Margins are razor thin in restaurants specifically. If you pay people more, you’ll need to raise your prices and that will offset the pay raise if it happens across the board.
What am I missing?
CEOs, managers, capitalist rent-seekers (outflow)
Of course in the general case, the places the workers do shop at, probably supermarkets, will notice that people have more money to spend and will likely try to capture that extra money for themselves - either because demand of certain items increases or just plain greed.
So continues the endless, exhausting and unwinnable battle between wages and inflation
Exactly.
This while at the same time some people are becoming very rich and the country considers itself very wealthy.
What I am debating is whether raising rages simply causes inflation that then negates the effect of the wage. That's not a problem with an economy per-say, but rather just how an economy works. But perhaps I'm missing something.
All of that said, I share the concern about wealth inequality. A country will eventually collapse if the people at the bottom feel like the game is rigged and they will never get ahead.
You could argue that exactly this has happened when upper incomes were raised disproportionately in the last few decades. All the major expenses/investments of that class like housing, health care, education, stocks and others shot up. Seems there is more money around than they can use productively so they just kept bidding up prices.
The problem here is equating wages and income.
It is to everyone’s benefit if jobs with a net positive value get done, even if the value isn't enough to support the worker at an adequate lifestyle without supplementation.
Everyone should also have income to support an adequate lifestyle, but there's no reason that needs to come from wages — that's what a social welfare system, whether classical or UBI-based — ought to guarantee.
Say we decide $1,000/month is the minimum support level. It is generally better that a job that the market would pay $500/month gets done, the profits of owners and wages of higher level employees resulting from that job being done get paid and taxed, and the worker gets at least $500 in social support than that the job goes undone, the taxes on the other income streams dependent on it go unpaid, and the worker collects $1,000 in social support. And its even worse for the worker in the latter case if the minimum income we demand to allow work is higher than the social support we provide the able bodied without work (which is generally the case in the US, especially unless you have dependent children, outside of short-term unemployment of those who previously had sufficient income for UI to provide an adequate temporary support.)
That's how it seems to me as well. This article also mentions it towards the bottom in reference to restaurants in New Orleans...
https://www.msn.com/en-us/news/us/is-raising-the-minimum-wag...
Do we have any examples / models where people having figured out how to raise the bottom without raising the entire ladder?
But those wealthier customers probably provide high-end labor inputs to goods and services the redtaurant worker consumes, so driving up their expenses increases their salary demands which drives up the costs of the goods and services their labor contributes to, thus driving up the restaurant worker’s cost of living.
Obviously this will be very attenuated, but it is a real effect.
https://www.reddit.com/r/LeopardsAteMyFace/comments/o9mbz8/t...