PeakTrader.com

[administrator]

PeakTrader:

Low costs, competition, and productivity are good for producers and consumers. We want “lean and mean” firms, and want lower prices.

Of course, a $15 minimum wage won’t stop firms from becoming “lean and mean,” and the higher wage will reduce other production costs, e.g. the extensive and enormous costs of turnover.

Moreover, real wages for low income workers will rise more than real wages for high income workers will fall, through higher prices (note, the Fed has been trying to inflate the economy, because raising nominal growth raises real growth).

A $15 minimum wage will not only give a raise to minimum wage workers, it’ll give a raise to all workers earning between the minimum wage and $15 an hour. Moreover, it'll likely raise wages for workers earning over $15 an hour, perhaps up to $25 an hour.

The (positive) income and multiplier effects may be stronger than the (negative) employment effect, up to a $15 national minimum wage, and the minimum wage can be higher in some parts of the country.

However, we also need to deregulate some of the $2 trillion a year in federal regulations, which are generally regressive, raise prices, lower real wages, and have yet to be absorbed in the economy, along with removing and reducing some state regulations. Furthermore, reducing tax rates for the “middle class” will boost consumption, output, and employment to raise tax revenue.

The higher minimum wage can allow all workers to pay some income taxes, to make fiscal policy more effective, i.e. raising tax rates when economic growth is strong and reducing tax rates when economic growth is weak, to more effectively achieve a more sustainable growth rate. Economic boom/bust cycles are inefficient both in the boom and bust phases, because of periods of strain and slack.

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Also, I may add, profit is the result of efficiencies in the (competitive) free market. Every firm should maximize profit. Well managed firms should win and poorly managed firms should lose.

Firms should maximize profits (legally, of course, and on a level playing field) whether the minimum wage is $7.25 or $15.

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