Is Raising the Minimum Wage a Tax on the Middle Class?

[alcibiades_mystery]

Whenever somebody says we should raise the minimum wage, the corporate interests and their media cronies immediately start bleating that the 'costs will simply be passed on to consumers." It is the oldest argument in the book, and it is almost always lodged whenever the people seek to develop fees for making things right in businesses. So now we hear that the fees to be levied on banks will "simply be passed off on to consumers," and some are even suggesting that this is some kind of secret tax on the middle class!

Are we that gullible here?

Do we aim for consistency?

Because if you oppose the bank fee simply on the basis of this claim that "costs will be passed on to consumers" (and therefore constitutes a "hidden tax"), you should oppose minimum wage increases for the same damn reason, since the same bleating and threats pop up there.

Unless you're just a fucking liar, and make up shit to smear the administration all day long, even going so far as to use the lamest business-interest logic as your premise.

[MannyGoldstein]

1. At The Very Least, An Increased Minimum Wage Goes Back To The Lower and Middle Classes

The bank tax will go back to bankers, based on what we've seen.

The big picture is more complex - banks are much more like monopolies than are businesses in general, so the economics are different than a minimum wage increase.

[alcibiades_mystery]

2. Jeez.

Nonsense #1: "The bank tax will go back to bankers, based on what we've seen." Prove.

Nonsense #2: "banks are much more like monopolies than are businesses in general, so the economics are different than a minimum wage increase." Actually, the vast majority of customers for the limited number of banks to which the fee applies can easily walk away to non-fee banks. This functions, in fact, LESS as a "monopoly" operation than an across the board minimum wage increase, from which there would be no exit move on the part of consumers, supposing we even believe the usual threats of passed on costs.

You say "the big picture is more complex" as part of your unending game to present yourself as an expert. Well expert away with some actual arguments instead of pretending that saying something is "complex" is sufficient to make a point.

[MannyGoldstein]

12. As To 1: $25 Trillion To Back Bankers So Far

And, on Christmas eve, Obama signed a bill pledging unlimited support for Fannie Mae and Freddie Mac - has he done that for mortgage holders or credit card debtors?

As to 2. - it's complicated to explain because it's statistical, but here's a start: The short story is that the closer things are to being monopolies, the more they can and do act like monopolies. And I think you know why monopolies are bad.

[alcibiades_mystery]

16. Your answer to #1

remains unsupported, and largely nonsensical, confusing unlikely pledges with actual payout, and refusing to deduct paybacks (which you already falsely argue are not actually paybacks elsewhere), and certainly fails the test for your initial response. You're just spouting talking points.

As for #2, I know perfectly well what a monopoly is, and you still haven't answered my question. Your further dodge (oh, it's all these complex statistics, and so on) is laughable. We're all grown ups here: if you have an argument, make it. My guess is that you don't know what the fuck you're talking about, which you hide by pretending that the explication of your point would be too complicated for your interlocutors. It's a sophomoric move. Lay out your argument. Don't worry about scaring me with statistics. I'm a big boy. And don't go proving some unrelated point. Stick to the discussion.

[hfojvt]

21. booga booga booga!

http://journals.democraticunderground.com/hfojvt/99

Not really germaine to the argument. Just thought I'd try to scare you with statistics. Or at least numbers.

[athenasatanjesus]

3. The elite have too much power

so any attempt to create fairness for the working class often ends up neutralized eventually.

[ChicagoSuz219]

4. OMG... you don't think they'd raise it to $8 do you?!?

And, people wonder how someone can work 2 & 3 jobs & still not afford healthcare... It's disgraceful.

[LiberalEsto]

5. If the Korpos are against it, I'm for it n/t

[safeinOhio]

6. CEO bonuses, stock dividends are a tax

on the rest of us.

[OnionPatch]

7. They probably used that excuse to justify slavery.

That doesn't make it right and is no excuse to just say "oh well" and ignore the injustice, which is what the right wing would like us to all do.

[Selatius]

8. The evidence seems to suggest otherwise.

Between 1997 and 2007 when the minimum wage was essentially frozen at the federal level, the prices of goods and services continued to rise, often due to other factors not related to payment of wages, such as machinations within the monetary supply created by the Federal Reserve (the time old problem of inflation) or unstable oil prices taxing the movement of goods and supplies from one place to another. Wages have stagnated for like the last 25 years and declined in real terms.

The whole notion that raising the minimum wage causes inflation is a bogeyman. The reality seems to be that raising the minimum wages stokes consumer spending. It goes up, likely because workers at or near minimum wage use their new-found wage increase to purchase more goods that they need. Producers, in turn, increase production in face of rising demand and may actually end up hiring more workers. Everybody seems to win.

But don't tell that to the oligarchs who sit on their golden thrones on Wall Street. They don't like their fucking party being disturbed by reality. Let them dream.

And let us rise.

