus should be on school instead of work. If we cannot pay young folks on par with adults, we shouldn't hire them.
As a sidenote: I'm guessing that the real reason the school hired them is because they are cheap labor - soft exploitation - and so long as their rate is less than paying a member of the custodial staff (who would have to pick up the slack), they won't be out of a job.
I assure you that these teenagers are not being mistreated, and there are adults doing this same job with them. Our society has come a long way. No teen spends 100% of their time on school work. Like anyone, they have a price they are willing to trade their time and labor for. Why should they, or anyone not be allowed to make that trade?
And yes, it is an emotional argument. We are emotional beings. Doing a useful job and being rewarded for it satisfies those emotions immensely.
In addition to that, it teaches things in ways that a classroom simply cannot. In a very real way it is paying them to get some education, as you suggested.
Eg: $15K per month for staffing translates to $3750 per week, which translates to $125 per hour at 30 hours per week on average, which translates to ~10 staff at $12 per hour.
At $15 per hour that is reduced to 8 staff. Alternatively the hours for 10 staff would be reduced from 30 hours per week to 24 hours per week.
The money doesn't come from thin air, raising minimum wage for 10 staff at $12 per hour to $15 doesn't mean there will be no layoffs or reduction in hours.
Increasing prices of products sold or services rendered would result in a reduction in products sold or services rendered. Again, the money doesn't come from thin air -- either prices are raised or staff costing is reduced through cut hours or cut headcount.
Who gets cut is another question too -- more than likely it is tied to appearance, education, likeability, or seniority. Who gets hired is another question too -- if the bar is too high for an uneducated black youth then they will simply not get hired. An increase in the minimum wage can result (and has historically resulted in) in higher unemployment among black youth.
There are some industries where it might have an effect, restaurants/coffee shops in particular. But I wouldn't expect mass produced goods/foodstuffs to increase much if at all, simply because of how efficiently the labour is utilised.
There are also be potential productivity gains from having workers in a more financially stable position.
Amazon. Enjoy your monoculture.