# Effects of Minimum Wage **URL:** \ **Category:** In My Humble Opinion\ **Created:** [September 15, 2020, 8:54pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726 "2020-09-15T20:54:56Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [September 16, 2020, 12:09pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/21 "2020-09-16T12:09:03Z")
> [@Ruken](#): > > SNAP I used a lower figure earlier. The point is there’s no cap. More kids = more need, and it’s only limited by biology, not federal statute. ---
**Author:** ![DavidNRockies](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidnrockies/32/6279_2.png) [@DavidNRockies](https://boards.straightdope.com/u/DavidNRockies)\ **Post date:** [September 16, 2020, 12:34pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/22 "2020-09-16T12:34:51Z")
Remember the economic recovery after the collapse of 2008-9 – the recovery where the gains overwhelmingly inured to the wealthiest Americans ? By definition, that created/s upward pricing pressure and inflation as all those dollars chase scarce goods. But why do we _never_ hear about the inflationary effects of mountains of cash winding up in the hands of the 1% or the 0.1% ? Why is it only apocalyptic when The Lowest Paid Workers In The Country might make a couple extra bucks per paycheck ? ---
**Author:** ![DavidNRockies](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidnrockies/32/6279_2.png) [@DavidNRockies](https://boards.straightdope.com/u/DavidNRockies)\ **Post date:** [September 16, 2020, 12:36pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/23 "2020-09-16T12:36:41Z")
> [@elbows](#): > > What kind of an argument is it that cries, but I should be able to pay poverty wages because it’s good for me! I believe it was the argument proffered by the Confederacy for a good long time. ---
**Author:** ![Fiddle\_Peghead](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fiddle_peghead/32/3506_2.png) [@Fiddle\_Peghead](https://boards.straightdope.com/u/Fiddle_Peghead)\ **Post date:** [September 16, 2020, 12:39pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/24 "2020-09-16T12:39:18Z")
It would lower the enormous profits of companies like McDonald’s, who will keep less because they pay their workers more. But most of these workers will spend every dime they make, because they ain’t getting rich working at fucking McDonald’s. This will put the money back into the economy, having various effects, one of which will be other surrounding businesses earning more, and thus helping others in those jobs. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [September 16, 2020, 12:56pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/25 "2020-09-16T12:56:06Z")
> [@DavidNRockies](#): > > Remember the economic recovery after the collapse of 2008-9 – the recovery where the gains overwhelmingly inured to the wealthiest Americans ? > > By definition, that created/s upward pricing pressure and inflation as all those dollars chase scarce goods. > > But why do we _never_ hear about the inflationary effects of mountains of cash winding up in the hands of the 1% or the 0.1% ? Why is it only apocalyptic when The Lowest Paid Workers In The Country might make a couple extra bucks per paycheck ? I recommend looking at actual CPI post-2008. Let us know if you’d like to revise the above. ---
**Author:** ![DavidNRockies](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidnrockies/32/6279_2.png) [@DavidNRockies](https://boards.straightdope.com/u/DavidNRockies)\ **Post date:** [September 16, 2020, 1:25pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/26 "2020-09-16T13:25:09Z")
> [@Ruken](#): > > I recommend looking at actual CPI post-2008. I just did. > [@Ruken](#): > > Let us know if you’d like to revise the above. Nope. Thanks, though. ---
**Author:** ![elbows](https://avatars.discourse-cdn.com/v4/letter/e/b3f665/32.png) [@elbows](https://boards.straightdope.com/u/elbows)\ **Post date:** [September 16, 2020, 1:27pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/27 "2020-09-16T13:27:12Z")
Compare what $20 bought when the MW was last set, to how much $20 purchases today. Remind us, when did the US last raise the MW? If that’s not enough to convince you, look at who’s sharing the front line with doctors, nurses, etc. Min wage workers! Grocery cashiers, shelve stockers, food delivery, parcel delivery, fast food workers, truck drivers, farm workers. If their service during this pandemic doesn’t inspire you to stand with them for livable wages I don’t know what would. They are currently demonstrating how essential their service actually is to your family. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [September 16, 2020, 1:34pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/28 "2020-09-16T13:34:00Z")
> [@DavidNRockies](#): > > > [@Ruken](#): > > > > I recommend looking at actual CPI post-2008. > > I just did. > > > [@Ruken](#): > > > > Let us know if you’d like to revise the above. > > Nope. Thanks, though. Ok so back in reality, CPI was historically low during the period you reference. So your post is nonsense. ---
