The argument I used to believe when I was young but now never do is “if we pay fast food workers 15 an hour, the price of a burger will double in price too”
For reference, minimum wage hourly rate in my state is roughly half of 15 dollars (like it is almost everywhere) so the idea was that doubling minimum wage would double the cost of goods sold.
That doesn’t make any sense. Sure, the cost will rise, but by no means does it mean that the cost will double. There is no economic law or observed rule that conclusively states that an increase in minimum wage equates to a dollar per dollar cost per item. It’s just funny that I used to think that was true until I actually thought about it and realized how little sense it made
Cost won’t rise because cost is determined by what people will pay for it rather than what it costs to produce. Any price rise is based on competition in the local area and whether it will decrease total customers.
As we suppose that no change whatever has taken place either in the productive powers of labour, or in the amount of capital and labour employed, or in the value of the money wherein the values of products are estimated, but only a change in the rate of wages, how could that rise of wages affect the prices of commodities? Only by affecting the actual proportion between the demand for, and the supply of these commodities.
The argument I used to believe when I was young but now never do is “if we pay fast food workers 15 an hour, the price of a burger will double in price too”
For reference, minimum wage hourly rate in my state is roughly half of 15 dollars (like it is almost everywhere) so the idea was that doubling minimum wage would double the cost of goods sold.
That doesn’t make any sense. Sure, the cost will rise, but by no means does it mean that the cost will double. There is no economic law or observed rule that conclusively states that an increase in minimum wage equates to a dollar per dollar cost per item. It’s just funny that I used to think that was true until I actually thought about it and realized how little sense it made
Cost won’t rise because cost is determined by what people will pay for it rather than what it costs to produce. Any price rise is based on competition in the local area and whether it will decrease total customers.
Well, no, it’s a factor but. LTV and all that. Which still doesn’t mean higher wages means higher prices, I think.
LTV isn’t about price.
yeah no i guess i didn’t think it did, was sort of worried you were taking the supply/demand narrative at face value but i’m dumb
Marx on the relationship between wages and prices
https://www.marxists.org/archive/marx/works/1865/value-price-profit/
Makes sense
ahh but you see, this smol bean business owner only sells one borger per employee so the cost has to double
There’s counties with higher minimum wages that also have McDonald’s but their burgers are only slightly more expensive, like under a buck.