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To: comitatus
What most people don't realize is that minimum wages just drive up the cost, so the people being paid are no better off than they were before the raise. The people that don't raise prices to cover the minimum wage just fire some of their staff, or don't new ones when someone quits.

Minimum wages are unconstitutional and should have been stopped long ago.

56 posted on 11/24/2009 6:38:59 AM PST by calex59
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To: calex59

The way I explain it (in simplified form) to people who don’t understand the concept of price floors goes like this:

Suppose you are a business owner and you can afford to pay $20/hour for unskilled labor. With minimum wage at $5/hour, you can afford to give 4 people jobs, each being better off than not being employed. Plus, it gives you the ability to produce more, opening the possibility of both production and job growth in the future. Then, the government tells you that you must now pay each employee $8/hour.

You now have two options, but both require cutting at least one person. You can choose to take a hit, increase your labor overhead by 20%, pay $24/hour and lay off one person only. This option relies mostly upon your benevolence (as the evil capitalist). A businessman would only choose this option if his return on labor is greater than the 20% cost of labor, which is unlikely.

The second option requires you to lay off two people. By doing this you save 20% of you labor overhead, but lose the most amount of production/service capability. You require your remaining employees to become more productive, which may or may not be possible.

In both scenarios, everyone loses after the government gets involved. Production capability is decreased, overall wage payment decreases, and income tax revenue decreases, both on personal and business income. The government is stupid.


63 posted on 11/24/2009 7:38:17 AM PST by Skenderbej (People need to learn that no muhammadan practices his religion peacefully.)
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