Michigan considers $10 minimum wage

[The Emerald Dawn]

obviously caps are necessary if i wish to rant

Obviously punting small children is necessary if I wish to express my anger.

>I can punt children

[Neo Art]

Minimum wage goes up, i put up my prices, I collect back the money i lost through the higher wage costs, through higher prices. Inflation rises further and the worker is not any better off.

It just costs the government money to implement.

The argument about "raising prices" is this:

Let's say I see widgets at $10 each. And I sell 50 a day. So my business makes $500 a day. Then I spend $300 in labor, and $50 in other expenses. So my profit is $150 a day. But then my labor costs go up by $100 a day. Now my total expenses are $450 and my income is $50. Well I know what I'll do, I'll raise my prices, I'll sell widgets for $12.00 each, that way I'll make $600 a day! I'll keep my income, and the consumer will have to bare the cost of my increased labor!"

And that argument makes a lot of sense. With the exception of one teeny weeny itsy bitsy tiny little problem. Primarily, you don't understand economics. Or, to put it a different way, if raising your prices would have increased your revenue.....why haven't you done that already?

I mean, really, this is the fatal flaw of any "well they'll just raise their prices!" counter. Any business, from mom and pop, to international conglomerates, has one goal, and one goal only. Maximize profits. If I sell 50 widgets a day, at $10 or $12...why would I have been selling them for $10 in the first place? This argument only works in this bizarre land of make believe where business could have raised prices, could have increased profits but, until this point, just....chosen not to, for some reason.

Or, to put this in a very simplistic way, if business could have increased prices without decreasing profits they would have done this already. Prices will naturally gravitate towards a revenue maximizing value regardless of what your expenses are.

That is economics rule #1.

[Mavorpen]

Minimum wage goes up, i put up my prices, I collect back the money i lost through the higher wage costs, through higher prices. Inflation rises further and the worker is not any better off.

It just costs the government money to implement.

The argument about "raising prices" is this:

Let's say I see widgets at $10 each. And I sell 50 a day. So my business makes $500 a day. Then I spend $300 in labor, and $50 in other expenses. So my profit is $150 a day. But then my labor costs go up by $100 a day. Now my total expenses are $450 and my income is $50. Well I know what I'll do, I'll raise my prices, I'll sell widgets for $12.00 each, that way I'll make $600 a day! I'll keep my income, and the consumer will have to bare the cost of my increased labor!"

And that argument makes a lot of sense. With the exception of one teeny weeny itsy bitsy tiny little problem. Primarily, you don't understand economics. Or, to put it a different way, if raising your prices would have increased your revenue.....why haven't you done that already?

I mean, really, this is the fatal flaw of any "well they'll just raise their prices!" counter. Any business, from mom and pop, to international conglomerates, has one goal, and one goal only. Maximize profits. If I sell 50 widgets a day, at $10 or $12...why would I have been selling them for $10 in the first place? This argument only works in this bizarre land of make believe where business could have raised prices, could have increased profits but, until this point, just....chosen not to, for some reason.

Or, to put this in a very simplistic way, if business could have increased prices without decreasing profits they would have done this already. Prices will naturally gravitate towards a revenue maximizing value regardless of what your expenses are.

That is economics rule #1.

The funny part is that this is based around an idea that consumers are really that stupid. They are seriously trying to convince me that someone who watches a Wal Mart commercial where they brag about how low their prices are, will not notice a price increase and will continue to buy the bullshit of, "we have the lowest prices around!" for very long?

...What happened to the free market being smart and efficient? Really, you cannot make the argument that consumers are too stupid to notice price increases in their favorite store and continue purchasing goods there while at the same time claiming that a totally unregulated free market leads to smart and efficient outcomes with a straight face.

Okay, I suppose you can, but don't expect me to listen with a straight face.

[Salandriagado]

The argument about "raising prices" is this:

Let's say I see widgets at $10 each. And I sell 50 a day. So my business makes $500 a day. Then I spend $300 in labor, and $50 in other expenses. So my profit is $150 a day. But then my labor costs go up by $100 a day. Now my total expenses are $450 and my income is $50. Well I know what I'll do, I'll raise my prices, I'll sell widgets for $12.00 each, that way I'll make $600 a day! I'll keep my income, and the consumer will have to bare the cost of my increased labor!"

