Reply #23: We have relatively high unemployment [View All]

[Nikia]

I suppose that in some areas there may be a shortage of people wanting to take low wage jobs. In most markets raising the wage at a fast food place from minimum wage to $7 or $8 is enough to attract workers who may have been out of work for a while. Although such jobs are more labor cost dependent than the manufacture of high priced items like cars, demand for fast food at peak times tends to be high and the company needs the workers to fill that demand and will lose money if they are not able to serve a customer within 2 minutes of ordering during a lunch rush. They may or may not raise the price a little, but people will come there regardless.
I do see the problem of raising wages if it means that prices will go up. The price we pay for low prices is low wages for someone. I think that relative income inequality is as much of a problem though. As someone pointed out, a person making less will be more affected by a rise in the price of jeans. A person making a lot of money will buy the jeans regardless (within reason, of course). If you have worked in any restuarant or low to midpriced retail establishment, you can observe the difference. Some people are concerned about pennies of price difference while to others money is of no concern. While some difference has to do with attitudes about money, most of the difference has to do with income. For relative buying power, we would be much better off if everyone made the same amount of money. The bigger the difference in income, the more likely that people at the lowest end will not have any disposable income and people in the middle will be worrying about pennies (or a few dollars for higher priced items).