Nadine -
But you still haven't shown that any jobs will be lost.
Labor is a cost component like anything else. If a business uses copper to make its product, and copper prices rise 20%, they might pass along the increase, or eat the cost, or use less copper. The third option is equivalent to cutting jobs; in the first two options, no jobs would be lost. What option they would actually choose depends on the market. So what makes you think that, for example, raising the minimum wage to match it to the 1973 minimum wage, adjusted for inflation, would cost jobs?
There is some number for the minimum wage which will be low enough to have no effect and there is another number that will be high enough that so that every job subject to it will be destroyed. An inflation corrected 1973 minimum wage, whatever it is, falls somewhere in between with an intermediate effect.
It seems clear that there wouldn't be a big political push for an increased minimum wage increase to a level which didn't affect anyone, so it seems fair to assume that at least some real labor costs will be increased.
In an economy as large and diverse as the US, your three choices of response to an increase in costs would all be implemented somewhere to some degree, even sometimes with all three responses implemented by a single employer. Note that even your 20% increase in the price of copper will result in job losses if demand is reduced by passing through cost increases or if marginal producers become loss-making operations and go out of business. Or job losses will occur if companies are forced to invest in capital equipment to increase productivity to stay in business, if they can't increase the size of their market.
Regards, Don |
