Michigan considers $10 minimum wage

[New Chalcedon]

How am I hurting them?

I never said I wouldn't put price caps. I'm not stupid enough to just raise wages and let inflation happen.

Look mate, you cannot force (at least not yet) businesses to pay more for labor than they can afford, based on revenue from those employees.

If I have a whole bunch of minimum wage guys working for, say I am paying them $7.

All of them generate more than $7 for me, or they would not have their jobs. Some generate $15 or more. I am keeping and promoting these guys.

Some more generate $11-$12. Keepers.

Some are only generating $8-$10.

Minimum wage goes up to $10. You expect me to pay some guy $2 an hour out my pocket as an act of charity? What?

And the least productive, the worst off employees are the ones that get hurt by these policies.

Given that US firms are generating record profits, I do not find their crying poor to be terribly convincing:



If US firms could afford minimum wages of $10.30/hour after inflation in 1970, I don't see why they can't today.

EDIT: And frankly, if a worker's only adding $8 in value/hour today, then they're either the laziest worker alive, or their labor's being misallocated already. I mean, really - a cashier does far more than that, as does a restaurant waiter/waitress. Unless the place is dead, in which case they're generating 3/5 of 5/8 of sweet fuck-all in terms of added revenue.....because there aren't any customers for one reason or another.

[New England and The Maritimes]

Look mate, you cannot force (at least not yet) businesses to pay more for labor than they can afford, based on revenue from those employees.

If I have a whole bunch of minimum wage guys working for, say I am paying them $7.

All of them generate more than $7 for me, or they would not have their jobs. Some generate $15 or more. I am keeping and promoting these guys.

Some more generate $11-$12. Keepers.

Some are only generating $8-$10.

Minimum wage goes up to $10. You expect me to pay some guy $2 an hour out my pocket as an act of charity? What?

And the least productive, the worst off employees are the ones that get hurt by these policies.

Given that US firms are generating record profits, I do not find their crying poor to be terribly convincing:



If US firms could afford minimum wages of $10.30/hour after inflation in 1970, I don't see why they can't today.

Is there a rationale for the S&L shock in 1986 not counting as a miniature recession on the graph? It's clearly reflected in the trend line but there's no green bar to indicate the circumstances.

[New Chalcedon]

Given that US firms are generating record profits, I do not find their crying poor to be terribly convincing:



If US firms could afford minimum wages of $10.30/hour after inflation in 1970, I don't see why they can't today.

Is there a rationale for the S&L shock in 1986 not counting as a miniature recession on the graph? It's clearly reflected in the trend line but there's no green bar to indicate the circumstances.

A "recession" has a technical definition - at least two consecutive quarters of negative GDP growth. I'm not sure the S&L shock met that definition.

[New England and The Maritimes]

Is there a rationale for the S&L shock in 1986 not counting as a miniature recession on the graph? It's clearly reflected in the trend line but there's no green bar to indicate the circumstances.

A "recession" has a technical definition - at least two consecutive quarters of negative GDP growth. I'm not sure the S&L shock met that definition.

Ah. That makes sense. It's just weird seeing what amounts to a functional recession in the data points without it being identified in line with other similar events.

[Cannot think of a name]

I see your hypothetical and raise you actual data.

http://davidcard.berkeley.edu/papers/njmin-aer.pdf
http://www.ifs.org.uk/publications/5412

Data that has been addressed, numerous times, in this very thread.

Not once. Not once has it been addressed. I even searched the thread for those links, literally the only response to those links that ever happened was you saying that they have totally been addressed.

But they haven't.

At best what has happened as repeatedly it's been shown what happens in the real actual world and that has been 'answered' with what happens in Storytown. A bunch of fantasies about what 'should' happen is not an answer to what actually fucking happens.

Here's the problem, you think I'm just as ideological as you on the subject. I'm not. I want the most equitable thing to happen, whatever helps out the net most. If the argument against minimum wage increases had been convincing, if it had caused unemployment to rise, if it had resulted in inflation greater than the wage increase, I'd have come down on the opposing side. But I followed these arguments and I kept thinking, "Are you fucking kidding me? Theory theory theory. We've instituted minimum wages and raised them in several different circumstances...surely someone somewhere has checked this shit." And within half a second Google showed me exactly that.

