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Hater Depot
Joined: 29 Mar 2005
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 Posted: Thu Sep 10, 2009 3:38 pm Post subject: |
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| Kuros wrote: |
| Krugman has taught me more than a few things about economics, but he's still a partisan at the end of the day. He cannot be trusted to present the opposing argument fairly. |
I think there are times he writes as a partisan and other times when he does not, but the latter times are becoming scarcer. His pre-Times column books are pretty good. Return of Depression Economics is not bad either. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Thu Sep 10, 2009 4:53 pm Post subject: |
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| RufusW wrote: |
| jaykimf wrote: |
| ...the cost would be shared by all its customers, not just its' own workers. Minimum wage workers, who are a small minority of the workforce would get the benefits of a raise, but all consumers in the economy would share in the cost. |
Well played. Minimum wage is about a moral imperative. We cannot expect people to work for subsistance level wages. Yes, minimum wages create inefficiencies - but the end result is a better standard of living for society. |
This doesn't address the contention that its furthering unemployment for the young. Nor does it address the fact that its harming the young's job skills training. Nor does it address the fact that most people on minimum wage are under the age of 25.
[quote="RufusW"I know you Americans hate that word, but that's what you are - a society. Europe realised it about 60 years ago. Stopping child labour produced an inefficiency in the free market - anyone complaining about it now?[/quote]
Either the policy is harmful or hurtful to the society at large. Rusty Shackleford doesn't oppose the minimum wage because he hates the poor or 'society.' |
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Fox
Joined: 04 Mar 2009
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| Posted: Thu Sep 10, 2009 5:08 pm Post subject: |
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| Kuros wrote: |
| This doesn't address the contention that its furthering unemployment for the young. |
To be entirely honest, I think it's yet to be proven exactly how much of an impact minimum wage has in this regard. There's a minimum number of people oen can run a business with in an efficient and effective fashion. The minimum wage is generally unlikely to push a business below that number of employees (because if you go below that number, you can no longer function properly). On the other hand, the removal of the minimum wage is unlikely to encourage employers to go above that number; why hire more workers if you've got enough to function perfectly well? You'd do better to lower your prices to attract more customers.
I'm not an expert, but it seems to me that minimum wage would affect the price of goods, but not necessarily increase unemployment. Walmart won't hire fewer workers; if they could get by on fewer workers, they'd all ready have let some go to save money. Instead, they'll just charge more, and since everyone else will too, they won't lose out competitively because of it.
Do you feel this reasoning is wrong? |
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Rusty Shackleford
Joined: 08 May 2008
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| Posted: Thu Sep 10, 2009 5:36 pm Post subject: |
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[quote="Fox"]
| Kuros wrote: |
| This doesn't address the contention that its furthering unemployment for the young. |
| Quote: |
| To be entirely honest, I think it's yet to be proven exactly how much of an impact minimum wage has in this regard. |
http://www.house.gov/jec/cost-gov/regs/minimum/briefing.htm
http://www.nber.org/papers/w12663
http://www.jstor.org/pss/2524738
http://www.jstor.org/pss/146069
http://www.jstor.org/pss/2524735 (Gated, thought the abstracts are illuminating.)
| Quote: |
| There's a minimum number of people oen can run a business with in an efficient and effective fashion. The minimum wage is generally unlikely to push a business below that number of employees (because if you go below that number, you can no longer function properly). |
So you put the the firm out of business? Everyone wins!
| Quote: |
On the other hand, the removal of the minimum wage is unlikely to encourage employers to go above that number; why hire more workers if you've got enough to function perfectly well? You'd do better to lower your prices to attract more customers.
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You would, likely, hire workers instead of installing machines to do the workers work.
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I'm not an expert, but it seems to me that minimum wage would affect the price of goods, but not necessarily increase unemployment. Walmart won't hire fewer workers; if they could get by on fewer workers, they'd all ready have let some go to save money. Instead, they'll just charge more, and since everyone else will too, they won't lose out competitively because of it. |
This is classic inefficiency. If goods cost more, it means there is less money that can be spent in other areas of the economy, thus even less jobs will be created.
| Quote: |
| Do you feel this reasoning is wrong? |
You blithely dismiss economics and seem proud of the fact that you don't know much about it. But still you insist on chiming in on economic matters, that in many cases had a consensus formed upon them decades ago.