And that argument makes a lot of sense. With the exception of one teeny weeny itsy bitsy tiny little problem. Primarily, you don't understand economics. Or, to put it a different way, if raising your prices would have increased your revenue.....why haven't you done that already?

I mean, really, this is the fatal flaw of any "well they'll just raise their prices!" counter. Any business, from mom and pop, to international conglomerates, has one goal, and one goal only. Maximize profits. If I sell 50 widgets a day, at $10 or $12...why would I have been selling them for $10 in the first place? This argument only works in this bizarre land of make believe where business could have raised prices, could have increased profits but, until this point, just....chosen not to, for some reason.

Or, to put this in a very simplistic way, if business could have increased prices without decreasing profits they would have done this already. Prices will naturally gravitate towards a revenue maximizing value regardless of what your expenses are.

That is economics rule #1.

The funny part is that this is based around an idea that consumers are really that stupid. They are seriously trying to convince me that someone who watches a Wal Mart commercial where they brag about how low their prices are, will not notice a price increase and will continue to buy the bullshit of, "we have the lowest prices around!" for very long?

...What happened to the free market being smart and efficient? Really, you cannot make the argument that consumers are too stupid to notice price increases in their favorite store and continue purchasing goods there while at the same time claiming that a totally unregulated free market leads to smart and efficient outcomes with a straight face.

Okay, I suppose you can, but don't expect me to listen with a straight face.

Oh, it's a lot worse than that. They are assuming that businesses are either monumentally stupid or intentionally try to minimise profits.

[Mavorpen]

The funny part is that this is based around an idea that consumers are really that stupid. They are seriously trying to convince me that someone who watches a Wal Mart commercial where they brag about how low their prices are, will not notice a price increase and will continue to buy the bullshit of, "we have the lowest prices around!" for very long?

...What happened to the free market being smart and efficient? Really, you cannot make the argument that consumers are too stupid to notice price increases in their favorite store and continue purchasing goods there while at the same time claiming that a totally unregulated free market leads to smart and efficient outcomes with a straight face.

Okay, I suppose you can, but don't expect me to listen with a straight face.

Oh, it's a lot worse than that. They are assuming that businesses are either monumentally stupid or intentionally try to minimise profits.

So to summarize this: "Everyone is stupid, including businesses and consumers. But don't worry guys! If you leave this black hole of stupidity on its own, the Free Market Fairy will grant us prosperity!"

[The Joseon Dynasty]

Minimum wage goes up, i put up my prices, I collect back the money i lost through the higher wage costs, through higher prices. Inflation rises further and the worker is not any better off.

It just costs the government money to implement.

The argument about "raising prices" is this:

Let's say I see widgets at $10 each. And I sell 50 a day. So my business makes $500 a day. Then I spend $300 in labor, and $50 in other expenses. So my profit is $150 a day. But then my labor costs go up by $100 a day. Now my total expenses are $450 and my income is $50. Well I know what I'll do, I'll raise my prices, I'll sell widgets for $12.00 each, that way I'll make $600 a day! I'll keep my income, and the consumer will have to bare the cost of my increased labor!"

And that argument makes a lot of sense. With the exception of one teeny weeny itsy bitsy tiny little problem. Primarily, you don't understand economics. Or, to put it a different way, if raising your prices would have increased your revenue.....why haven't you done that already?

I mean, really, this is the fatal flaw of any "well they'll just raise their prices!" counter. Any business, from mom and pop, to international conglomerates, has one goal, and one goal only. Maximize profits. If I sell 50 widgets a day, at $10 or $12...why would I have been selling them for $10 in the first place? This argument only works in this bizarre land of make believe where business could have raised prices, could have increased profits but, until this point, just....chosen not to, for some reason.

Or, to put this in a very simplistic way, if business could have increased prices without decreasing profits they would have done this already. Prices will naturally gravitate towards a revenue maximizing value regardless of what your expenses are.

