Comment Re:Stupid reasoning. (Score 1) 1094
I love seeing this crap in American articles. "Oh Noes! If we pay people more, it will cost businesses more!"
The reason that business costs are lamented is because those costs represent the scarce resources with alternative uses that businesses must use in order to deliver their products. If a business's costs go up then there are a number of things that happen, all of them bad. All else being equal, this means that less of the resource will be used. Thirty years ago this was an uncontroversial tenet, with about 95% of economists holding it. Now, since the Card and Krueger study, it's slightly more controversial, with only 85% of economists holding it. The Card and Krueger study, and subsequent studies, are fatally flawed, and I'm happy to discuss that with you if you wish. (Note, there are rare exceptions to this. Those exceptions are called abnormal goods, of which the potato during the Irish Potato Famine is the most notable.)
To put it simply, if the price of labor is increased then less of it will be used. That means that after a minimum wage increase, assuming the minimum wage is greater than where wages would be if allowed to move freely, more people will be unemployed than there would be in the absence of the minimum wage increase.
Lets look at this for a second.... Who are a businesses customers? Hint: It's the people who get paid a wage.
Some are. Of course, others aren't. Some customers are living on a fixed wage, such as a pension or off of their savings, or from dividends. Some are people who earn more than the minimum wage, either before or after the change. Some customers are on food stamps. Some customers have income to which minimum wage minimums don't apply. (This often happens for small businesses.) It's wildly oversimplifying to say that a business paying minimum wage has customers who all earn minimum wage.
These people get more money, more businesses get more customers. More customers mean more sales.
You would need to make that case. An alternative is that businesses go out of business, so minimum wage earners don't earn any wage, and the former businesses stop making product. Another alternative is that the prices of the businesses goods go up sufficiently to consume the entirety, or more, of the wage increase. Another alternative is that the minimum wage earners save the additional proceeds. Another alternative is that the earners fail to qualify for government largesse after the minimum wage increase, and subsequently have less money to spend.
More sales means more profits.
You remind me of a passage in Robert Heinlein's The Moon is a Harsh Mistress. In it, the protagonist remarked that it appeared as though China-men could make a profit starting business in craters on the moon selling rocks to each other and raise large families doing so. They could sell at a loss and make up the difference through volume. More sales means more profits, all else being equal. Of course, one change often begets another, and all else is seldom equal.
~Loyal