Noahfecks
El Destructo!
- Location
- Glenwoody Springs, CO
Wage controls, they don't work
For starters, a portion of the working poor are always displaced when wages go up. This means a portion of those you are trying to help go from having a wage, to not having any wage at all. Go tell that guy how you helped him.
Wage inflation, while you may have given the worker a few more bucks in his paycheck, he is actually worse off because the cost of goods raises by more than his pay increase, effectively making him poorer.
Lets say Joe makes $10/hr, and the .gov decides it's going to raise his wage by 10%, he now makes $11/hr because he was lucky enough not to be replaced by a machine that doesn't miss the day after the Superbowl because it's hung over. Joe is a useful idiot so he is psyched because he has more dollars in his pocket. People who make stuff don't do it out of the kindness of their hearts, they expect a return on investment, they have a target number in mind that makes it worth the missed opportunity cost of doing something else. We call it profit margin, lets assume a flat 10% (this is actually a very thin margin, if you don't make 10% you should close your doors and go do something else). The manufacturer of Joe's beer experiences a 10% increase in his labor cost because the .gov mandated that Joe get a raise. The old price of Joe's beer was COGSx1.10%. The manufacturer isn't going to accept a smaller profit margin, after all it's a publicly traded company and the shareholders, people who have retirement accounts invested in mutual funds, demand a constant dividend. The new price of Joe's beer is (COGS+10% labor increase)x1.10%, meaning that Joe got a 10% wage increase but everything he wants to buy went up 11% in price. But Joe is a useful idiot so he will continue to vote for democrats because they keep promising to put more dollars that have less buying power in his pocket. Poor Joe, he should have paid attention in math class.
For starters, a portion of the working poor are always displaced when wages go up. This means a portion of those you are trying to help go from having a wage, to not having any wage at all. Go tell that guy how you helped him.
Wage inflation, while you may have given the worker a few more bucks in his paycheck, he is actually worse off because the cost of goods raises by more than his pay increase, effectively making him poorer.
Lets say Joe makes $10/hr, and the .gov decides it's going to raise his wage by 10%, he now makes $11/hr because he was lucky enough not to be replaced by a machine that doesn't miss the day after the Superbowl because it's hung over. Joe is a useful idiot so he is psyched because he has more dollars in his pocket. People who make stuff don't do it out of the kindness of their hearts, they expect a return on investment, they have a target number in mind that makes it worth the missed opportunity cost of doing something else. We call it profit margin, lets assume a flat 10% (this is actually a very thin margin, if you don't make 10% you should close your doors and go do something else). The manufacturer of Joe's beer experiences a 10% increase in his labor cost because the .gov mandated that Joe get a raise. The old price of Joe's beer was COGSx1.10%. The manufacturer isn't going to accept a smaller profit margin, after all it's a publicly traded company and the shareholders, people who have retirement accounts invested in mutual funds, demand a constant dividend. The new price of Joe's beer is (COGS+10% labor increase)x1.10%, meaning that Joe got a 10% wage increase but everything he wants to buy went up 11% in price. But Joe is a useful idiot so he will continue to vote for democrats because they keep promising to put more dollars that have less buying power in his pocket. Poor Joe, he should have paid attention in math class.
