# How to increase the GDP rate to 4% **URL:** \ **Category:** Great Debates\ **Created:** [May 29, 2017, 10:53pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676 "2017-05-29T22:53:34Z")\ **Posts on this page:** 20\ **Page:** 6
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [June 1, 2017, 6:22pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/101 "2017-06-01T18:22:02Z")
> [@k9bfriender](#): > > As I said that a MW increase is _not_ going to result in a 4% increase in GDP growth, I am not sure what you are asking, I can only assume that you did not read my post very well. I read your post just fine. It said “I do think that there is economic benefit to raising MW, no matter what level you take it to”. Show your math. My guess is that you “believe” this, which is not the same as thinking. So let’s just start here, and once you’ve shown this to be true, then we can go on and tackle the other stuff. But if you can’t show this is true, then the debate is something else. As I said in my first post, if you want to argue that it is “good public policy” (i.e., we need this as a wealth transfer mechanism) that’s another thing entirely. ---
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [June 2, 2017, 3:27pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/102 "2017-06-02T15:27:09Z")
> [@HurricaneDitka](#): > > In my eyes, this sums up a lot of the anti-business rhetoric coming from the Left. It seems much more of an emotional reaction than a logical plan. If that was the only words of my post that you read, then I could see how it would reinforce that incorrect opinion that you hold. If you had read the post I was responding to, you would see that I was using the same language that was first directed at my post. If you had read the rest of my post, you would have seen why I feel that if a business cannot handle an increased expense without going out of business, then they are going to go out of business regardless of what happens with MW. > [@Shodan](#): > > This is a little more than simplistic. > > If increases in MW hit everyone, in that everyone gets a raise and everyone raises their prices to cover the increased cost, then everyone’s purchasing power decreases such that you are paying more and getting the same. That’s just inflation, and doesn’t help anyone. This only works if MW isn’t just a factor in inflation, and not just the primary factor in inflation, but the _sole_ factor in inflation. Unless you are making the claim that the only reason for inflation is increases in MW, then a MW increase will leave MW and near MW workers with more purchasing power. > [@](#): > > But increases in MW don’t hit everyone. I would not get a raise if they increased MW - my salary is not tied to MW in any sense, and my boss would laugh at me if I asked for a raise because the servers in my local restaurants got a raise. You do not ever get raises or COL adjustments to your pay? Well, at least that means that you have something in common with a MW worker. They never get raises or adjustments to cover increased costs of living unless there is a change in MW. > [@](#): > > Increases in MW hit hardest on businesses with larger numbers of employees who are earning between what the MW used to be, and what it is increased to. Thus if you raise the MW from $7.25 to $10.10, the businesses hit hardest are those with the largest numbers of employees who earn between $7.25 and $10.10, because they all have to get raises. > > So now the businesses just raise their prices to cover the increased cost of labor, and everything is hunky-dory, right? > > No. Because consumers have choices, and because economics operates largely at the margins. > > Suppose you have a restaurant. You have a lot of busboys and servers and whatnot who are earning between $7.25 and $10.10 an hour. I take my wife there twice a month, and we have dinner. OK - now the MW is increased to $10.10. The busboys and servers get a raise, and the restaurant raises prices to cover the raises. Coupla things there. First, servers don’t get paid MW by their employer, they get tips, so the MW the employer pays is much much lower. Technically, they need to make MW per hour, but no restaurant I have ever worked for has actually honored that, and they are lucky if they average MW per shift. Busboy, depending on the state, also can be considered tipped employees, as they get tipped out by the servers. That varies in both time and place. There are also cooks and dishwashers and other utility people. Those would be the ones getting around MW. Labor is usually around 25-30% of costs, with cooks usually making up about half of that. So, let’s be generous, and say that an increase from 7.25 to 10.10 (which I would advocate over at least 2, preferably 3 years, not as a single adjustment, but whatever, we are using your hypothetical), and all of the employees get a raise of 2.85, keeping them at MW, then you are increasing that part of labor by 40%. We’ll overestimate and say that 75% of your employees are effected by this, and we’ll go ahead and be generous and call labor 33.33%, so we are looking at a total cost increase of 10%. (75%\*33%\*40%) There are quite a number of overestimations\* in there, so the real increase is going to be closer to half of that, but just going with that, I have seen greater increases in the prices