If the inflation keeps low, total amount of money in the economy is relative constant, thus the cake is not getting much bigger, increasing minimum wage is going to reduce the number of jobs in the sector that is paying previous the minimum wage.
Because those jobs don't disappear when that minimum wage is raised. This has been tested by comparing the job differences across state borders where the minimum wage has been raised on one side but not the other (Dube/Lester/Reich and Card/Krueger).
>Minimum wage dictates that those jobs and the products they provide will not exist
The reality is that that it tends to dictate whether cashflow is funneled into profit margins or wages.
Yeah, input costs have no effect on whether a business can operate at the margin...
>This has been tested...
If we suddenly care about what the economic research says, you should do a search for papers that don't confirm your biases.
How the fact that raising labour costs will reduce the demand for labour is controversial is beyond belief, truly. We have social programs here in Canada that do exactly this: subsidize wages of employees in certain industries because the value that the labour of some people doesn't cover the costs. But hey, what do we know up here...
I guess this mentality comes from the new wave of socialism or comes from people who have never run a business in their lives.
They can but that's obviously a rather different question.
>If we suddenly care about what the economic research says, you should do a search for papers that don't confirm your biases.
I have.
>How the fact that raising labour costs will reduce the demand for labour is controversial is beyond belief
Why is it so hard to believe that demand for minimum waged labor is very inelastic?
How is this a "different question"? It's the question. If there are businesses that can be economically profitable paying $14/hour, but minimum wage rises to $15/hour, those businesses are no longer viable.
We can argue about how many of those businesses there are, but it's merely a fact that they exist at the margin. If you've ever run a small business yourself, you'll understand how small changes in the cost of labour can be painful. I'm not talking about about McDonald's or Walmart here.
Again, we have social programs in my country to alleviate these issues. And they work.
>Why is it so hard to believe that demand for minimum waged labor is very inelastic?
So businesses optimize for the number of people employed, regardless of prevailing wages? I don't buy that, sorry.
Because most businesses make profits so it's perfectly possible to raise input prices without them closing.
>We can argue about how many of those businesses there are
That's what we were doing. The answer was "not a statistically significant amount".
>If you've ever run a small business yourself, you'll understand how small changes in the cost of labour can be painful.
I understand all too well the kind of caterwauling that happens when you do something that could threaten the profits of any business.
>Again, we have social programs in my country to alleviate these issues.
And a historically high % of profit to GDP, so maybe we can give some of those programs a break and take the money from a sector of the economy that is actually flush with cash.
>So businesses optimize for the number of people employed, regardless of prevailing wages?
Absolutely they do, yes!
There are some jobs that don't create $15/hour in value. Why is that hard to imagine? Minimum wage dictates that those jobs and the products they provide will not exist. Whether you think that's a net benefit to society is another question.