On finding the links on minimum wage, I came across only one study that found little effect on employment from minimum wage. That study was debunked in one of the studies I posted. |
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Fox
Joined: 04 Mar 2009
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| Posted: Thu Sep 10, 2009 6:13 pm Post subject: |
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| Rusty Shackleford wrote: |
| Quote: |
| There's a minimum number of people oen can run a business with in an efficient and effective fashion. The minimum wage is generally unlikely to push a business below that number of employees (because if you go below that number, you can no longer function properly). |
So you put the the firm out of business? Everyone wins! |
You think they'd choose to go out of business instead of just keeping their current staff and raising prices? Every other business is affected by the same laws, after all, so it's not like doing so is going to cost them with regards to competition.
| Rusty Shackleford wrote: |
| Quote: |
On the other hand, the removal of the minimum wage is unlikely to encourage employers to go above that number; why hire more workers if you've got enough to function perfectly well? You'd do better to lower your prices to attract more customers.
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You would, likely, hire workers instead of installing machines to do the workers work. |
Why would they install machines or hire more workers? If they've all ready got enough workers to operate optimally, I don't think they'd do either. Surely they'd just lower prices to compete better instead of wasting money on machines or workers that they simply don't need. Isn't this what your economic principles insists will happen? Businesses cutting costs where possible to outcompete one another?
| Rusty Shackleford wrote: |
| Quote: |
I'm not an expert, but it seems to me that minimum wage would affect the price of goods, but not necessarily increase unemployment. Walmart won't hire fewer workers; if they could get by on fewer workers, they'd all ready have let some go to save money. Instead, they'll just charge more, and since everyone else will too, they won't lose out competitively because of it. |
This is classic inefficiency. If goods cost more, it means there is less money that can be spent in other areas of the economy, thus even less jobs will be created. |
Well, for now I would like to start with determining whether an individual business will hire fewer workers because of the minimum wage laws force them to pay more, and move on from there. So far, to be honest, your responses on that topic aren't very clear, especially when you start talking about machines.
| Rusty Shackleford wrote: |
| Quote: |
| Do you feel this reasoning is wrong? |
You blithely dismiss economics and seem proud of the fact that you don't know much about it. But still you insist on chiming in on economic matters, that in many cases had a consensus formed upon them decades ago. |
Neither of us understands economics anywhere near at an expert level. One of us admits the truth on that matter and is in this thread asking a question. Because your grasp on the subject is also tenuous -- and because your ideology makes me doubt everything you say -- I'm not sure you're the best person to answer me on this subject. If it's okay, I'd rather hear from someone like Kuros, mises, or Pluto about it.
I appreciate the links, though, I will read them later. |
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some waygug-in
Joined: 25 Jan 2003
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| Posted: Thu Sep 10, 2009 6:30 pm Post subject: |
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I've said it before, if you want to create jobs, you have to create tax breaks for small businesses. For every extra employee they hire, they get xx% deduction on their income tax or some similar idea.
Wages have always lagged far behind cost of living increases, at least in Canada.
The real burden for employers is not the actual wage, but all the extra expenses that must be born; such as health insurance, workers compensation, accident insurance, employment insurance, pension as well as taxes. My brother's employer told him that to hire an extra employee his actual cost was double the wage he paid to the worker.
Failure to address the additional costs that are faced by employers makes your arguements meaningless. |
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Rusty Shackleford
Joined: 08 May 2008
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| Posted: Thu Sep 10, 2009 8:33 pm Post subject: |
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| Fox wrote: |
| Rusty Shackleford wrote: |
| Quote: |
| There's a minimum number of people oen can run a business with in an efficient and effective fashion. The minimum wage is generally unlikely to push a business below that number of employees (because if you go below that number, you can no longer function properly). |
So you put the the firm out of business? Everyone wins! |
You think they'd choose to go out of business instead of just keeping their current staff and raising prices? Every other business is affected by the same laws, after all, so it's not like doing so is going to cost them with regards to competition. |
A firm doesn't really choose to go out of business. They are either run out of business by external factors (competition, govt regs etc) or by internal factor (incompetence, poor pricing structure etc.)
