A question concerning economics & minimum wage

[MikeRox]

sc94597 said:

Geralt said:
Hi I am an Economics Major going to get my Master's degree.
A high minimum wage can increase the prices of goods but not due to inflation. Inflation only occurs when the money supply increases greater than Real GDP growth.
A higher minimum wage forces firms to higher less workers and sell less product (due to having less workers). Society is at a loss overall with a high minimum wage.
The best way to increase prices is to increase the output of each worker or increase the amount of jobs available to choose from.

 

This! Inflation is caused by the increase in the supply of money by government. Prices increase because the overall willingness to pay for goods increase in addition to the costs of producing goods and services. Minimum wages create unemployement and push unskilled workers to move to states/cities with lower minimum wages. Furthermore a minimum wage would devestate regions with lower average wages but also lower costs of living. Having the same minimum wage for D.C and San Fransisco as rural West Virginia harms West Virginians as it makes jobs less desirable due to lower productivity and less capital accumulation. 

Wouldn't a higher minimum wage mean that companies in that country have increased production costs though? That in itself contributing to inflation?

Though yes on the "rural" area aspect. The Minimum wage in the UK will disproportionately affect lower paid parts of the country. As the lower cost of living in the northern parts of the UK, means that employees are happy having lower wages than the south/London. However if the wages are going to be identical in both parts of the country, it just basically makes it a no brainer to relocate everything to London and the South East.