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Thursday, March 13, 2014

"MINIMUM WAGE MYTHS..." 'Douglas Dunn' (Guest-blogger)

Guest blogger Douglas Dunn  is a regular commenter and guest-blogger on dakinetalk... Doug runs a small publishing consulting business in San Diego county and is a  certified American sign language (ASL) interpreter (for Deaf people),  last but not least he has been a Democratic Party media spokesperson and has had  the good fortune to work with Hillary Clinton and Barack Obama. Doug also drives a Nissan Leaf !
Doug drives  a Nissan Leaf electric car and  is doing his part to help save the planet along with
saving quite a few dollars by never ever having to purchase gas , ever!
Doug with President Obama back in
2007 at the California Democratic Convention

Editor's note, Doug is debating dakinetalk  blog of 03-06-14;
"Minimum wage increase,It's a bust..."


The two arguments most commonly used by conservatives against raising the minimum wage are that it would cause inflation (the cost of labor being passed on to consumers) and that it would reduce employment. Both have been totally debunked by actual economists in economic journals when not funded by the fast-food industry.

As to inflation:

Consumer PRICE is not based on the cost of goods. That is a myth promoted by those who want to scare consumers into supporting lower wages to workers. PRICE is set at the intersection of SUPPLY and DEMAND. At best, cost of goods is one indirect component of SUPPLY.

They can't just "pass the costs along" — they can't sell for more than is allowed by DEMAND — "what the market will bear."

PRICE is NEVER based on cost. People produce stuff they can't sell all the time, and end up selling it at a loss (think about how real estate goes "under water" or what a "short sale" means). New Balance athletic shoes are better quality, MADE IN AMERICA with American wages at higher costs, but sell for a LOWER PRICE than Nike, which is a poorer quality and cheaper (slave labor) production costs, but has more consumer demand because they have better marketing PR. From 1955 to 1975, McDonald's repeatedly complied with numerous significant increases in the minimum wage (which brought it to almost $20/hr in inflation-adjusted equivalent today), yet the price of a basic McDonald’s hamburger, in that entire 20-year period, stayed completely constant at a flat 19¢ — no price increase at all.

And, yes, even IF you passed along the costs, which doesn't actually happen, because compensation to low wage workers is only a fraction of operating costs, the actual price increase if the entire cost were passed along to consumers, which has never occurred in the past, the actual increase would be extremely small.

By the way, how come conservatives who are so concerned about raising wages for the poorest workers are never concerned about the effect on consumer price of waging CEO compensation?

As long as goods are still profitable, even if the margin is diminished, the supply will continue and the price still cannot exceed what the market will bear.

Example: Minimum wage in New York City is $7.25 / hr. Minimum wage in San Francisco is $10.55 / hr — $3.30 per hour higher. Yet a Big Mac in San Francisco does not cost more than in New York City. It is still about the interplay between SUPPLY and DEMAND.

As to causing higher unemployment:

The conservative MYTH that minimum wages reduce employment (because of the supply/demand dynamic they were so quick to overlook in discussing consumer prices), in that if you raise the cost of something, you will have less of it; ergo, raise the cost of labor and you will have less of it.

This myth has been utterly debunked by replicated university studies (and I have the specific references for anyone who wants them) that were NOT funded by the fast-food industry.

Yes, labor is an economic commodity, and raising the price should theoretically reduce the supply, BUT only in a simplistic, myopic, one-dimensional conservative world lacking nuance.

In the reality, what real-world studies have proven, is that LABOR is PEOPLE (duh!) — and the WORKERS who make up the "commodity" element of labor play MULTIPLE roles in the economy; they are multi-dimensional, and it is more complex than simplistic CONs understand. WORKERS are also CONSUMERS, and when they have more money in their pockets, they increase DEMAND, which requires more supply of goods and services, and to satisfy that DEMAND, and produce that SUPPLY, more workers need to be hired, and EMPLOYMENT IS INCREASED. Business owners do not hire teenagers out of the goodness of their hearts because they just love young people or because they have extra money burning a hole in their pockets. They hire exactly the fewest number of workers they need to meet consumer demand. So when consumer demand goes up, so does hiring, even if the profit margin for the employer is narrower. As long as there is one, it will go up.

But NO ONE WILL BE HIRED if no one can afford to buy what no one is making thus resulting in no demand.

And the conservatives only point to the economic cost of low wage workers, never to CEO compensation nor do they explain why CEO's or shareholders should pay LOWER tax rates on their higher incomes.

The opinions, beliefs and viewpoints expressed by the various authors and forum participants on this blog site do not necessarily reflect the opinions, beliefs and viewpoints of the publisher of Dakinetalk the blog, but they could?

If you would like to express yourself about any subject you feel passionate about, please  feel free to submit a guest blog to dakinetalk. Please limit guest blogs between 200-500 words, along with a short bio and photo of yourself. Send all blog submissions to; jrsensei@hotmail.com  who knows your blog could go viral!

Hana Hou, (Encore) Shard From Facebook...


KimoRosen said...

A higher minimum wage will only increase the cost of everything, so what's the point?

I see both sides, but do know there are always people who need to make less to balance the system.

Francine Grace said...

Maybe they should try living on minimum wage for a year; bet they'd change their tune pretty quick!!

Douglas Dunn said...

Kimo — as my guest commentary documents, a broad base of objective evidence makes clear that there is NO historical basis for concluding that raising the minimum wage either increases consumer prices or exerts net downward pressure on employment.

I stand by what is stated, with support, in the commentary, but thank you for allowing me to express a dissenting view. (While our views more often agree, seems in this case we look at the facts and come to differing conclusions.)

KimoRosen said...

Doug, you are always welcome to guest-blog, if we don't agree on everything, so be it, that's what makes blogging fun!

Deborah Morel said...

So, that's Douglas Dunn! Finally, we meet. Nice story, no doubt. Will read it when I get home from work.

KimoRosen said...

D- Doug has guest blogged 5-6 times, you can look him up on dakinetalk's internal search engine located on any dakinetalk blog. He has a classic blog I run every year at Christmas time. If you have never read it, it's a real classic, like "it's a wonderful life and Wizard of OZ! "http://dakinetalk.blogspot.com/.../the-truth-about-santa...

KimoRosen said...

And to Doug, Deborah has also guest blogged numerous times, she had one of the most viewed dakinetalk blogs of all time, with her blog titled, "Christopher Deedy & Chronicle's of Racism in the 50th State " I thank both Deborah and Doug for their awesome contributions to my blog, making me seem more intelligent because of thier writing skills and subject matter.! http://dakinetalk.blogspot.com/.../christopher-deedy...

Francine Grace said...

Having worked in several places that do Western Union.....go there on any given payday and watch how much money is sent to foreign soils. This occurs with people employed on the island, as well as Cruise ship employees. I see that contributing to part of the problem with the economy.
If the money is earned from legit jobs, then yes the economy benefits from their tax withholdings....but for those 'cash jobs' (yeah, we all know it's happening); money that would normally be spent locally doesn't benefit our local economy, when the money is sent elsewhere.

KimoRosen said...

Great point Francine, where you working now?

Deborah Morel said...

"...making me seem more intelligent because of their writing skills and subject matter!" That's funny Kimo. Thank you for the kudos. Run for county council, win, and I can write stories about you! Now, that would be interesting.

KimoRosen said...

D-it's true, both you and Doug have a way with words. which when guest-blogging on my blog reflects on me in a positive and intelligent light!