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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: Peter Dierks who wrote (56124)	9/20/2012 12:48:25 PM
From: TimF	1 Recommendation Read Replies (1) \| Respond to of 71588

Obviously in your example an increase from 170,000 cars sold to 184,000 as a result of every employee buying one is a far sight from the 500,000 cars they grew to as a result of efficiencies. Also, employees can't buy a new car every year. And its not even that. That assumption (14k new customers) assumed everyone who gets the raise buys the car, but that if they didn't get the raise none of them would. Combine that with the fact that they don't buy a car every year and you might get an increase in sales of about 500 a year (give or take a lot, there is no precision here at all), or about one part in 1000 of the later large number of sales, in exchange for a near doubling of employee costs. The "pay the employees more and the economy will boom" idea is a long term talking point on the left. Its one of the reasons they think (or at least claim) that minimum wages and active unions are such "a good idea" (they primarily focus on "fairness", but they also often argue that there is an overall gain, not just a redistribution). Obama is just going along with this idea, whether from sincere but ignorant belief, or whether from pandering, I don't know. - Near doubling is from "what the cost otherwise would have been at the end, not from the initial level. "From the initial level" is a more complex issue, and one that I don't have the information needed to calculate, and one that is probably less important. And its a near doubling, rather than doubling, because even then (and much more so now, with payroll taxes, employer provided health care, employer matches on 401Ks, more regulation etc.), cash compensation to employees is less than the cost of the employer to the company, and the other costs wouldn't double when you increase wages.