That is economics rule #1.

Not necessarily.

As you said, producers are out there to profit maximise, and profit maximisation is conducted under many constraints. For a given wage, the profit-maximising point might yield a price of p₁, where profits are equal to π₁. If the wage is moved upwards through an exogenous policy decision, the producer has to contend with another set of constraints. His expenditure constraint, chiefly, will be shifted upwards. This now means that p₁ is no longer the profit-maximising price, and π will have unambiguously fallen, holding all else constant.

So, the producer will need to again calculate what his profit-maximising price is, and it could quite realistically be higher than before, some p₂ where p₂ > p₁. But keep in mind that this is profit-maximisation subject to constaints, and since this is under a new constraint, unless the producer wasn't profit-maximising beforehand, the new profit π₂ will be less than before, so π₂ < π₁. Basically, the profit-maximising price could realistically rise with the introduction of a minimum wage, but that doesn't make it a better profit-maximising price than before. The producer will make less profits than before, even with the price rise, but it's still profit-maximising because the constraints have now changed.

To use your example, p₁ = £10, q₁ = 50, FC = £50, wl = £300. If we assume he's profit-maximising with price and cost, then he'll be making π₁ = £150. Now, if w rises such that wl = £450, holding all else constant, π = £50. A better profit-maximising decision might be to cut back on labour l, so that wl = £320, raise the price to p₂ = £12 and only sell q₂ = 40.

Now, my π₂ = £110. It's less than before, but it's not unrealistic to think that this is the new profit-maximising point. If we defined a production function for producers, utility function for consumers, etc, and defined a theoretical widget market, the profit-maximising calculations could potentionally yield something like this.

[Freiheit Reich]

seems too high for a minimum wage price IMO

You're right, changing it so that it takes a mere sixty hours of minimum wage work, or just over a 9-5 every single day of your life, to afford a decent place to live gives the people of Michigan the kind of quality of life that's just unbecoming of humans.

Houses are dirt cheap in Michigan, you could buy a home making $4 an hour and only 40 hours a week (Flint and Detroit are filled with many homes below $15,000). Look at realtor.com if you want to find out. There are not many jobs at $7 an hour, what makes you think more employers will offer the job for $10 an hour?

http://www.realtor.com/realestateandhom ... t_MI/sby-1

Remember, the real minimum wage is $0 per hour which is what many Michigan folks make, especially after this stupid measure is passed.

[That 0ne Place]

.

[Freiheit Reich]

For comparison of minimum wages:
http://en.wikipedia.org/wiki/List_of_mi ... by_country


Australia hourly: $16.45
USA hourly: $7.25-$9.19

Yeah ten dollars would completely destroy the nation.

No minimum wage in Singapore and I did not see too many homeless bums in the streets. Singapore's economy is strong and the city-state has a better quality of life than Detroit or Flint offers.

Singapore would say 'cane the gangsters and teach them manners', Michigan would say 'blame the evil capialists and let's help them with welfare.'

Oh, Singapore is actually better off than the USA WITHOUT minimum wage. Why isn't it a cesspool with 90% of people making $1 per hour as liberals would imagine a place with no minimum wage to be?

http://en.wikipedia.org/wiki/List_of_co ... y_GDP_(PPP)_per_capita

http://en.wikipedia.org/wiki/List_of_co ... P_(nominal)_per_capita

Notice Haiti, Afghanistan, and Ghana have higher minimum wages than Singapore and they are poorer? Why is this? I thought liberals believed minimum wage means everybody will have good living standards:

http://en.wikipedia.org/wiki/List_of_mi ... by_country

[Saiwania]

Because you know they don't have to, right? They can just tell you to go fuck off. And its not like they're going to stupidly say, "Oh, O.K...." when you explain that the ebil gubbermint has just jacked up your wages, and so you've got to raise your prices to maintain your profits. No, they're going to say, "That's your problem," because in fact your customers don't give a good God-damn about your profits; they just want to get the best deal they can.