And up to this point the only answer to the actual, factual 'what fucking happened' has been more and more story time.

You have not made the case. Whether you believe it or not, I was convincable. You failed. You failed because all you've given is story time. All you've given is theory when there has been practice for fucking decades. The only response to actual, factual data on the subject is a dream you once had where you addressed it.

[Neo Art]

Data that has been addressed, numerous times, in this very thread.

Not once. Not once has it been addressed. I even searched the thread for those links, literally the only response to those links that ever happened was you saying that they have totally been addressed.

But they haven't.

At best what has happened as repeatedly it's been shown what happens in the real actual world and that has been 'answered' with what happens in Storytown. A bunch of fantasies about what 'should' happen is not an answer to what actually fucking happens.

Here's the problem, you think I'm just as ideological as you on the subject. I'm not. I want the most equitable thing to happen, whatever helps out the net most. If the argument against minimum wage increases had been convincing, if it had caused unemployment to rise, if it had resulted in inflation greater than the wage increase, I'd have come down on the opposing side. But I followed these arguments and I kept thinking, "Are you fucking kidding me? Theory theory theory. We've instituted minimum wages and raised them in several different circumstances...surely someone somewhere has checked this shit." And within half a second Google showed me exactly that.

And up to this point the only answer to the actual, factual 'what fucking happened' has been more and more story time.

You have not made the case. Whether you believe it or not, I was convincable. You failed. You failed because all you've given is story time. All you've given is theory when there has been practice for fucking decades. The only response to actual, factual data on the subject is a dream you once had where you addressed it.

The answer is always an ideological dodge. The conditions weren't right, the effects were mitigated by "outside factors", the free market fairy was busy giving a blowjob to the easter bunny. SOMETHING.

Because when your entire life's philosophy is dictated by "THE THEORY', then you have to make excuses for when "THE THEORY" doesn't work in actual practice. You phone it in, mumble something about externalities, and swear, like some Misinean Dr. Claw, next time, Gadget, we'll see real inflation! NEXT TIME!

[Alien Space Bats]

You know why Japan didn't invade mainland US? Their was a "gun behind every leaf of grass".

Yeah, I can't imagine that it might have had something to do with having a 9,000 km supply line across waters filled with enemy submarines...

<pause>

So can we get back on topic, instead of perpetuating stupid historical myths?

[Tekania]

Not once. Not once has it been addressed. I even searched the thread for those links, literally the only response to those links that ever happened was you saying that they have totally been addressed.

But they haven't.

At best what has happened as repeatedly it's been shown what happens in the real actual world and that has been 'answered' with what happens in Storytown. A bunch of fantasies about what 'should' happen is not an answer to what actually fucking happens.

Here's the problem, you think I'm just as ideological as you on the subject. I'm not. I want the most equitable thing to happen, whatever helps out the net most. If the argument against minimum wage increases had been convincing, if it had caused unemployment to rise, if it had resulted in inflation greater than the wage increase, I'd have come down on the opposing side. But I followed these arguments and I kept thinking, "Are you fucking kidding me? Theory theory theory. We've instituted minimum wages and raised them in several different circumstances...surely someone somewhere has checked this shit." And within half a second Google showed me exactly that.

And up to this point the only answer to the actual, factual 'what fucking happened' has been more and more story time.

You have not made the case. Whether you believe it or not, I was convincable. You failed. You failed because all you've given is story time. All you've given is theory when there has been practice for fucking decades. The only response to actual, factual data on the subject is a dream you once had where you addressed it.

The answer is always an ideological dodge. The conditions weren't right, the effects were mitigated by "outside factors", the free market fairy was busy giving a blowjob to the easter bunny. SOMETHING.

Because when your entire life's philosophy is dictated by "THE THEORY', then you have to make excuses for when "THE THEORY" doesn't work in actual practice. You phone it in, mumble something about externalities, and swear, like some Misinean Dr. Claw, next time, Gadget, we'll see real inflation! NEXT TIME!