of food at restaurants (and at the grocery) that were much greater than that 10% over the past near decade since MW was last increased. overestimations\* A big one is that everyone will get a 2.85 raise. As you are very fond of pointing out, so I should not need a cite, most people don’t make MW. Most of the people in a restaurant are going to be making 8, 9, even 10 an hour. Some restaurants pay even more. I know most restaurants around here start at 10, and there are people working there that make 15-16. So unless the hypothetical restaurant that you take you wife to only pays MW to all their employees the increased costs they are going to see are going to be substantially less. A second one is labor cost. Most restaurants I have worked for in the last decade have tried to keep their labor below 25%. > [@](#): > > I didn’t get a raise - as mentioned, I make a lot more than MW. So the amount I have to spend on entertainment doesn’t change. But the prices at the restaurant have changed - they went up. So instead of going there twice a month, we go there once a month and the other night we stay in and cook a nice meal and use the good china and make a night of it. And the restaurant loses out on that once-a-month revenue even though they have increased costs. Once again, I have to doubt that you never receive raises. Do you make exactly what you did in 2009? No? You know who does? A MW worker. But, will you really go from a twice out a month restaurateur to a once a monther because of a 10% increase in menu price? Would you only do this because of a MW increase, or would you stop eating out at restaurants because their food costs more, or their rent costs more, and they pass those costs on to you as well? > [@](#): > > You seem to be assuming that demand is going to be constant, because everyone is affected the same by increases in MW. [list=A][li]No, it isn’t, and [\*]no, they aren’t.[/list]The CBO report projected that an increase in MW to $10.10 would raise income for many, and cost a half million jobs. TANSTAAFL. [/li] Actually no, I do not assume that demand will be constant. The raised income for many means that many can afford things that they didn’t use to. You may go out to eat less often, but now they get to go out to eat at all. > [@](#): > > There was a very old [legend](http://www.snopes.com/critters/disposal/catrat.asp) about an “investment” idea. We open a cat farm, next door to a rat farm. Rats breed faster than cats, so we can feed the rats to the cats. Then we kill and skin the cats, and feed their carcasses to the rats. We feed the rats to the cats and the cats to the rats, and get the skins for nothing. > > Or we increase MW, so workers spend more, which increases revenue, which increases profits. We feed the rats to the cats and the cats to the rats, and get the **profits** for nothing. Cool story, bro Do you think that restaurants and workers all exist in a vacuum? That there is no input into the system? > [@](#): > > Regards, > Shodan > [@Ruken](#): > > We’re already seeing a decline in restaurant traffic as restaurant prices go up out of proportion of other expenses. The price of food away from home is up 26% since 2008, compared to just 15% for food at home (which is about the same as it was three years ago.) > > [https://www.wsj.com/articles/going-out-for-lunch-is-a-dying-tradition-1496155377](https://www.wsj.com/articles/going-out-for-lunch-is-a-dying-tradition-1496155377) > [@John\_Mace](#): > > I read your post just fine. It said “I do think that there is economic benefit to raising MW, no matter what level you take it to”. Show your math. My guess is that you “believe” this, which is not the same as thinking. > > So let’s just start here, and once you’ve shown this to be true, then we can go on and tackle the other stuff. But if you can’t show this is true, then the debate is something else. As I said in my first post, if you want to argue that it is “good public policy” (i.e., we need this as a wealth transfer mechanism) that’s another thing entirely. You are quoting me out of context. Try reading the full sentence. By leaving the last phrase off of it, you change the meaning entirely. I will assume, though you have done it twice now and doubled down on it, that it was unintentional. I said, in full "While I do think that there is economic benefit to raising MW, no matter what level you take it to, it is certainly not going to be able to make 4% increase in the “GDP rate” So, you are trying to make me defend the claim “I do think that there is economic benefit to raising MW, no matter what level you take it to” which is not the claim that I made. I was specifically saying that no matter what you do with MW, it will not make a 4% increase in gdp growth, not that no matter what level you take it to, not how you have chosen to read it, as no matter what you do with MW, there would be an economic benefit. Now, if you are asking me to back the claim that “I do think that there is economic benefit to raising MW” (which in the context of disagreeing with a $15 mw would indicate a much more reasonable increase), I can show you that there are plenty of people smarter than you or I that disagree on that subject, and I agree with those who say that if people have more money to spend, then they spend it in the economy. There are times for supply