You can't have it both ways, either businesses are still able to make a profit or they are unable to and are forced to leave or shut down. If the barrier to entry is too high and the profit margins too small, fewer companies are able to remain afloat and gradually the sources of income for an area dries up and the quality of life plummets until it becomes a slum or ghost town.

I think a minimum wage is good in the sense that it can give people enough disposable income in which to purchase consumer goods and set the bar for all higher wages to expand from, but it isn't without at least some negative consequences.

[Freiheit Reich]

Singapore discussed this and Michigan should listen:

http://www.asiaone.com/Business/News/St ... 57928.html

In his speech, Manpower Minister Gan Kim Yong also argued that a minimum-wage policy runs counter to the Singapore work ethic and culture of self-reliance. "A guaranteed level of income may remove the incentive for training for less-productive workers," he said.

"We should continue to encourage people to fish for themselves instead of depending on others to fish for them, and we should help them to fish more effectively," said NMP Terry Lee.

[Neo Art]

The argument about "raising prices" is this:

Let's say I see widgets at $10 each. And I sell 50 a day. So my business makes $500 a day. Then I spend $300 in labor, and $50 in other expenses. So my profit is $150 a day. But then my labor costs go up by $100 a day. Now my total expenses are $450 and my income is $50. Well I know what I'll do, I'll raise my prices, I'll sell widgets for $12.00 each, that way I'll make $600 a day! I'll keep my income, and the consumer will have to bare the cost of my increased labor!"

And that argument makes a lot of sense. With the exception of one teeny weeny itsy bitsy tiny little problem. Primarily, you don't understand economics. Or, to put it a different way, if raising your prices would have increased your revenue.....why haven't you done that already?

I mean, really, this is the fatal flaw of any "well they'll just raise their prices!" counter. Any business, from mom and pop, to international conglomerates, has one goal, and one goal only. Maximize profits. If I sell 50 widgets a day, at $10 or $12...why would I have been selling them for $10 in the first place? This argument only works in this bizarre land of make believe where business could have raised prices, could have increased profits but, until this point, just....chosen not to, for some reason.

Or, to put this in a very simplistic way, if business could have increased prices without decreasing profits they would have done this already. Prices will naturally gravitate towards a revenue maximizing value regardless of what your expenses are.

That is economics rule #1.

Not necessarily.

As you said, producers are out there to profit maximise, and profit maximisation is conducted under many constraints. For a given wage, the profit-maximising point might yield a price of p₁, where profits are equal to π₁. If the wage is moved upwards through an exogenous policy decision, the producer has to contend with another set of constraints. His expenditure constraint, chiefly, will be shifted upwards. This now means that p₁ is no longer the profit-maximising price, and π will have unambiguously fallen, holding all else constant.

So, the producer will need to again calculate what his profit-maximising price is, and it could quite realistically be higher than before, some p₂ where p₂ > p₁. But keep in mind that this is profit-maximisation subject to constaints, and since this is under a new constraint, unless the producer wasn't profit-maximising beforehand, the new profit π₂ will be less than before, so π₂ < π₁. Basically, the profit-maximising price could realistically rise with the introduction of a minimum wage, but that doesn't make it a better profit-maximising price than before. The producer will make less profits than before, even with the price rise, but it's still profit-maximising because the constraints have now changed.

To use your example, p₁ = £10, q₁ = 50, FC = £50, wl = £300. If we assume he's profit-maximising with price and cost, then he'll be making π₁ = £150. Now, if w rises such that wl = £450, holding all else constant, π = £50. A better profit-maximising decision might be to cut back on labour l, so that wl = £320, raise the price to p₂ = £12 and only sell q₂ = 40.

Now, my π₂ = £110. It's less than before, but it's not unrealistic to think that this is the new profit-maximising point. If we defined a production function for producers, utility function for consumers, etc, and defined a theoretical widget market, the profit-maximising calculations could potentionally yield something like this.

