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To: Lou L
"I don't follow your logic here...."

Well it depends on what the net effect is. You would expect that some employers who are willing to pay $7.25 won't pay $10. And so some jobs will be lost. But we don't know what percent that is.

Let's say the economy has 100,000,000 minimum wage jobs at $7.25, and the minimum wage results in a 50% decrease in those jobs. Those jobs were earning $725,000,000, now you have 50,000,000 jobs earning $10 so that class of jobs after the wage increase is earning $500,000,000. Total wages in the economy dropped by ($225,000,000). In this scenario, you ended up with fewer people working and total wages is less to boot. That's definitely negative for the economy.

But lets assume that only 10% of the minimum wage jobs gets cut. That's leaves 90,000,000 working at $10/hr for total wages of $900,000,000. Total wages went up by $175,000,000. The initial effect is fewer people working, but more total wages flowing into the economy. Those workers may be more likely to turn around and spend those additional wages. Which could fund another 17,500,000 $10 jobs. Resulting in a net increase in employment.

There's a muliplier effect on the wages. Basically the same money muliplier that occurs in banking. Those wages get spent creating wages for others.

Thus the effects of raising the minimum wage are uncertain, and could be a negative or a positive to the economy.

20 posted on 06/30/2014 11:42:44 AM PDT by DannyTN
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To: DannyTN
Danny, your argument discounts inflation across the board for all other goods and services from an increase in the minimum labor cost. You can't just look at wages and say there's an automatic multiplier to the economy, regardless of the percentage of jobs lost. And if there's a multiplier from increased wages, there's a negative multiplier for increased costs and taxes. So yes, those still working will have more money in their pockets, but that's negated by increased costs everywhere: housing, energy, food, transportation, etc.

I respect your input, and I agree with your statement that the effects are "uncertain" from such a raise in the minimum wage. Specific effects, yes, but the general effects are well-known. My intuition and logic tell me that it's not an experiment I want to attempt.

21 posted on 06/30/2014 12:10:25 PM PDT by Lou L (Health "insurance" is NOT the same as health "care")
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