side economics, those times are for when everyone has money, and there is not enough to buy. That is not the situation at this time. There is a surplus of goods and services that are available for purchase, but not enough consumers who can afford them. Increasing the numbers of consumers who can afford to meaningfully participate in the economy is, IMHO, a benefit to the economy. YMMV. And in any case, I also feel that it is good public policy to ensure that employers are compensating workers in a way that does not waste the resources of their time. Those workers did not pop out of the vacuum either, they were raised and educated using public resources, and if they are not being paid enough, then they are still using public resources in order for an employer to have them ready for their labor force. The employer is being heavily subsidized by societies investment of resources into these workers. So, it’s not just a compact with the employee that makes society call for a higher MW, but it is also the compact with society itself. So, I say the reverse, as far as the math goes, in that as a good social policy, then the burden is upon those who are against raising MW to show the harm it will do to the economy. ---
**Author:** ![Slash1972](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slash1972/32/6461_2.png) [@Slash1972](https://boards.straightdope.com/u/Slash1972)\ **Post date:** [June 2, 2017, 3:36pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/103 "2017-06-02T15:36:18Z")
> [@k9bfriender](#): > > You do not ever get raises or COL adjustments to your pay? Well, at least that means that you have something in common with a MW worker. They never get raises or adjustments to cover increased costs of living unless there is a change in MW I’m pretty sure he meant the raises that he DOES get are not tied to MW. And also, people who start a job at MW can and do get raises, even when MW is not raised. ---
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [June 2, 2017, 4:48pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/104 "2017-06-02T16:48:23Z")
> [@Slash1972](#): > > I’m pretty sure he meant the raises that he DOES get are not tied to MW. Well, him getting a raise will contribute to his employer having to increase his costs, which means that his employers customers will have to pay more which will cuase inflation, so he will end up with the same or less purchasing power, by his logic. If he got a raise based on COL, then he got a raise based on a MW increase, and he claimed that he would never get a raise based on a MW increase, so that means that he would never get a COL increase. He also flatly denied having gotten a raise at all. > [@](#): > > And also, people who start a job at MW can and do get raises, even when MW is not raised. Sometimes. I worked a few jobs that paid MW, and told the employees that they were against giving raises. Some other jobs I worked that were just over MW gave raises between a nickel and a dime a year. People pay MW because they do not value their workforce, and consider them to be entirely fungible. If one is not willing to bust their ass for MW, then someone else will. As long as there is someone out there that is more desperate than you are, then there is no reason for the employer to pay more. Some companies actually value their employees, and compensate them accordingly. These companies will be the least effected by an increase in MW. ---
**Author:** ![Slash1972](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slash1972/32/6461_2.png) [@Slash1972](https://boards.straightdope.com/u/Slash1972)\ **Post date:** [June 2, 2017, 5:01pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/105 "2017-06-02T17:01:57Z")
> [@k9bfriender](#): > > Well, him getting a raise will contribute to his employer having to increase his costs, which means that his employers customers will have to pay more which will cuase inflation, so he will end up with the same or less purchasing power, by his logic I’m pretty sure you can see the difference between one person in one company getting a raise, and a sweeping MW raise that affects the whole country. > [@](#): > > If he got a raise based on COL, then he got a raise based on a MW increase, and he claimed that he would never get a raise based on a MW increase, so that means that he would never get a COL increase. He also flatly denied having gotten a raise at all These are strange statements to make. I’ve gotten Cost of Living raises every year for the past 26 years. Not all of those are based on a MW increase. I don’t believe he flatly denied having gotten a raise at all. Can you link to that post? > [@](#): > > Sometimes. I worked a few jobs that paid MW, and told the employees that they were against giving raises. Some other jobs I worked that were just over MW gave raises between a nickel and a dime a year NOW you say “sometimes” when before you flat out stated that people who make MW don’t get raises. > [@](#): > > Some companies actually value their employees, and compensate them accordingly. These companies will be the least effected by an increase in MW. I agree. ---
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [June 2, 2017, 5:35pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/106 "2017-06-02T17:35:11Z")