In order for the effect of a minimum wage increase to have a real effect on the price of goods, on a market aggregate level, then the increase in minimum wage must have a significant impact on wages throughout the economic sector. Which is to say, that the profit-maximing price to set an object at will only increase when the overal net wealth of a society increases. It would be extremely difficult to demonstrate such an increase, when only a small percent of society is even at minimum wage now (although it is worth noting, that an increase in minimum wage will not only increase the wages of those AT minimum wage, but increase the wage of those above current minimum wage, but below the new maximum. For example, an increase in MW from $7/hr to $10/hr will see an increased wage in everyone making $7.00/hr through $9.99/hr).

Now of course too MUCH of a minimum wage increase and you're capturing everyone in the realm of "more than minimum but less than new maximum". An increase from $6.25/hr to $6.50/hr will have a very little impact on society since it wont inject all that much more wage into the economic sector (indeed, it won't inject ANY new wealth, it'll just sorta move it around a bit. It'll at best change, slighly, wealth distribution). A change from $6.25 an hour to, say $50.00/hr will have a dramatic impact on wealth distribution, and probably lead to rampant inflation.

So, indeed, while it is theoretically possible to "pass it on to the consumer", this is only true in the case where a redistribution of wealth results in a new profit-maximizing price that will allow for the cost to be "written off", at least to an appreciable measure. And while this is POSSIBLE, the number of people this change will impact, along with the relatively small impact, will no where near impact the economy sufficient to do this.

Indeed, it's also a relationship between the seller and buyer, and what impact an increased minimum wage will have on your buyer. Increasing the minimum wage will do nothing to me, as I make more than it, AND more than the newly proposed cap, so raising it will not impact my economic stanidng, nor will it cause me to have more money in my pocket. Ergo you can't "pass the cost on to me" because as a non impacted consumer, I'm not going to be willing to bear the cost on behalf of the seller. My wallet is unchanged.

Indeed, the ONLY retailers who might theoretically see a "profit maximizing price increase" are those who sell products to people who are primarily on minimum wage already, or below the "new minimum".

And those people, and only those people are going to see a gain, those making under the new minimum. Now true, the higher you make the "new minimum", the broader it will be, and the more sectors of the economy that MAY see a profit maximizing price shift.

But at the prices we're discussing, it's difficult to envision what sellers out there exist whose primary source of income is selling to those making minimum wage, except for the more dispicable businesses like check cashing entities, and high interest loan companies.

In fact, at a small enough level, the only entities who might be impacted significantly are those that prey on poverty.

And I'm pretty ok with that.

[Distruzio]

:palm:

If $10 seems reasonable, why stop there? Why don't they raise minimum wages to $1000/hr. Then folks could afford things, right?

/end sarcasm

Do you have a problem with there being any minimum wage at all?

Yes.

[New Chalcedon]

Minimum wage goes up, i put up my prices, I collect back the money i lost through the higher wage costs, through higher prices. Inflation rises further and the worker is not any better off.

It just costs the government money to implement.

The argument about "raising prices" is this:

Let's say I see widgets at $10 each. And I sell 50 a day. So my business makes $500 a day. Then I spend $300 in labor, and $50 in other expenses. So my profit is $150 a day. But then my labor costs go up by $100 a day. Now my total expenses are $450 and my income is $50. Well I know what I'll do, I'll raise my prices, I'll sell widgets for $12.00 each, that way I'll make $600 a day! I'll keep my income, and the consumer will have to bare the cost of my increased labor!"

And that argument makes a lot of sense. With the exception of one teeny weeny itsy bitsy tiny little problem. Primarily, you don't understand economics. Or, to put it a different way, if raising your prices would have increased your revenue.....why haven't you done that already?

I mean, really, this is the fatal flaw of any "well they'll just raise their prices!" counter. Any business, from mom and pop, to international conglomerates, has one goal, and one goal only. Maximize profits. If I sell 50 widgets a day, at $10 or $12...why would I have been selling them for $10 in the first place? This argument only works in this bizarre land of make believe where business could have raised prices, could have increased profits but, until this point, just....chosen not to, for some reason.

Or, to put this in a very simplistic way, if business could have increased prices without decreasing profits they would have done this already. Prices will naturally gravitate towards a revenue maximizing value regardless of what your expenses are.

That is economics rule #1.

Absolutely correct. The first rule of economics: taken as an aggregate, people will overall act in their individual self-interest.

