On Tue, 4 Aug 2015 14:10:41 -0700 (PDT), "
wrote:

On Tuesday, August 4, 2015 at 2:41:02 PM UTC-4, Ed Huntress wrote:



Total wage/salary labor runs from 18% of operating costs
(retail/wholesale trade) to 52% (healthcare). I averages under 30%
across the economy. Don't confuse this with "total workforce costs,"
which include hiring/replacement costs and many other factors that
have nothing to do with workers' salaries or wages.

Meantime, roughly 4.3% of US workers make minimum wage or less. So,
you double their wages, you're looking at 0.043 x 0.30, or roughly
1.3% increase in total operating costs.

Only if you use the simplest sort of reasoning. Doubling the minimum wage will mean that those who earn a little above the minimum wage will get raises so the still earn a little above minimum wage.

Probably true. You can add 2.7 million to the 3.3 million if you want
to include those who make between minimum and $10.10 (which is the
realistic figure, if it comes to a federal minimum). The number is
still absurdly small -- you're up around 2% with your addition -- if
you consider it to be support for your point.

You do want to hire the best employees. So you have to pay a bit above the minimum wage to be able to select those that come to work as scheduled , etc. So your analysis is WRONG.

Here's where that argument breaks down:

If you're paying the minimum wage and you want to be able to select
the better employees, you pay them more. If the minimum wage is
increased, you still have to pay those same employees more.

The proportions of who is paid minimum, versus more, remains the same.
The numbers of people involved are the same. So the numbers and
proportions who are paid minimum or more does not change. The effect
is the same; any increase in labor costs that result from paying more
for good employees, now, will be the same as those that result from
paying more for good employees when the minimum wage is increased.

Net zero.



That does not include capital costs, which vary by industry, but which
can be high, and which further diminish the effect on costs of
doubling the minimum wage.

Capital costs are things as buildings. Well guess what carpenters will get more money if the minimum wage is increased. So capital costs will be higher.

The total number of construction workers who make minimum wage or less
is 37,000, says the Labor Dept. That's 0.8% of total paid hourly
employees in construction. Dan, get serious.

http://tinyurl.com/nr6dj63 (page 8)



So what do you get by doubling the minimum wage? A cost effect that is
somewhere between 1% and 1.3% to the economy. Meantime, you've
increased the purchasing power of 3.3 million workers and reduced the
burden on social services (especially food stamps) that they
represent.

Your simple analysis fails to recognize that raising the minimum wage raises all labor costs.

It doesn't. It only raises costs for 4.3% of workers. You can look at
average labor rates across the economy, and see what happens to total
labor costs when you double the rate on the lowest 4.3%. The amount is
trivial.



How does it come out in the wash, in straight economic terms and
disregarding the sociel effects? You tell me. I don't know. Nobody
knows. There are commissions made up of reputable economists trying to
figure it out. And if anyone tells you that he knows, there's only one
thing that YOU will know: That he's full of ****.


And anyone that says raising the minimum wage will only affect those that make the minimum wage are also full of ****.

See above.

Either that or everything I learned in economics is false.

No comment. g

--
Ed Huntress