Free market theories only work with spherical consumers in a vacuum.

[Neo Art]

The answer is always an ideological dodge. The conditions weren't right, the effects were mitigated by "outside factors", the free market fairy was busy giving a blowjob to the easter bunny. SOMETHING.

Because when your entire life's philosophy is dictated by "THE THEORY', then you have to make excuses for when "THE THEORY" doesn't work in actual practice. You phone it in, mumble something about externalities, and swear, like some Misinean Dr. Claw, next time, Gadget, we'll see real inflation! NEXT TIME!

Free market theories only work with spherical consumers in a vacuum.

.....I love you so much right now.

[Mavorpen]

The answer is always an ideological dodge. The conditions weren't right, the effects were mitigated by "outside factors", the free market fairy was busy giving a blowjob to the easter bunny. SOMETHING.

Because when your entire life's philosophy is dictated by "THE THEORY', then you have to make excuses for when "THE THEORY" doesn't work in actual practice. You phone it in, mumble something about externalities, and swear, like some Misinean Dr. Claw, next time, Gadget, we'll see real inflation! NEXT TIME!

Free market theories only work with spherical consumers in a vacuum.

So... this?

[Alien Space Bats]

I dictate the highest price that allows me to profit maximize. Most of the time when my costs go up especially labour costs, I must raise the price to continue to profit maximize. It really is simple enough to be described in one sentence.


EDIT: Having studied economics at university, I always had trouble with linking the theory to reality. Then it hit me, might some theory's have gaping holes in their construction when it comes to reality. Does economic theory not complicate in practice the real simplicity behind supply and demand economics. Does it not over generalize to try and satisfy all outcomes and yet does not thoroughly explain any? (Especially when dealing with Keynesian theory and apparently you). All valid accusations that could be landed at your door. I do not pretend to understand in full why my idea's work in practice, I only know that they work. But the free market is a Beast far more complex than any single economic theory allows for by itself and in conjunction with others. The market always wins!

So what you're telling me is that your customers have no place else to go to get what you sell, and they don't care what price they pay. You could double or treble your prices, and they'd still buy just as much as they do now, so long as you've got a nice line you can feed them about how the cost of Croatian wrought iron or Hungarian lath has "forced" you to raise your prices in order to stay in business?

What quaint, rural corner of England is either so inbred or has such high levels of lead poisoning in the water that people behave like that?

<pause>

Either way, it's irrelevant to this conversation. Unlike you, I do live in Michigan, and consumers here are just not that stupid. If one gas station raises their prices, people go to another; if one restaurant raises their prices, people go to another; if one grocery store raises prices, people go to another; if one sporting goods supplier raises prices, people go to another; if one auto parts store raises prices, people go to another.

And that happens quite as much in Ludington, Manistee, Alpena, or Bad Axe as much as it happens in Ann Arbor, Birmingham, Novi, or St. Claire Shores. Maybe your father's business has no competition, but in the bare-knuckles world of Michigan business, it happens everywhere all the time.

Therefore, take your experience from Northumbria or the Midlands or wherever and chuck it, because this thread is about minimum wage laws in my native State of Michigan, where I can assure you that both consumers and business do very much perform as rational actors, thank you very much...

But if we assume that all firms are identital, which we often do in perfectly competitive markets, then economic theory dictates that all firms will change their price to the profit-maximising point. Individual firms are price-takers, but the market itself isn't.

Yet in the real world we know that this is not so, and it's here that minimum wage laws will have their effect. We know that Costco pays its workers more than Wal-Mart and correspondingly enjoys greater productivity; thus we know that an increase in the minimum wage will actually have the effect of discriminating against Wal-Mart's business model and in favor of Costco's, as Costco won't see any increase in labor costs (at least for a good long while, which is to say until secondary effects cause wages to rise up-market), while Wal-Mart will see such an increase, and will have to cope accordingly.

