If you demand a living wage, you're demanding Stalinism

Started Apr 14, 2012 | Discussions thread
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Dave, A "minimum wage" is just another tax
In reply to Chato, Apr 17, 2012

A tax borne by all consumers.

Whenever the government mandates a higher wage, then businesses have no choice but to raise their prices to cover this new expense. There simply isn't enough profit in these businesses to cover this cost from profits. Ultimately, everyone just pays a higher price for the goods and services they pay for.

Having said that, I'm not sure if I agree or disagree with your position. Because one way or the other, the consumers end up paying for everything. We can pay higher prices, and NOT give people food stamps, and perhaps we break even that way.

Or, more likely a modest increase like this will NOT get anyone off food stamps. So we will end up paying both ways.

There are always differences in the prices we pay for things, and those price differences are driven by cost. Last weekend we were up in NYC and I noticed that gasoline cost 50 cents a gallon more than it costs in North Carolina. A cheeseburger and french fries at a diner was $14. Here that would cost around $6.

NYC is in a tough spot, having effectively driven the middle class out to the suburbs due to the high cost of rent and housing. Manhattan has essentially become a two class society. The people who live there are either very well off, or very poor. (Except for Dave, who looks like one of the few middle class types left in Manhattan.

The whole problem with mandating a "living wage" is that $10.50 an hour might be a living wage in Alabama, but it is still a poverty wage in Manhattan. In order to pay someone a "living wage" in NYC, you'd probably have to give them $25 an hour. And that still wouldn't support a family there.

Another big problem is whenever you mandate higher wages, you are forcing any job that can be moved elsewhere... to be moved elsewhere.

There used to be textile workers in NY and New England, but the demand for lower priced clothing moved the industry to the South. And the demand for even lower prices moved the industry to Central America. Even those wages were too high, and the industry has moved to China. Eventually all clothing will be made in sweat shops by child labor in Cambodia. Even the high priced brands will be made by very poorly paid workers.

Another "unintended consequence" of mandating higher prices is it creates more incentive to automate or eliminate jobs. No matter how good your intentions are you just can't repeal the laws of economics. When you make it unprofitable for employers to do business in an area, than employees end up paying the price.

Personally, I think NYC can indeed put conditions on their contractors. If someone doesn't like it they can just stop doing business with NYC. But of course, the consumers will pay 100% of this added cost. And some jobs will be eliminated, and others will be automated as a result.
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