> [@Slash1972](#): > > I’m pretty sure you can see the difference between one person in one company getting a raise, and a sweeping MW raise that affects the whole country. Yes I do, but you are assuming that he is the only one to get a raise. If everyone wants a raise, then we end up with inflation. > [@](#): > > These are strange statements to make. I’ve gotten Cost of Living raises every year for the past 26 years. Not all of those are based on a MW increase. He said he had never received a raise based on an increased MW. That mean that either MW does not increase the cost of living, or that he has never received a COL raise. > [@](#): > > I don’t believe he flatly denied having gotten a raise at all. Can you link to that post? > [@Shodan](#): > > I would not get a raise if they increased MW… > > I didn’t get a raise - as mentioned, I make a lot more than MW. So the amount I have to spend on entertainment doesn’t change. He is indicating here that he is on a fixed income, and that if costs increase, then he has no choice but to decrease his consumption. Now, I don’t believe that he has never received a raise in the last 8 years since the last MW adjustment, but that is certainly the direction that he is trying to get people to think, in that he will have less purchasing power if MW workers get a raise. > [@](#): > > NOW you say “sometimes” when before you flat out stated that people who make MW don’t get raises. People who make MW, by definition do not get raises without an increase to MW. That is what I flat out stated, and that is what I stand by. If MW is $7.25 in 2009, and you make MW, then in 2017, when MW is $7.25, if you make MW then you make $7.25. I don’t see any raise in there, do you? Now, I do agree that not all businesses pay out MW, and that many businesses give people raises above MW, but that was not the point I was making, the point I was making is that someone making MW makes the same as they did in 2009. Do you disagree? > [@](#): > > I agree. ---
**Author:** ![Slash1972](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slash1972/32/6461_2.png) [@Slash1972](https://boards.straightdope.com/u/Slash1972)\ **Post date:** [June 2, 2017, 5:41pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/107 "2017-06-02T17:41:57Z")
> [@k9bfriender](#): > > Yes I do, but you are assuming that he is the only one to get a raise. If everyone wants a raise, then we end up with inflation Well luckily, raises aren’t dependent on what everyone “wants” > [@](#): > > He said he had never received a raise based on an increased MW. That mean that either MW does not increase the cost of living, or that he has never received a COL raise. > > He is indicating here that he is on a fixed income, and that if costs increase, then he has no choice but to decrease his consumption. > > Now, I don’t believe that he has never received a raise in the last 8 years since the last MW adjustment, but that is certainly the direction that he is trying to get people to think, in that he will have less purchasing power if MW workers get a raise I don’t think any of this is accurate, but I’m uncomfortable trying to explain what other posters meant any more than I already have. > [@](#): > > People who make MW, by definition do not get raises without an increase to MW. That is what I flat out stated, and that is what I stand by. If MW is $7.25 in 2009, and you make MW, then in 2017, when MW is $7.25, if you make MW then you make $7.25. > > I don’t see any raise in there, do you? If that’s what you meant, then sure, people who make MW make MW. Not sure what that proves. > [@](#): > > Now, I do agree that not all businesses pay out MW, and that many businesses give people raises above MW, but that was not the point I was making, the point I was making is that someone making MW makes the same as they did in 2009. Do you disagree? I agree that MW is the same now as it was in 2009 at a Federal level. So? ---
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [June 2, 2017, 6:15pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/108 "2017-06-02T18:15:48Z")
> [@Slash1972](#): > > Well luckily, raises aren’t dependent on what everyone “wants” Exaclty, there are quite a number of people who would like raises to somethig taht they can actually support themselves on. I don’t kno whtat it is lucky that they don’t get them. But, you said that you have gotten a COL every years for the last quarter centruy. If that is true of all the people for your employer, wouldn’t you think that that would be a driver of inflation? Does your employer not need to charge more in order to cover your higher rate? > [@](#): > > I don’t think any of this is accurate, but I’m uncomfortable trying to explain what other posters meant any more than I already have. I don’t know that it is accurate either, as he was ambiguous. But he did specifically say that he has never gotten a raise due to a MW increase, which is either not the case, indicates that he does not believe that MW causes inflation, or has never received a COL raise. I tend to favor the former, but unless he weighs in, I could not tell you for sure why he said what he did. > [@](#): > > If that’s what you meant, then sure, people who make MW make MW. Not sure what that proves. Proves nothing, responding to your incredulousness that someone who makes MW hasn’t gotten a raise in the last 8 years. > [@](#): > > I agree that MW is the same now as it was in 2009 at a Federal level. So? So, MW buys less than it did 8 years ago (10 years ago that congress passed the increase to take place over 3 years). A worker who makes MW will find it much more difficult to make ends meet then they would have when last MW was raised. ---