Which is maybe the whole public policy point behind minimum wage laws, when you get right down to it. After all, Wal-Mart underpays its workers and then coaches them on how to apply for food stamps, Medicaid or other locally-run public health programs (like the Washtenaw Health Plan [WHP] here in the Ann Arbor-Ypsilanti area), as well as other forms of State or Federal assistance; they actually train their workers in gaming the system to supplement their income with public money, which effectively transforms our State's social safety net a huge public subsidy for Wal-Mart (Wal-Mart managers have been heard telling their staff such this as "This is our health plan" and "This is our bonus plan" when discussing publicly-funded social safety net programs). In contrast, to steal Paul Ryan's misguided rhetoric, corporate "makers" like Costco actually pay their workers a living wage and thus contribute in a positive way to our State and local economies rather than serving as a drain on our public resources, the way corporate "takers" (a/k/a "corporate welfare queens") like Wal-Mart do.

So one way of looking at the minimum wage is as a vehicle for righting the ship — IOW, a vehicle for making corporate parasites like Wal-Mart choose a business model that places less of a strain on our State and municipalities, in favor of one that makes them more of a net contributor to our economy.

This is not to say that I'm fully behind an increase in the State's minimum wage to $10/hour; I'd need to see hard data as to whether $10 was the "sweet spot" for weaning our "corporate welfare queens" off the public teat of using our assistance programs to subsidize their poverty-level wages. It might, in fact, turn out that $9/hour is the right wage; alternately, it might turn out that $11/hour is where we kick these leeches off the dole and make them actually focus on productivity and performance rather than mindlessly staffing with overworked and untrained warm bodies, poorly led and poorly managed.

For the moment, I've given it very little thought, largely because this entire thread is totally speculative; with a "Red" Legislature and Governor, I'd rather spend my time defending voting rights or the basic right to unionize than waste time thinking about a minimum wage law that isn't ever going to get out of committee.

Down the road, though, we do need to think about making sure that businesses can't use our social safety net as a way to undercut the competition, and the minimum wage may well be an important tool in doing that. Maybe sometime after 2020, we can get around to taking up that question...

[Salandriagado]

Abolish the minimumum wage. You want more money? Get out of bed earlier.

As somebody who has worked for significantly less than minimum wage: fuck that bullshit.

[The Joseon Dynasty]

Because the firm is constrained by demand, and setting a higher price is always conditional on selling a lower quantity. The firm maximises his profit subject to that reality.

Precisely - the business is subject to the reality of the marketplace. It doesn't dictate it.

That assumes that there are more efficient firms than the one in my example in the market.

Perhaps because in a competitive market, there usually are.

Some firms are more capable of responding the changes in input costs than others, and that will impact where their profit-maximising price is set. If the market is perfectly competitive,

Which even the most theory-loving economist acknowledges almost never happens in the real world.

we'll see the new price shuffle to the point where the most efficient firms make zero long-term profits,

I hope you mean zero economic profit, rather than zero accounting profit.

which will still necessarily be higher than before, assuming Bertrand competition, and other firms will exit the market. But if we assume that all firms are identital, which we often do in perfectly competitive markets,then economic theory dictates that all firms will change their price to the profit-maximising point. Individual firms are price-takers, but the market itself isn't.

And if I had some muffins, I could have muffins and tea....if I also had some tea.

The marketplace is never perfectly competitive. If it was, there would be no need for advertising.

Firms won't arbitrarily lower the price to undercut competition if they are making less than zero long-run profits.

Arbitarily? No. Strategically? Yes - for instance, in an effort to outlast the competition and drive them out of the market.

That lower limit is known as Bertrand competition, and is still consistent with a price rise in a competitive market given an increase in input costs. It's logical. If all firms are operating at the point where they make zero long-run profits, and their input costs rise such that they're now making negative long-term profits, the competitive price in the market for all firms could very well shift upwards in response.

This is true, but you're making the assumption that American companies - which are making record profits - are operating at the Bertrand point. I don't believe that they are.

That's only one possible reason for a price increase, where there is an upward-sloping long-run supply curve, denoting the heterogeneity of firms in the market. But simply re-calculating the profit-maximising point subject to the new cost constraints on a market-wide scale could very well yield a higher price, as I discussed earlier.

