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Comment: Re:Curious... (Score 1) 1063

by Alioth (#49734451) Attached to: Los Angeles Raises Minimum Wage To $15 an Hour

Raising minimum wage *past a certain point* won't help anyone. If you've ever done basic calculus you will have come across the concept of oprimization - in the abstract for instance, finding where the derivative of a function that's some sort of concave-down curve crosses zero.

The minimum wage will be like that. If you graphed the spending power of the minimum wage people (their income minus their expenses) it will probably be some kind of curve. Starting from zero, the graph will slope upwards, until you hit a peak, and then it will slope downwards as the increased labour cost exceeds the benefit of higher wages.

We are probably somewhere to the left of this optimal point. The increase LA is making probably will move people closer to the optimal point. Increasing the minimum wage to $100/hr will move you to a point far to the right of the point at which the first derivative of the graph crosses zero.

Comment: Re:Consumer Price Index (Score 1) 1063

by Alioth (#49734249) Attached to: Los Angeles Raises Minimum Wage To $15 an Hour

That assumes 100% of the cost of a product is labour costs.

In reality this is not true. In your example, the wage might go from $60/day to $120/day, but the product will go from $60 before to $80 after. Competition will mean many businesses take lower profits rather than pass on the entire price increase, and virtually no products are 100% labour cost. While wages cannot be raised infinitely, there will be an optimal point, and I suspect we are well below that optimal point as other cities have already demonstrated.

Comment: Re:Stupid reasoning. (Score 1) 1063

by Alioth (#49734233) Attached to: Los Angeles Raises Minimum Wage To $15 an Hour

Only if 100% of that product's cost is labour.

In reality this is rarely true, and competition means that businesses often can't pass on all of the cost increase - what it'll mean is businesses will make a little less profit, prices will increase by less than the increase in the minimum wage, and more people will have some sort of disposable income they can now spend on discretionary items. So sales increase.

Certainly you can't raise wages infinitely, and at some point you'll hit a peak, but I suspect we are a long way below that peak.

"Pascal is Pascal is Pascal is dog meat." -- M. Devine and P. Larson, Computer Science 340

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