**Author:** ![Slash1972](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slash1972/32/6461_2.png) [@Slash1972](https://boards.straightdope.com/u/Slash1972)\ **Post date:** [June 2, 2017, 6:22pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/109 "2017-06-02T18:22:48Z")
> [@k9bfriender](#): > > But, you said that you have gotten a COL every years for the last quarter centruy. If that is true of all the people for your employer, wouldn’t you think that that would be a driver of inflation? Does your employer not need to charge more in order to cover your higher rate? Sorry, but federal taxes have paid my salary for my entire working career. Now they pay for my retirement, and the salary at my new job 🙂 Did your taxes go up to pay for my COL increases? > [@](#): > > So, MW buys less than it did 8 years ago (10 years ago that congress passed the increase to take place over 3 years). A worker who makes MW will find it much more difficult to make ends meet then they would have when last MW was raised. I agree. And I am in favor of tying MW to cost of living or whatever it’s called. But a person on MW should be striving to make MORE than the MW. And no, I don’t think that it is easy to do, but I do believe that it’s possible. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [June 2, 2017, 6:46pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/110 "2017-06-02T18:46:43Z")
> [@k9bfriender](#): > > People who make MW, by definition do not get raises without an increase to MW. False. People who make MW get raises all the damn time, or move to higher paying jobs. _Then_ they aren’t people who make MW. The population of people making MW today is very different than the one in 2009, and you’ll be hard pressed to find many individuals who were MW earners over that entire period. ---
**Author:** ![Slash1972](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slash1972/32/6461_2.png) [@Slash1972](https://boards.straightdope.com/u/Slash1972)\ **Post date:** [June 2, 2017, 6:52pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/111 "2017-06-02T18:52:36Z")
I think he is saying MW earners who get raises are no longer part of the group of MW people who only get raises with an increase in MW. Or something like that. I’m not too sure. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [June 2, 2017, 7:05pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/112 "2017-06-02T19:05:47Z")
Having fun with BLS stats here. There were 1.7MM 16-24 year old MW (or less) earners in 2009. Last year there were 526k 25-34 year old MW earners. I’m pretty sure two thirds of them died. Certainly not raises. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [June 2, 2017, 7:12pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/113 "2017-06-02T19:12:59Z")
> [@k9bfriender](#): > > This only works if MW isn’t just a factor in inflation, and not just the primary factor in inflation, but the _sole_ factor in inflation. > > Unless you are making the claim that the only reason for inflation is increases in MW, then a MW increase will leave MW and near MW workers with more purchasing power. This makes no sense. Inflation can be caused by increases in the MW, and it can also be caused by other factors. That inflation is sometimes caused by other factors does not imply that it cannot be caused by increases in MW. > [@](#): > > You do not ever get raises or COL adjustments to your pay? Well, at least that means that you have something in common with a MW worker. They never get raises or adjustments to cover increased costs of living unless there is a change in MW. I do get raises. I don’t get COL raises. I get raises based on how well I make my performance goals, and how well the company is doing. I also got raises in the past by changing employers. I could do that because I can do things that a MW worker can’t do, like program computers. I have never received a raise because the government said I should receive a raise, and I would not receive a raise just because the MW was increased. > [@](#): > > Coupla things there. > > First, servers don’t get paid MW by their employer, they get tips, so the MW the employer pays is much much lower. Technically, they need to make MW per hour, but no restaurant I have ever worked for has actually honored that, and they are lucky if they average MW per shift. > > Busboy, depending on the state, also can be considered tipped employees, as they get tipped out by the servers. That varies in both time and place. > > There are also cooks and dishwashers and other utility people. Those would be the ones getting around MW. So you are saying that people who aren’t covered by MW laws aren’t affected by changes in MW law. IOW just like I wouldn’t get a raise if the MW increased, they wouldn’t get a raise if the MW increased. Gotcha, but I don’t see the point. People who are covered by MW laws would be affected, and those are the people we are talking about. > [@](#): > > There are quite a number of overestimations\* in there, so the real increase is going to be closer to