The biggest problem in your theory - which is generally sound, if short-sighted - is that you neglect to note the various structural imbalances in market power that individually and collectively lead to excess profits accumulating toward corporations. To consider just two:

(1) The information imbalance between firms and consumers has led to prices being higher than the worth of goods; and
(2) The bargaining imbalance between capital and labor has led to virtually all of the value-adding of production being accumulated toward capital rather than evenly split between capital and labor.

My post is entirely situated in theory, so I did ignore the complexities of reality, which obviously change the predictions. It was just arguing against the notion that there is rarely an underlying incentive to raise prices when wages go up in a competitive market.

[New Chalcedon]

*snips quote pyramid*

And you were arguing against ASB's assertion that neat theory - which you did correctly cite, well done - rarely works so well in practice as theory says it ought. Without ever once venturing into real-world applications to do so.

[The Joseon Dynasty]

*snips quote pyramid*

And you were arguing against ASB's assertion that neat theory - which you did correctly cite, well done - rarely works so well in practice as theory says it ought. Without ever once venturing into real-world applications to do so.

ASB's assertion, as I understood it, was in the language of economic theory, and so I responded in theory. I didn't think it was a discussion on how that theory translates into practice.

Edit: Re-reading it, I still don't see where the discussion left the realm of pure theory.

[Sibirsky]

No. I have a dart board with his picture on it, next to the Obama symbol with a hammer and sickle over it and my anarchist flag. All throughout the apartment. Fun to practice; I think I'm a good thrower with such incentive.

Obama is the biggest fucking capitalist corporatist ever. How you people think he is a socialist I do not understand.

Do not confuse the two.

[Sibirsky]

I cry with tears of laughter.


That is fucking brilliant!!



I would be fucked if i lived in america, i hate the republicans and i hate the democrats. Know wonder most American's love thatcher she was nicely in the middle. Still why put in the work if i can't gain from it? The trouble with socialism is, inevitably it eventually runs out of other people's money.

Socialism isn't about taking and using other people's money. Hell, I'm a socialist and I'm shooting for a business degree, I love the market system.

I like free market socialists.

[Sibirsky]

Look mate, you cannot force (at least not yet) businesses to pay more for labor than they can afford, based on revenue from those employees.

If I have a whole bunch of minimum wage guys working for, say I am paying them $7.

All of them generate more than $7 for me, or they would not have their jobs. Some generate $15 or more. I am keeping and promoting these guys.

Some more generate $11-$12. Keepers.

Some are only generating $8-$10.

Minimum wage goes up to $10. You expect me to pay some guy $2 an hour out my pocket as an act of charity? What?

And the least productive, the worst off employees are the ones that get hurt by these policies.

What would you do if a labor shortage forced wages to go up from $7 to $10? Would you cut back on your work force, and essentially shrink your business operations? Or would you increase productivity to try and make up for the labor cost increase?

Answering that question might help you better see how businesses are likely to respond to a minimum wage increase.

The bolded italics, obviously.

However it is not always possible.

[Sibirsky]

Look mate, you cannot force (at least not yet) businesses to pay more for labor than they can afford, based on revenue from those employees.

If I have a whole bunch of minimum wage guys working for, say I am paying them $7.

All of them generate more than $7 for me, or they would not have their jobs. Some generate $15 or more. I am keeping and promoting these guys.

Some more generate $11-$12. Keepers.

Some are only generating $8-$10.

Minimum wage goes up to $10. You expect me to pay some guy $2 an hour out my pocket as an act of charity? What?

And the least productive, the worst off employees are the ones that get hurt by these policies.

Given that US firms are generating record profits, I do not find their crying poor to be terribly convincing:



If US firms could afford minimum wages of $10.30/hour after inflation in 1970, I don't see why they can't today.

EDIT: And frankly, if a worker's only adding $8 in value/hour today, then they're either the laziest worker alive, or their labor's being misallocated already. I mean, really - a cashier does far more than that, as does a restaurant waiter/waitress. Unless the place is dead, in which case they're generating 3/5 of 5/8 of sweet fuck-all in terms of added revenue.....because there aren't any customers for one reason or another.