You said there is "a minimum number of people oen can run a business with in an efficient and effective fashion." This is partly true. But you need to factor in capital equipment. Machines, buildings, tools, computers, desks etc. A better statement would have been
"At a given level of capital equipment there is a minimum number of people oen can run a business with in an efficient and effective fashion"
If the business wanted to expand, (more capital equipment), it would probably need more workers. If labor is more expensive than the firm is willing to pay, it won't expand.
| Rusty Shackleford wrote: |
| Quote: |
On the other hand, the removal of the minimum wage is unlikely to encourage employers to go above that number; why hire more workers if you've got enough to function perfectly well? You'd do better to lower your prices to attract more customers.
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| Quote: |
| You would, likely, hire workers instead of installing machines to do the workers work. |
Why would they install machines or hire more workers? If they've all ready got enough workers to operate optimally, I don't think they'd do either. Surely they'd just lower prices to compete better instead of wasting money on machines or workers that they simply don't need. |
You need to produce the product some how. But you can't turn a profit if you lower prices but don't simultaneously increase production. The knock on effect of that is less goods and less jobs. Everybody loses. This goes back to the example above.
| Quote: |
| Rusty Shackleford wrote: |
| Quote: |
I'm not an expert, but it seems to me that minimum wage would affect the price of goods, but not necessarily increase unemployment. Walmart won't hire fewer workers; if they could get by on fewer workers, they'd all ready have let some go to save money. Instead, they'll just charge more, and since everyone else will too, they won't lose out competitively because of it. |
This is classic inefficiency. If goods cost more, it means there is less money that can be spent in other areas of the economy, thus even less jobs will be created. |
Well, for now I would like to start with determining whether an individual business will hire fewer workers because of the minimum wage laws force them to pay more, and move on from there. So far, to be honest, your responses on that topic aren't very clear, especially when you start talking about machines. |
You are confused when I talk about machines as you don't seem to be aware of the role of capital equipment ie machines. In many cases they are a substitute for human labor but also in many cases a complement to labor.
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| Rusty Shackleford wrote: |
| Quote: |
| Do you feel this reasoning is wrong? |
You blithely dismiss economics and seem proud of the fact that you don't know much about it. But still you insist on chiming in on economic matters, that in many cases had a consensus formed upon them decades ago. |
Neither of us understands economics anywhere near at an expert level. One of us admits the truth on that matter and is in this thread asking a question. Because your grasp on the subject is also tenuous -- and because your ideology makes me doubt everything you say -- I'm not sure you're the best person to answer me on this subject. If it's okay, I'd rather hear from someone like Kuros or mises about it. |
The problem is, I make too many assumptions about what you already know about economics. What seems self evident to me, (and anyone who has skimmed an elementary econ text book) is actually confusing and almost a foreign language to others. I'm not trying to say the econ is some esoteric language that only the intellectual elite can understand. It's really more of a useful rule of thumb that can help you frame an argument about the economy. It may seem ideological to you, but economists do do research into what they proclaim. And there is a a lot of consensus over certain issues. including minimum wage laws.
"A minimum wage increases unemployment among young and unskilled workers. (79%)"
http://gregmankiw.blogspot.com/2009/02/news-flash-economists-agree.html |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Sep 10, 2009 8:40 pm Post subject: |
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A minimum wage marginally raises structural unemployment. The effect, at prevailing rates, is likely unnoticeable in the American (or Canadian) economy.
In an ideal world, sure. No MW and a bag of chips is still 10cents so BFD. In the real world, those who are made unemployed are already the next in line of most unemployable and they're likely not going to remain employed anyhow. If you raise it to 12 or 15 bucks an hour you'd bring severe dysfunction to the economy. |
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Fox
Joined: 04 Mar 2009
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| Posted: Thu Sep 10, 2009 8:59 pm Post subject: |
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| Rusty Shackleford wrote: |
| A firm doesn't really choose to go out of business. They are either run out of business by external factors (competition, govt regs etc) or by internal factor (incompetence, poor pricing structure etc.) |
If a firm is given a choice: raise your prices or go out of business, and it doesn't raise its prices, it is choosing to go out of business. Because minimum wage laws affect their competition as well, it's not as if their competitors are going to simply decide not to comply with the law and gain an advantage.