If a business can charge $12 for a product that it is presently charging $10 for, it will do so without hesitation. Likewise - as a generally-unspoken corollary - if a buyer can shop around and get it at $8, s/he will do so, again without hesitation.

Each half of this comes into play when arguing against the notion that businesses will just pass on the entirety of a cost increase. If they could have charged more, they would have when the costs were lower, thus making more profit. And if there is competition available to the consumers, they will endeavour to pay the lowest price on offer - thus, sellers will seek to compete with each other by (among other mechanisms) cutting prices so long as they can make profit at the reduced price.

[Vietnam]

:palm:

If $10 seems reasonable, why stop there? Why don't they raise minimum wages to $1000/hr. Then folks could afford things, right?

/end sarcasm

Do you really see this as a legitimate argument?

[Luveria]

Do you have a problem with there being any minimum wage at all?

Yes.

You must be an an-cap or libertarian.

[The Joseon Dynasty]

*Snip*

I think you're arguing against a point that I never made, and indeed one that I agree with. I support the minumum wage rise quite strongly. I was simply stating that the "if they could just raise prices, why wouldn't they have done so already?" argument, while technically correct in some circumstances, often misunderstands how producers profit-maximise, and I said nothing about the significance or prevalence of those sorts of businesses on the macro level.

[Vietnam]

Yes.

You must be an an-cap or libertarian.

Is anarchy even compatible with capitalism?

[Luveria]

You must be an an-cap or libertarian.

Is anarchy even compatible with capitalism?

I'm not sure it is when anarchy isn't possible. Before an-caps say BUT SOMALIA, Somalia had a state the entire time, a failing and inefficient state, but still a state.

[Distruzio]

Yes.

You must be an an-cap or libertarian.

Yes. I am. Both. More specifically, anarcho-monarchist.

[Distruzio]

You must be an an-cap or libertarian.

Is anarchy even compatible with capitalism?

Yes. It is.

[Distruzio]

Is anarchy even compatible with capitalism?

I'm not sure it is when anarchy isn't possible. Before an-caps say BUT SOMALIA, Somalia had a state the entire time, a failing and inefficient state, but still a state.

Actually, ancaps don't point to Somalia as an example of anarchy. Statists do. We'd agree with your statement.

[Distruzio]

:palm:

If $10 seems reasonable, why stop there? Why don't they raise minimum wages to $1000/hr. Then folks could afford things, right?

/end sarcasm

Do you really see this as a legitimate argument?

It is. Search the rest of my posts in this thread for elaboration. I offered it when folks asked for it.

[Luveria]

You must be an an-cap or libertarian.

Yes. I am. Both. More specifically, anarcho-monarchist.

I don't know many other ideologies that care so little about people they want minimum wage abolished entirely

[Distruzio]

Yes. I am. Both. More specifically, anarcho-monarchist.

I don't know many other ideologies that care so little about people they want minimum wage abolished entirely

How'd you guess that we hated the poor?

Quit your current job on Monday and try to get a new one without a cell phone or internet connection. Try it. Prove us wrong.

I actually have. I've never been unemployed in 15 years and I've worked at 8 different companies. Kroger, Ingles, Publix, Regal Cinemas, Carmike Cinemas, World Automotive Group, Cardinal Health, Walmart. In all that time, I never had a cell phone or internet until 2006. Every single job I've had has been through word of mouth, walk-ins, and spur of the moment decisions. Every single job I've had has seen my standard of living increase.

I've also endured destitution, before you lob that attack my way. I've lived in a car for two years with no home. McDonalds on my mothers payday was as full a meal as we'd get during that time.

I've lost two houses. One to foreclosure. One to asset seizure (a poor excuse for a roommate was making meth in my upstairs kitchen while I was at work).

I know what it's like to struggle and, yet, I say what I say in this thread. Minimum wage should be abolished, not raised. Why do I say this? B/c I've actually lived through times where less than minimum wage would have been more than enough to put food in my belly. The minimum wage laws disemployed my mother and impoverished us for years, just as they will do to the unskilled Michigan laborers.