See, the thing is, it is mostly large multinationals that are breaking profit records. And most of that cash is overseas.

I am not worried about them. It is the small businesses and their employees I am worried about.

[The Emerald Dawn]

You know why Japan didn't invade mainland US? Their was a "gun behind every leaf of grass".

Yeah, I can't imagine that it might have had something to do with having a 9,000 km supply line across waters filled with enemy submarines...

<pause>

So can we get back on topic, instead of perpetuating stupid historical myths?

ASB doesn't so much post in threads, as he drives by in a modified '68 Chevelle blaring "Big Band" music spraying a pair of mini-uzis loaded with truth.

[Alien Space Bats]

ASB doesn't so much post in threads, as he drives by in a modified '68 Chevelle blaring "Big Band" music spraying a pair of mini-uzis loaded with truth.

<frowns>

Like my buddy Michael Moore (Davison '72), I grew up in the Greater Flint area (Grand Blanc '75). Trust me, us Buicktown kids would never pull a drive-by in a '68 Chevelle.

Try a '69 Olds Cutlass Convertible or a '68 Buick Riviera, bought at Vic George on N. Saginaw St.

And that's a genuine 8-track tape deck, son...

[Imperiatom]

I dictate the highest price that allows me to profit maximize. Most of the time when my costs go up especially labour costs, I must raise the price to continue to profit maximize. It really is simple enough to be described in one sentence.


EDIT: Having studied economics at university, I always had trouble with linking the theory to reality. Then it hit me, might some theory's have gaping holes in their construction when it comes to reality. Does economic theory not complicate in practice the real simplicity behind supply and demand economics. Does it not over generalize to try and satisfy all outcomes and yet does not thoroughly explain any? (Especially when dealing with Keynesian theory and apparently you). All valid accusations that could be landed at your door. I do not pretend to understand in full why my idea's work in practice, I only know that they work. But the free market is a Beast far more complex than any single economic theory allows for by itself and in conjunction with others. The market always wins!

So what you're telling me is that your customers have no place else to go to get what you sell, and they don't care what price they pay. You could double or treble your prices, and they'd still buy just as much as they do now, so long as you've got a nice line you can feed them about how the cost of Croatian wrought iron or Hungarian lath has "forced" you to raise your prices in order to stay in business?

What quaint, rural corner of England is either so inbred or has such high levels of lead poisoning in the water that people behave like that?

<pause>

Either way, it's irrelevant to this conversation. Unlike you, I do live in Michigan, and consumers here are just not that stupid. If one gas station raises their prices, people go to another; if one restaurant raises their prices, people go to another; if one grocery store raises prices, people go to another; if one sporting goods supplier raises prices, people go to another; if one auto parts store raises prices, people go to another.

And that happens quite as much in Ludington, Manistee, Alpena, or Bad Axe as much as it happens in Ann Arbor, Birmingham, Novi, or St. Claire Shores. Maybe your father's business has no competition, but in the bare-knuckles world of Michigan business, it happens everywhere all the time.

Therefore, take your experience from Northumbria or the Midlands or wherever and chuck it, because this thread is about minimum wage laws in my native State of Michigan, where I can assure you that both consumers and business do very much perform as rational actors, thank you very much...

My prices are as high as the can realistically go without we falling of the back of the total revenue curve (As i said before profit maximization). If a change in the cost of the factors of production occur i can and do change the price(normally up) to where my MR equals my MC. Since as i have already stated i am running at almost 100% inefficiency i can't cut my labour supply to obtain MC=MR2 so my only choice is to rely solely the price mechanism. Prices go up I am no worse off than before.

On your point about Michigan and being inbred, going to Maryland is bad enough. The stupidity level is sometimes astounding, given many Americans routinely don't know the answer to basic questions when one walks into a store. My advice is to chuck out the laws entirely before you do irreparable damage to your economy in the medium term.