| Rusty Shackleford wrote: |
You said there is "a minimum number of people oen can run a business with in an efficient and effective fashion." This is partly true. But you need to factor in capital equipment. Machines, buildings, tools, computers, desks etc. A better statement would have been
"At a given level of capital equipment there is a minimum number of people oen can run a business with in an efficient and effective fashion"
If the business wanted to expand, (more capital equipment), it would probably need more workers. If labor is more expensive than the firm is willing to pay, it won't expand. |
But, how much the firm is willing to pay is based on the market they're competing in, is it not? If the minimum wage is higher, then goods and services will cost a bit more, and hiring more workers will both cost more and result in greater return on their work (because the goods and services have a higher price). If because of the higher prices people buy less of the goods or services, I can understand why that would limit expansion, but minimum wage involves an increase in wages alongside the increase in prices, so I'm not sure that needs to happen. Yes, people are suddenly paying more for those goods, but they've also got more money to spend.
| Rusty Shackleford wrote: |
| Rusty Shackleford wrote: |
| Quote: |
On the other hand, the removal of the minimum wage is unlikely to encourage employers to go above that number; why hire more workers if you've got enough to function perfectly well? You'd do better to lower your prices to attract more customers.
|
| Quote: |
| You would, likely, hire workers instead of installing machines to do the workers work. |
Why would they install machines or hire more workers? If they've all ready got enough workers to operate optimally, I don't think they'd do either. Surely they'd just lower prices to compete better instead of wasting money on machines or workers that they simply don't need. |
You need to produce the product some how. But you can't turn a profit if you lower prices but don't simultaneously increase production. |
If you lower prices, but manage to merely keep production at the same level, it seems to me your profits would still increase. You're producing the same amount, but for less money.
| Rusty Shackleford wrote: |
| Quote: |
| Rusty Shackleford wrote: |
| Quote: |
| Do you feel this reasoning is wrong? |
You blithely dismiss economics and seem proud of the fact that you don't know much about it. But still you insist on chiming in on economic matters, that in many cases had a consensus formed upon them decades ago. |
Neither of us understands economics anywhere near at an expert level. One of us admits the truth on that matter and is in this thread asking a question. Because your grasp on the subject is also tenuous -- and because your ideology makes me doubt everything you say -- I'm not sure you're the best person to answer me on this subject. If it's okay, I'd rather hear from someone like Kuros or mises about it. |
The problem is, I make too many assumptions about what you already know about economics. |
However you care to explain it. |
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Fox
Joined: 04 Mar 2009
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| Posted: Thu Sep 10, 2009 9:01 pm Post subject: |
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| mises wrote: |
A minimum wage marginally raises structural unemployment. The effect, at prevailing rates, is likely unnoticeable in the American (or Canadian) economy.
In an ideal world, sure. No MW and a bag of chips is still 10cents so BFD. In the real world, those who are made unemployed are already the next in line of most unemployable and they're likely not going to remain employed anyhow. If you raise it to 12 or 15 bucks an hour you'd bring severe dysfunction to the economy. |
So as long as the minimum wage is kept within reason, you feel the negative impacts regarding unemployment are negligible? Are there other negative effects outside of unemployment that you think that warrant an active crusade to abolish minimum wage laws? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Sep 10, 2009 9:15 pm Post subject: |
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| Quote: |
| Are there other negative effects outside of unemployment that you think that warrant an active crusade to abolish minimum wage laws? |
Yes. In the US African Americans are harmed as they are forced to work for a minimum wage while illegals aren't. This places AA's at a disadvantage to Mexicans and others who are able to work for less than the MW. Either you remove illegal labour or you remove the MW for AA's to remove the distortion. It's worth noting that as Mexicans have been returning home African Americans have seen a few months here and there with increasing over all employment levels, despite the depression. |
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Fox
Joined: 04 Mar 2009
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| Posted: Thu Sep 10, 2009 9:38 pm Post subject: |
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| mises wrote: |
| Quote: |
| Are there other negative effects outside of unemployment that you think that warrant an active crusade to abolish minimum wage laws? |
Yes. In the US African Americans are harmed as they are forced to work for a minimum wage while illegals aren't. This places AA's at a disadvantage to Mexicans and others who are able to work for less than the MW. Either you remove illegal labour or you remove the MW for AA's to remove the distortion. It's worth noting that as Mexicans have been returning home African Americans have seen a few months here and there with increasing over all employment levels, despite the depression. |
That's an interesting point. I suppose the proponent of minimum wage laws would say the ideal solution is to enforce illegal immigration laws more strictly, but that's both more difficult and more prone to error than removing the minimum wage. |
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Rusty Shackleford
Joined: 08 May 2008
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| Posted: Thu Sep 10, 2009 9:56 pm Post subject: |
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| Fox wrote: |
| Rusty Shackleford wrote: |
| A firm doesn't really choose to go out of business. They are either run out of business by external factors (competition, govt regs etc) or by internal factor (incompetence, poor pricing structure etc.) |
If a firm is given a choice: raise your prices or go out of business, and it doesn't raise its prices, it is choosing to go out of business. Because minimum wage laws affect their competition as well, it's not as if their competitors are going to simply decide not to comply with the law and gain an advantage. |
They may however decide to replace those workers with capital equipment (where possible). This would mean they could keep prices the same. This would mean less overall jobs. However, no matter what way you cut it, increasing prices benefits nobody. The goal should be to move towards the lowest prices possible.
