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sundin13 on 06 June 2020
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Ka-pi96 said:
sundin13 said:

This is going a bit off topic, but I've always felt like this argument didn't make much sense. When you look at all of the things which contribute to the cost of an item, labor costs make up a small portion of it. There is also ingredient/goods costs and overheads to consider. There is also the consideration that minimum wage increases do not apply to every worker, so you are not seeing a 10% increase in overall wage costs when you increase the minimum wage 10%.

As such, the data that I've found indicated that a 10% increase of minimum wage tends to increase cost of goods by about 0.4% (some studies find it to be higher for food service/fast food, but still not anywhere close to 10%). That means the people who see their wages increased 10% get a significant increase in buying power while everyone else gets a very minor decrease in buying power.

https://www.upjohn.org/research-highlights/does-increasing-minimum-wage-lead-higher-prices

"By looking at changes in restaurant food pricing during the period of 1978–2015, MacDonald and Nilsson find that prices rose by just 0.36 percent for every 10 percent increase in the minimum wage, which is only about half the size reported in previous studies. They also observe that small minimum wage increases do not lead to higher prices and may actually reduce prices. Furthermore, it is also possible that small minimum wage increases could lead to increased employment in low-wage labor markets."

I did say "meaningful pay increases" though. I'm sure smaller amounts would be easy (as long as CEOs are willing to temper their greed for "ALL THE MONEY" a little bit. But is a 10% increase really that meaningful?

Sorry, I don't think I was entirely clear. 10% is just an interval not a ceiling. This is discussing what happens for every 10% increase in minimum wage. That means if you increase minimum wage 10% you increase costs ~0.4%, which continues to roughly 20%:0.8%; 30%:1.2% etc.

That said, an ~$0.80/hour increase would be an increase in $1664/year for a full time job which could very much be a meaningful increase for someone making ~$16k/year.