[Alien Space Bats]

My prices are as high as the can realistically go without we falling of the back of the total revenue curve (As i said before profit maximization). If a change in the cost of the factors of production occur i can and do change the price(normally up) to where my MR equals my MC. Since as i have already stated i am running at almost 100% inefficiency i can't cut my labour supply to obtain MC=MR2 so my only choice is to rely solely the price mechanism. Prices go up I am no worse off than before.

Of course you are — unless you're abusing the English language.

If, as you put it, your "prices are as high as the[y] can realistically go without ... falling of[f] the back of the total revenue curve", then any price increase will reduce your revenue and hence your profits; if then, as you put it, you are already "running at almost 100% inefficiency" and thus "can't cut [your] labour supply to obtain MC=MR2", then you can't lower labor costs at all; yet having just reduced your revenue, you are necessarily left with fewer profits (unless math doesn't work the same way on your side of the pond).

Indeed, the only way you can do what you claim to be doing is if the local demand curve for your services is highly inelastic, in which case you can probably still increase prices and make more money whatever your cost structure might happen to be (which means that you are not, in fact, currently operating at the revenue-maximizing level).

So obviously your situation is not as you describe it; there is, after all, no reason why prices in your neck of the woods should suddenly become less elastic (allowing you to increase them without a loss of revenue, assuming you were previously operating at the revenue maximizing level, as you claim) just because your costs changed, now is there?

[Imperiatom]

My prices are as high as the can realistically go without we falling of the back of the total revenue curve (As i said before profit maximization). If a change in the cost of the factors of production occur i can and do change the price(normally up) to where my MR equals my MC. Since as i have already stated i am running at almost 100% inefficiency i can't cut my labour supply to obtain MC=MR2 so my only choice is to rely solely the price mechanism. Prices go up I am no worse off than before.

Of course you are — unless you're abusing the English language.

If, as you put it, your "prices are as high as the[y] can realistically go without ... falling of[f] the back of the total revenue curve", then any price increase will reduce your revenue and hence your profits; if then, as you put it, you are already "running at almost 100% inefficiency" and thus "can't cut [your] labour supply to obtain MC=MR2", then you can't lower labor costs at all; yet having just reduced your revenue, you are necessarily left with fewer profits (unless math doesn't work the same way on your side of the pond).

Indeed, the only way you can do what you claim to be doing is if the local demand curve for your services is highly inelastic, in which case you can probably still increase prices and make more money whatever your cost structure might happen to be (which means that you are not, in fact, currently operating at the revenue-maximizing level).

So obviously your situation is not as you describe it; there is, after all, no reason why prices in your neck of the woods should suddenly become less elastic (allowing you to increase them without a loss of revenue, assuming you were previously operating at the revenue maximizing level, as you claim) just because your costs changed, now is there?

A rise in the cost of labour will move the MC curve, i then need to move my MR curve to get to the new point of profit maximization. Given at the same time a wage rise has just occurred i can normally just increase the price(the general wage increase will make my products slightly less elastic until i raise the price). I am operating at my current profit maximization but if any of the factors of production change i may need to need to react to stay at that point.


I INCREASE THE PRICE OF MY PRODUCTS Listen to me, to keep the same amount of Profit i increase the price. Since most people are normally putting up prices for one reason or another i don't see a lose in sales.

[Alien Space Bats]

A rise in the cost of labour will move the MC curve, i then need to move my MR curve to get to the new point of profit maximization. Given at the same time a wage rise has just occurred i can normally just increase the price(the general wage increase will make my products slightly less elastic until i raise the price). I am operating at my current profit maximization but if any of the factors of production change i may need to need to react to stay at that point.
r

I INCREASE THE PRICE OF MY PRODUCTS Listen to me, to keep the same amount of Profit i increase the price. Since most people are normally putting up prices for one reason or another i don't see a lose in sales.

IOW, you are running a cameo business in a rural area and have no competition; you're not actually charging the profit maximizing price, but only think you are; or (alternately) your price increases over time have pretty much only been in line with inflation, effectively making all of your combined changes a wash.

Either way, your experience has little relevance to this particular topic, since most Michigan businesses do not enjoy that sort of monopolistic position within their respective marketplaces.