| Quote: |
| Rusty Shackleford wrote: |
You said there is "a minimum number of people oen can run a business with in an efficient and effective fashion." This is partly true. But you need to factor in capital equipment. Machines, buildings, tools, computers, desks etc. A better statement would have been
"At a given level of capital equipment there is a minimum number of people oen can run a business with in an efficient and effective fashion"
If the business wanted to expand, (more capital equipment), it would probably need more workers. If labor is more expensive than the firm is willing to pay, it won't expand. |
But, how much the firm is willing to pay is based on the market they're competing in, is it not? If the minimum wage is higher, then goods and services will cost a bit more, and hiring more workers will both cost more and result in greater return on their work (because the goods and services have a higher price). If because of the higher prices people buy less of the goods or services, I can understand why that would limit expansion, but minimum wage involves an increase in wages alongside the increase in prices, so I'm not sure that needs to happen. Yes, people are suddenly paying more for those goods, but they've also got more money to spend. |
A. Higher prices don't equal more profit. If you have raised prices and the costs of doing business, profit stays exactly the same, if not lower as you are now selling less due to the higher price.
B. Just because the law of supply and demand is suspended for you, doesn't mean it is also for the rest of the world. The fact still stands that in the case of 99% of goods, if they are more expensive, people will buy less.
| Quote: |
| Rusty Shackleford wrote: |
| Rusty Shackleford wrote: |
| Quote: |
On the other hand, the removal of the minimum wage is unlikely to encourage employers to go above that number; why hire more workers if you've got enough to function perfectly well? You'd do better to lower your prices to attract more customers.
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| Quote: |
| You would, likely, hire workers instead of installing machines to do the workers work. |
Why would they install machines or hire more workers? If they've all ready got enough workers to operate optimally, I don't think they'd do either. Surely they'd just lower prices to compete better instead of wasting money on machines or workers that they simply don't need. |
You need to produce the product some how. But you can't turn a profit if you lower prices but don't simultaneously increase production. |
If you lower prices, but manage to merely keep production at the same level, it seems to me your profits would still increase. You're producing the same amount, but for less money. |
This is very confusing. You are suggesting that lowering prices means you can produce at a lower cost? I think you had better rethink that one. I assume you're are getting cost and price mixed up. If I lower the price at which I teach, am I making more money? |
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Rusty Shackleford
Joined: 08 May 2008
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| Posted: Thu Sep 10, 2009 10:00 pm Post subject: |
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| Fox wrote: |
| mises wrote: |
| Quote: |
| Are there other negative effects outside of unemployment that you think that warrant an active crusade to abolish minimum wage laws? |
Yes. In the US African Americans are harmed as they are forced to work for a minimum wage while illegals aren't. This places AA's at a disadvantage to Mexicans and others who are able to work for less than the MW. Either you remove illegal labour or you remove the MW for AA's to remove the distortion. It's worth noting that as Mexicans have been returning home African Americans have seen a few months here and there with increasing over all employment levels, despite the depression. |
That's an interesting point. I suppose the proponent of minimum wage laws would say the ideal solution is to enforce illegal immigration laws more strictly, but that's both more difficult and more prone to error than removing the minimum wage. |
http://www.youtube.com/watch?v=7DS0XXFdyfI&eurl=http%3A%2F%2Fblog.mises.org%2Farchives%2F010334.asp&feature=player_embedded
Not entirely relevant. It's a black guy taking about min wage, so it's vaguely relevant. |
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Fox
Joined: 04 Mar 2009
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| Posted: Thu Sep 10, 2009 11:46 pm Post subject: |
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| Rusty Shackleford wrote: |
| Fox wrote: |
| Rusty Shackleford wrote: |
| A firm doesn't really choose to go out of business. They are either run out of business by external factors (competition, govt regs etc) or by internal factor (incompetence, poor pricing structure etc.) |
If a firm is given a choice: raise your prices or go out of business, and it doesn't raise its prices, it is choosing to go out of business. Because minimum wage laws affect their competition as well, it's not as if their competitors are going to simply decide not to comply with the law and gain an advantage. |
They may however decide to replace those workers with capital equipment (where possible). This would mean they could keep prices the same. This would mean less overall jobs. However, no matter what way you cut it, increasing prices benefits nobody. The goal should be to move towards the lowest prices possible. |
I think the "(where possible)" is the most important part of that statement. I'm having a hard time thinking of too many examples where paying a worker $5.15 an hour is reasonable, but if it gets bumped up to $6.00 an hour, you're going to suddenly be forced to replace them with machines.
