First oil, then rice and wheat, and now the cost of hiring low-skilled labor is up by 12% in just one day. Shocking.
Hat tip to Don Boudreaux.
More Inflation
Previous post: New constitutional amendments?
Our Books
Modern Principles of Economics
Launching The Innovation Renaissance
The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will(Eventually) Feel Better
Create Your Own Economy: The Path to Prosperity in a Disordered World
Discover Your Inner Economist
Good and Plenty: The Creative Successes of American Arts Funding
Judge and Jury: American Tort Law on Trial
Markets and Cultural Voices: Liberty vs. Power in the Lives of Mexican Amate Painters (Economics, Cognition, and Society)
The Voluntary City: Choice, Community, and Civil Society (Economics, Cognition, and Society)
Creative Destruction: How Globalization Is Changing the World's Cultures
Changing the Guard: Private Prisons and the Control of Crime
What Price Fame?
In Praise of Commercial Culture
Entrepreneurial Economics: Bright Ideas from the Dismal Science
Contact Us
I fell this one is a necessary inflation. It had stayed 5.15 for over a decade when all other prices went up. Its not shocking, its a good move.
please. with rational expectations, the effect of this increase has already been felt at the time of the legislation. there is no new information here. inflation will not increase because of this anticipated increase in wages. unless you are advocate of (very) sticky prices. or perhaps you like mankiw, reis – sticky information, which is a nice model, but much less plausible in a scenario like this with a well-known government-mandated wage increase. or maybe the rational expectations assumption is greatly violated. i’ll not go there in this comment… but i sympathize.
I remember when my wife managed a pizza restaurant for the owner. The owner staunchly refused to pay more than the federal minimum wage, even though the average entry wage in that city was higher than the minimum. She tried, but could not convince the owner to pay more. Thus, she was only able to hire those who had been fired elsewhere. Her job became much easier (and the quality of the product increased) after she was able to higher a better class of worker.
It is no surprise that the teen unemployment rate is up so much this summer. I hear the McDonald’s near
me hired 1 less person this summer and expected everyone else to work 12% harder. Go figure.
At a magnanimous $6.55 per hour, the recipients will not be likely to experience much in the way of wage competition from many CEO applicants. Are you looking to apply for one of these jobs?
Plus, this is not a sudden price or inflationary rise, but a planned government intervention.
While it may sound like illegals are less expensive than minimum wage workers, that is not the case. Once you load in Taxes and Insurance for your minimum wage workers cost you well over 10/hr.
Of course, YMMV.
Yes, but TFA says that he rate had been unchanged for over 10 years. What cost $5.15 in 1997 would cost $6.74 in 2007. So really the minimum wage is lagging behind the inflation rate and even with the current increase is lower than it was the last time it was raised.
@Marcus: “Once you load in Taxes and Insurance for your minimum wage workers cost you well over 10/hr.” But those taxes pay for things we like to have. If you don’t like taxes, move to a third world country. Lower taxes, less regulation. You’ll love it there!
If you don’t like taxes, move to a third world country. Lower taxes, less regulation.
You should take a peek at the World Bank’s Doing Busines Report–it shows regulatory burdens across countries (measured as # of procedures required to open a business, # of days the procedures require, and license costs as a pct of per capita income). The findings show that in many third world countries there are extremely burdensome regulations.
David,
That may be true, but virtually zero of the taxes anyone pays actually benefits him/her in particular. Paying $1 more in taxes may conceivably provide everyone as a whole with $1 (or more) of public goods, but that gets shared over a lot of people. I hate to be pedantic, but if it were true that you should ignore the cost of taxes when making your decisions, then we don’t need to levy taxes, as people would pay the same amount voluntarily.
P. Blank,
This statement is not correct: “Don’t confuse price increases with inflation. Increases in price are a RESULT of inflation, not inflation itself.”
Actually, the rate of inflation is *defined* as a percentage change in prices, typically some summary measure of a number of prices, such as the CPI Index. It’s simply a matter of definition. And in fact, a change in the overall level of prices, the rate of inflation, are generated by supply and demand (whether those two things are manipulated by governments, or otherwise). Though your’s is an easy mistake to make; in fact, the causes and cost of inflation are poorly explained, if ever explained, in the popular press.
Her job became much easier (and the quality of the product increased) after she was able to higher a better class of worker.
But what about those crappy worekers who worked there before? Either A) they’re now unemployed, or B) they’re working in other places, sonme of which used to pay slightly above minimum wage. A) isn’t good, obviously, if the minimum wage increase causes unemployment. B) isn’t good either, not for your wife’s employer or those other businesses. The pizza restaurant owner is worse off because he is now being forced to pay a premium for better workers. Yeah, the food might be better now, but the owner would have rather sold crappy food for a lower cost. The other businesses that used to pay slightly above minimum wage are worse off because even though they’re paying the same wages as before, their workers got worse.
Since it’s probably a combination of A) and B), this means almost everyone is worse off: for a wage increase of crappy workers, some other crappy workers are now unemployed, minimum wage hirers are forced to pay higher salaries, slightly above minimum wage hirers are getting worse workers, and consumers get higher prices.
the minimum wage is dumb. Its irrelevant in high cost areas, where wages are already higher. It creates unemployment and encourages illegal labor elsewhere.
Its an abdication of financial responsibility as well. Lets help the lowest earners by forcing someone to give them money they haven’t earned. At least when the government pays, the cost is distributed to all taxpayers (ok, to future generations because we’d be borrowing as usual)
I noted the comment by Jay about unemployment being higher for young people because of basically an increase in the minimum wage leading MacDonald (!!!) to employ less people… HOW RIDICULOUS!! Let’s cry for MacDonalds, don’t we, if they had to cut their precious profits to contribute to a small improvement in their workers’ life.. It is MacDonald that should be put on the spot for refusing what I consider still a poverty wage to its workers. Without them.. there is NO PROFIT at all MacDonald… I live in the UK and I am French…staff MacDonalds
Flyff gold
flyff Penya
flyff money
buy flyff penya
cheap flyff penya
cheap flyff gold
Is it realistic?
Comments on this entry are closed.