**Author:** ![DavidNRockies](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidnrockies/32/6279_2.png) [@DavidNRockies](https://boards.straightdope.com/u/DavidNRockies)\ **Post date:** [September 16, 2020, 1:36pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/29 "2020-09-16T13:36:25Z")
> [@Ruken](#): > > Ok so back in reality, CPI was historically low during the period you reference. So your post is nonsense. But your point doesn’t refute mine. “Upward pricing pressure” may serve to dampen an otherwise deflationary market. It may simply bend the curve. And TO your point: if the huge sums of money that inured to the benefit of the Very Few didn’t cause actual inflation … then why would you think an increase in the MW would ? Does money know who’s spending it – rich, poor, black, brown, or white ? ---
**Author:** ![DavidNRockies](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidnrockies/32/6279_2.png) [@DavidNRockies](https://boards.straightdope.com/u/DavidNRockies)\ **Post date:** [September 16, 2020, 1:55pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/30 "2020-09-16T13:55:30Z")
This may be useful in terms of this piece of the discussion: [![](https://www.advisorperspectives.com/dshort/charts/inflation/CPI-categories-since-2000.gif) ](https://www.advisorperspectives.com/dshort/charts/inflation/CPI-categories-since-2000.gif) ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [September 16, 2020, 2:12pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/31 "2020-09-16T14:12:05Z")
> [@DavidNRockies](#): > > But your point doesn’t refute mine. “Upward pricing pressure” may serve to dampen an otherwise deflationary market. It may simply bend the curve. It might, but it’s up to you to show that. Which you haven’t. We know that inflation was low. We “_never_ hear about the inflationary effects of mountains of cash winding up in the hands of the 1% or the 0.1%” because we didn’t see inflationary effects. > [@DavidNRockies](#): > > And TO your point: if the huge sums of money that inured to the benefit of the Very Few didn’t cause actual inflation … then why would you think an increase in the MW would ? > > Does money know who’s spending it – rich, poor, black, brown, or white ? I never argued one way or another. But recall that income, wealth, spending, and velocity, while coupled, are not the same thing. If my stocks double, I’m not increasing my spending. If I use that wealth to bid up a mansion from $20M to $25M and buy it (not going to happen), that spending doesn’t necessarily affect much else. When my income went up by \>$10k last year, that didn’t affect my spending. But when, years ago, I went from $25k to $35k, my spending went up a lot. Anecdotes, sure, but they’re consistent with differing effects from people in different situations. That doesn’t mean we _will_ see inflation with a (still unquantified) MW increase. And if we do, that doesn’t mean it’s bad policy. Although the OP didn’t ask us about optimal policy. ---
**Author:** ![DavidNRockies](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidnrockies/32/6279_2.png) [@DavidNRockies](https://boards.straightdope.com/u/DavidNRockies)\ **Post date:** [September 16, 2020, 2:17pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/32 "2020-09-16T14:17:13Z")
> [@Ruken](#): > > I never argued one way or another. Neither did I, actually. I think you and I agree far more than we disagree. > [@Ruken](#): > > If my stocks double, I’m not increasing my spending. If I use that wealth to bid up a mansion from $20M to $25M and buy it (not going to happen), that spending doesn’t necessarily affect much else. When my income went up by \>$10k last year, that didn’t affect my spending. But when, years ago, I went from $25k to $35k, my spending went up a lot. But you’re talking about yourself, and the impacts of those gains on you, in distinct isolation. Those stock gains … even the equity appreciation on that mansion … translate into increased wealth for others. That increased wealth tends to translate into increased expenditures, which – again – tend to create upward pricing pressures. Even if you haven’t upped _your_ spending by a dime. My point was to debunk the argument that a $0.10/hr increase in the MW means we’ll all be paying double for a hamburger 😉 ---
**Author:** ![Czarcasm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/czarcasm/32/4050_2.png) [@Czarcasm](https://boards.straightdope.com/u/Czarcasm)\ **Post date:** [September 16, 2020, 2:22pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/33 "2020-09-16T14:22:27Z")
> [@octopus](#): > > Well since we don’t have a control Earth to compare to you have to rely on inference I ask if you have _any_ examples of it happening in the past, and _this_ is all you can come up with? Congratulations! You have actually come up with a brand new way to say “I’ve got nothing”. ---