| Rusty Shackleford wrote: |
| Rusty Shackleford wrote: |
| Rusty Shackleford wrote: |
You said there is "a minimum number of people oen can run a business with in an efficient and effective fashion." This is partly true. But you need to factor in capital equipment. Machines, buildings, tools, computers, desks etc. A better statement would have been
"At a given level of capital equipment there is a minimum number of people oen can run a business with in an efficient and effective fashion"
If the business wanted to expand, (more capital equipment), it would probably need more workers. If labor is more expensive than the firm is willing to pay, it won't expand. |
But, how much the firm is willing to pay is based on the market they're competing in, is it not? If the minimum wage is higher, then goods and services will cost a bit more, and hiring more workers will both cost more and result in greater return on their work (because the goods and services have a higher price). If because of the higher prices people buy less of the goods or services, I can understand why that would limit expansion, but minimum wage involves an increase in wages alongside the increase in prices, so I'm not sure that needs to happen. Yes, people are suddenly paying more for those goods, but they've also got more money to spend. |
A. Higher prices don't equal more profit. If you have raised prices and the costs of doing business, profit stays exactly the same, if not lower as you are now selling less due to the higher price. |
But if the prices go up and wages go up together, I'm not sure why you'd sell less, unless the prices went up more than the wages did?
| Rusty Shackleford wrote: |
| B. Just because the law of supply and demand is suspended for you, doesn't mean it is also for the rest of the world. The fact still stands that in the case of 99% of goods, if they are more expensive, people will buy less. |
But surely expense can only be truly measured relative to one's income. If goods go up 10% in price, and your wages go up 10% in price, they didn't really get more expensive for you at all. Isn't that so?
| Rusty Shackleford wrote: |
| Quote: |
| Rusty Shackleford wrote: |
| Rusty Shackleford wrote: |
| Quote: |
On the other hand, the removal of the minimum wage is unlikely to encourage employers to go above that number; why hire more workers if you've got enough to function perfectly well? You'd do better to lower your prices to attract more customers.
|
| Quote: |
| You would, likely, hire workers instead of installing machines to do the workers work. |
Why would they install machines or hire more workers? If they've all ready got enough workers to operate optimally, I don't think they'd do either. Surely they'd just lower prices to compete better instead of wasting money on machines or workers that they simply don't need. |
You need to produce the product some how. But you can't turn a profit if you lower prices but don't simultaneously increase production. |
If you lower prices, but manage to merely keep production at the same level, it seems to me your profits would still increase. You're producing the same amount, but for less money. |
This is very confusing. You are suggesting that lowering prices means you can produce at a lower cost? I think you had better rethink that one. I assume you're are getting cost and price mixed up. If I lower the price at which I teach, am I making more money? |
You're correct, I responded to your last response too quickly between classes, and misspoke, because your response confused me somewhat and I wasn't thinking well.
My point was this: if we remove the minimum wage, minimum wage jobs will probably experience a wage loss. So now those companies are paying people less for the same jobs. They have several choices:
1) Hire more people without genuinely producing any additional goods and services (such as hiring a few extra unneeded cashiers at a grocery store).
2) Hire more people and attempt to use their greater work force to expand operations.
3) Lower prices.
4) Don't change prices or hire more people and pocket the money.
Surely someone's going to pick #3. Shouldn't that person outcompete other people for customers, and thus essentially force other companies to also lower prices? If so, instead of more jobs, instead we have cheaper products, but also less money in the hands of those lower class minimum wage earners, meaning they have less purchasing power too.
Do you disagree with this? If so, why? |
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