The good news is that, to take one of your examples, while the minimum wage does have a small effect on prices, the inflationary effect seems to be vanishingly tiny compared to the actual wage rise offered. (PDF link) https://mitsloan.mit.edu/shared/ods/documents/?PublicationDo...
Minimum wage used to be adjusted for inflation. That hasn't happened in decades. Its past time.
And its a myth that prices go up according to minimum wage. In truth its a very weak influence on inflation. Prices will probably not change much at all. Our entire economy does not depend on what we pay the lowest earners.
> 1) the minimum wage doesn't get increased with inflation
Sure it does. It's pretty much unchanged since 1980 (in a sawtooth, they build up some pressure due to inflation and then it jumps up due to legislation).
I think it's interesting that minimum wage has to be raised like clock-work. It's like inflation is out-pacing wages -- which seems like another failed implementation of price control (interest rates).
Are you suggesting that raising the minimum wage will increase inflation? That seems theoretically plausible to me, I suppose, but I haven't seen any evidence for it happening in practice. We have had plenty of natural experiments where one region has raised the minimum wage while its neighbours have not. Do you have any information about what happened to inflation in those cases?
I am entirely convinced that an increase to the minimum wage (perhaps not as high as $15/hr) will have no major effect on employment. That idea is contradicted by all the empirical evidence we have. I have not seen enough evidence to draw a conclusion on inflation.
Raising minimum wages and inflation are very, very different. It affects the lower end of the income spectrum in a very disproportionate way, and does not cause an equivalent raise in prices, there is an entire universe of other economic factors at play.
I mostly wanted to point out the incongruity in your putting down of the article/author, when your argument is based on superficial assumptions.
This is an empirical question (if raising minimum wage effects inflation) so what you expect in terms of inflation doesn't really matter. This isn't a philosophy question where you can imagine the answer and get a best in class result.
Since 2009 people on the Internet have been prophesizing about massive inflation and inflation has been extremely low.
Maybe they will one day be right, but like the boy who cried wolf nobody should be listening to warnings about inflation from people on the internet, as a class they don't have any idea what they are talking about.
Raising the minimum wage allows for a (very) short term benefit, but in the medium and long run, it drives inflation up. The minimum wage and inflation are effectively proportional.
I'm surprised we haven't heard more arguments for raising the minimum wage over the last few years. The main argument against it is that it leads to inflation, but inflation has been the least of our worries recently.
If that was true why is there so much resistance to increasing the minimum wage in the US? Inflation has primarily been driven by increased commodity prices, inflated corporate profits and real estate being treated as an investment asset, wages are a pretty small chunk of that.
Note that jobs paying exactly minimum wage are bundled into the "low" graph before the change but into the "high" graph after the change. I'd like to see an uncooked graph.
Just the chart/image: https://theintercept.imgix.net/wp-uploads/sites/1/2021/03/mi...
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