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Politics : Formerly About Advanced Micro Devices
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To: J_F_Shepard who wrote (770185)2/19/2014 6:08:44 PM
From: i-node2 Recommendations

Recommended By
gamesmistress
simplicity

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The answer is simple enough, even for you.

1. If you raise the cost of labor, significant number of jobs will go away because employers around the country will choose to buy automatic potato peelers instead of having minimum wage workers peel potatoes. They will buy automatic drink dispensers instead of having someone stand that and fill drinks for the drive-thru customers. They will have iPads replace order takers.

That is not complicated, right?

2. If you raise the cost of the cost labor, those employers who don't replace workers will be forced to raise prices. The idiotic CJ response would be, "Well EVERYONE has to raise prices, so it is no problem." But it IS a problem. Because it results in a couple of mitigations:

a) Prices go up. Burgers cost more. And the small increase in marginal cost will be just enough to cause a select number of customers to say, "No way. I'm eating at home." Multiplied by thousands of restaurants and millions of employees and many millions of customers, it translates to lost jobs. Probably far more than CBO acknowledged. But still.

b) Prices go up. Customers continue to be willing to pay it because they need or want the product. Those increased costs pass through to consumers, and of course, the people who got the raises are consumers, they have to pay the higher prices themselves (even if another segment of the economy) and so the after-tax benefit is pretty much nothing.

The bottom line is government cannot wave its hands and make people better off with a minimum wage. Some people are going to lose big and the tradeoff is not a good one.
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