Quote:
Originally Posted by iggy_oi
I think you are both looking at this from a different perspective than what I was referring to. I was talking about the minimum wage increase and how one poster claimed it was printing money. What it actually does (or at least the intent of it) is it takes money that would go towards a companies profits and puts it in the hands of workers who are also consumers.
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It also strongly incents companies to use fewer minimum wage workers in favour of more efficient ones or automated replacements (as I outlined in another thread using my company as an example).
Take for analogy the concept of a carbon tax.
The idea is we increase the cost of carbon-intensive goods and services by, say, 20% and that will lead to an increase in efficiency of some kind and a migration of spending (capital) away from carbon-intensive goods and services to less carbon-intensive ones. Makes sense to me. The taxpayer as a collective could be mostly made whole through rebates and whatnot (barring the cost lost to collect and then redistribute) while individuals who live more sparingly will be better off and those who waste more will be worse off, and some will muddle by in the middle with a lower standard of living due to increased costs that they don't do much about. The same pressure would be applied to companies and utilities to decrease their carbon footprint - the efficient ones (and industries) will do better, some will muddle by, some marginal businesses and industries will go out of business.
What I can't get is why someone who accepts the carbon tax logic outlined above, does not see that there will be pressure to reduce minimum wage labour when the cost of that low-value labour increases by 47% ($10.20 in 2014 to $15.00 in a couple years).
Businesses will not accept a loss in profits to accept more expensive labour on a one-to-one basis. The winning businesses will become more efficient in terms of consumption of that labour (i.e. will automate and/or focus the hours on the higher performers while turfing the low performers), some will muddle by with reduced profits and some combination of labour consumption reduction and the losers will eat the costs with many going out of business.
There will increased spending power from a number of people making up to 47% more than before. This will be offset by a bunch of people making 100% less as their jobs cease to exist through automation and cuts in hours, or their industries shipped overseas. The question is whether the winners will offset the losers or not, but there will be people (and companies and industries) in both camps.