**Author:** ![DavidNRockies](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidnrockies/32/6279_2.png) [@DavidNRockies](https://boards.straightdope.com/u/DavidNRockies)\ **Post date:** [September 16, 2020, 2:38pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/34 "2020-09-16T14:38:36Z")
I also think it’s helpful to draw a distinction between [marginal propensity to consume](https://www.investopedia.com/terms/m/marginalpropensitytoconsume.asp) (MPC) and absolute dollars. An affluent person may tend to spend very little of each incremental dollar that she makes, while a very poor person may spend all or nearly all of it. But the aggregate dollars are important in terms of overall economic impact and the pricing pressure it produces. Just a quick illustrative example: | wealthy\_MPC | 1% | | --- | --- | | poor\_MPC | 90% | | incremental\_wealthy | $1,000,000 | | incremental\_poor | $10,000 | | inc\_spending\_wealthy | $10,000 | | inc\_spending\_poor | $9,000 | ---
**Author:** ![Acierocolotl](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/acierocolotl/32/6241_2.png) [@Acierocolotl](https://boards.straightdope.com/u/Acierocolotl)\ **Post date:** [September 16, 2020, 3:27pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/35 "2020-09-16T15:27:40Z")
MPC looks like it would be of value if there were concrete numbers to draw from, and would be of greater value if it also had population segments embedded in its final results. Otherwise (respectfully), it’s serious-sounding nonsense that can be used to support any point you choose. | wealthy\_MPC | 1% | | --- | --- | | poor\_MPC | 95% | | incremental\_wealthy | $1,000,000 | | incremental\_poor | $15,000 | | inc\_spending\_wealthy | $10,000 | | inc\_spending\_poor | $14,250 | But given that, say, 10% of the population (since we’re just playing sourceless number games at the moment) makes over 100,000, in a population slice of 1,000 people: 100 (wealthy) x $10,000/person = $1,000,000 net spending 900 (poor) x $14,250 = $12,825,000 (or $9,000,000 with your numbers). Anything that positively affects the poor, even with less-fudged numbers than I’ve displayed, has a disproportionate affect on the amount of dollars available to spend. ---
**Author:** ![DavidNRockies](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidnrockies/32/6279_2.png) [@DavidNRockies](https://boards.straightdope.com/u/DavidNRockies)\ **Post date:** [September 16, 2020, 4:03pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/36 "2020-09-16T16:03:12Z")
At least you’re talking about the relative impact of incremental assets on wealthy vs. poor. My point – again – is that it’s economic sophistry to point to the potential upward pricing pressure of an increase in the MW while simultaneously ignoring the upward pricing pressure when the wealthiest Americans make stratospheric gains. Two interesting articles: > **[CHARTS: How the rich won the Great Recession](https://theweek.com/articles/460179/charts-how-rich-won-great-recession)** > > The top 1 percent of U.S. earners now have the biggest share of the American pie since the Roaring Twenties > **[Estimating the Marginal Propensity to Consume Using the Distributions of...](https://www.bostonfed.org/publications/research-department-working-paper/2019/estimating-the-marginal-propensity-to-consume-using-the-distributions-income-consumption-wealth.aspx)** ---
**Author:** ![Acierocolotl](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/acierocolotl/32/6241_2.png) [@Acierocolotl](https://boards.straightdope.com/u/Acierocolotl)\ **Post date:** [September 16, 2020, 4:16pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/37 "2020-09-16T16:16:01Z")
It was an argument I was largely staying out of, yeah. I have read your articles, and brother, you are preaching to this choir. We’re on the same side of this argument as a whole. Any argument that tries to suggest that making the poor less poor is bad for everyone is, in my arrogant opinion, beyond self-centered and goes into casual cruelty. ---
**Author:** ![DesertDog](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/desertdog/32/11503_2.png) [@DesertDog](https://boards.straightdope.com/u/DesertDog)\ **Post date:** [September 16, 2020, 5:02pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/38 "2020-09-16T17:02:50Z")
Interesting chart. I’m wondering what the reason for the semi-annual bump in apparel is. ---
**Author:** ![DavidNRockies](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidnrockies/32/6279_2.png) [@DavidNRockies](https://boards.straightdope.com/u/DavidNRockies)\ **Post date:** [September 16, 2020, 5:10pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/39 "2020-09-16T17:10:35Z")
It’s pretty much as simple as the changing seasons (ie, weather) _and_ the Holidays in the winter months. ---
**Author:** ![Dr.Winston\_OBoogie](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr.winston_oboogie/32/2945_2.png) [@Dr.Winston\_OBoogie](https://boards.straightdope.com/u/Dr.Winston_OBoogie)\ **Post date:** [September 16, 2020, 5:39pm UTC](https://boards.straightdope.com/t/effects-of-minimum-wage/920726/40 "2020-09-16T17:39:14Z")
> [@DesertDog](#): > > Interesting chart. I’m wondering what the reason for the semi-annual bump in apparel is. Back-to-school sales. [Previous page](https://boards.straightdope.com/t/effects-of-minimum-wage/920726.md?page=1) [Next page](https://boards.straightdope.com/t/effects-of-minimum-wage/920726.md?page=3)