[blindpig]

9. +1

[metalbot]

10. Why not raise it to $50 an hour then?

"The whole notion that raising the minimum wage causes inflation is a bogeyman. The reality seems to be that raising the minimum wages stokes consumer spending. It goes up, likely because workers at or near minimum wage use their new-found wage increase to purchase more goods that they need. Producers, in turn, increase production in face of rising demand and may actually end up hiring more workers. Everybody seems to win."

There's clearly a point at which minimum wage increases DO cause inflation and are counter productive. The real question is at what level the economic "sweet spot" is that strikes the right balance between wages and economic growth.

[MannyGoldstein]

13. IIRC, Minimum Wage In Germany Is $20 An Hour Or So

For adults.

And Germany is the first or second largest exporter in the world, so I guess this is OK.

[Mudoria]

18. Actually it's around $10.20

From an article I googled the Trade Unions want to raise it from 7.50 euros to 8.50.

http://www.xe.com/news/2010-02-20%2010:52:00.0/966389.htm?c=3&t=100

[MannyGoldstein]

19. I looked it up, and it's actually fairly complicated

There's actually no minimum wage, but most workers are in unions that have a minimum wage, which protects them and drives low-end wages up.

There's currently an effort to set a federal minimum wage.

At least that's what I can see.

In any case, it's much higher than the US, and they are doing just great - neck-and-neck with China as the world's biggest exporter.

[athenasatanjesus]

14. minimum wage causes inflation because the corporations choose to inflate prices to compensate nt

[Selatius]

17. Only in an environment of poor competition or even no competition.

In an environment where you face stiff competition, if you simply tried to jack up your price to compensate for a higher wage paid to your workers, one of your numerous competitors will probably make you pay for that move by either keeping prices the same or even dropping them in response to you in a bid to capture your market share.

A functioning market is one where there is healthy competition. In such a market, you learn to accept that you will make profits...not extravagant profits. Unfortunately, some markets are extremely consolidated where only a few large firms exist. They, of course, don't want to compete, and they work to keep competition between themselves soft, the prices high, and the potential for new entrants into the market low.

[Lyric]

22. I don't think your argument here is sound.

Unlike a typical competitive marketplace (in which, if one store raises its prices, the others can take advantage) the minimum wage increases affect ALL the stores. So they all raise prices together rather than undercutting each other. It's hard to keep your prices low for a competitive advantage when YOU are stuck paying higher wages just like your competitors are.

I think some businesses do raise prices and try to pass off the pain to the consumers--and I also think that this practice is wrong. Is it not possible to create some kind of federal regulation that prevents businesses from passing on more than a percentage of cost increases to their consumers? Colleges are the worst offenders of all in this respect: if there's a financial aid cost-of-living increase from the government, you can be sure that colleges will raise their tuition rates JUST enough to swallow down every bit of the increase, leaving their students with no more money than before, even though the increased cost of living that the money was SUPPOSED to be for is still there. It's sickening!

Why should the consumers ALWAYS have to be the ones who bear the costs? Why can't businesses and colleges be forced to share the pain instead of passing it all onto our backs? Why do shareholders believe that the "little people" are the ONLY ones who deserve to take a cut in income? It's like they think they have a god-given, etched-in-stone right to make a profit of a certain percentage, and if anything threatens that percentage, BAM! Pass it along.

Sick. Just sick.

[Warren Stupidity]

23. Except that there is no real world data that demonstrates this 'fact'.

The economic theory that 'proves' that raising the min wage is a zero sum event offset exactly by compensating price increases relies on the artifice of a model in which the only variable that is allowed to change is the minimum wage. The real world, which constantly confounds rightwing economists, does not exhibit this sort of behavior: the model used is a joke, invented to argue an ideologically driven point of view.

[alcibiades_mystery]

15. Yes, this is obviously true

The whole notion that raising the minimum wage negatively impacts working people is a canard. It seems to be the same canard that the corporations are using to argue against bank fees, and some very gullible DUers are twisting this argument into an attack on Obama, which is predictable.

[DefenseLawyer]

11. There is no blanket answer.

Costs can only be "passed on to the consumer" when the consumer will continue to consume the product at the higher price. Generally speaking most businesses already sell their products for the highest price the market will bear. Thus, in those cases rising labor costs will come from profits rather than being passed on. The cool thing is that higher wages lead to more spending, more demand and ultimately high prices for goods and more profits. That requires taking a long term, big picture look at the economy. Most people in business are only focused on profits next quarter for their own company, not the big picture. So we see companies moving jobs to Mexico in order to immediately see dramatic cuts in labor costs, only to see in the long run higher unemployment and stagnant wages at home means there are fewer consumers who can afford to buy new cars and refrigerators coming back from Mexico.

[WonderGrunion]

20. Not just no, but hell no!

But I suspect you already know my answer if you've read through the thread that prompted this one.