half of that, but just going with that, I have seen greater increases in the prices of food at restaurants (and at the grocery) that were much greater than that 10% over the past near decade since MW was last increased. So have I. The price of beef has gone up noticeably in the last few years, for instance. As a result, I eat less beef and more pork and chicken. > [@](#): > > A second one is labor cost. Most restaurants I have worked for in the last decade have tried to keep their labor below 25%. That’s what we are talking about. An increase in MW is going to make it that much more difficult to keep labor costs below 25%, or whatever else the figure they want turns out to be. If an increase in MW pushes labor costs too high, then businesses look for ways to cut those costs - one less employee, for instance. Hence the reference in the CBO report to the loss of a half million jobs, should the MW be increased to $10.10. > [@](#): > > Once again, I have to doubt that you never receive raises. Do you make exactly what you did in 2009? No? You know who does? A MW worker. I think I’ve already explained this to you, and I doubt repeating it will help. > [@](#): > > But, will you really go from a twice out a month restaurateur to a once a monther because of a 10% increase in menu price? Yes, I would probably reduce the number of times if the price rose. Increased price tends to depress demand, all other things being equal. Welcome to Econ 101. > [@](#): > > Would you only do this because of a MW increase, or would you stop eating out at restaurants because their food costs more, or their rent costs more, and they pass those costs on to you as well? Yes, all of those as well. Prices can increase for a number of reasons, and this has a negative effect on demand. Increases in MW are included among those reasons. > [@](#): > > Actually no, I do not assume that demand will be constant. The raised income for many means that many can afford things that they didn’t use to. You may go out to eat less often, but now they get to go out to eat at all. It appears you are assuming that demand would increase, and that is something I don’t see. Workers get a raise, not based on their increased productivity, but by law. Businesses increase their prices to cover the increased raises. Then workers go out to spend their money, and find that their money doesn’t buy them more, because prices have gone up. > [@](#): > > Do you think that restaurants and workers all exist in a vacuum? That there is no input into the system? No, just the opposite. The market deals with all the inputs into a system, good and bad alike, and tends towards equilibrium between perceived supply, and perceived demand. If we increase MW, that is a different input into the system. So the market will adjust itself and reach a new equilibrium. According to the CBO report, that equilibrium will consist of a balance between the many MW workers who will benefit from increased income, and the half million who will lose their jobs. Is that worth it? That’s an open question. Simply saying “there’s no downside and it will pay for itself” is why we get tax cuts and a huge deficit. > [@](#): > > And in any case, I also feel that it is good public policy to ensure that employers are compensating workers in a way that does not waste the resources of their time. I don’t see any waste. Everything on earth is worth exactly what you can convince someone else to pay for it. This includes labor. If some MW worker thinks his talents are being wasted on a menial job, he needs to convince someone else that he is worth $10 an hour, or $15, or $100. If he can find that someone, good for him. And that is what happens with most of the rather small minority who earn MW in America - they work their way up, or they find a better job, or they graduate from school, and then they don’t work for MW anymore. If he can’t find that someone, we could increase MW to $10 an hour. Then he doesn’t have to look - his current employer has to pay him $10. Or lay him off. In which case he just has to find someone who believes he is worth $10 an hour, when his last employer didn’t think so. Regards, Shodan ---
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [June 2, 2017, 7:16pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/114 "2017-06-02T19:16:39Z")
> [@Slash1972](#): > > Sorry, but federal taxes have paid my salary for my entire working career. Now they pay for my retirement, and the salary at my new job 🙂 Did your taxes go up to pay for my COL increases? Someone’s taxes went up, or will go up when we get around to paying down the debt that you ran up with your extravagant lifestyle. > [@](#): > > I agree. And I am in favor of tying MW to cost of living or whatever it’s called. But a person on MW should be striving to make MORE than the MW. And no, I don’t think that it is easy to do, but I do believe that it’s possible. People should strive for that, but there are those who either don’t, or even can’t strive for much more. I have worked in these jobs most of my career, and I have met many who will never get a job that pays a significant amount above MW. They aren’t exactly developmentally disabled, but they aren’t all the bright either. They can flip a cheeseburger, but really trying to get them to do much more than that is not going to be fruitful. > [@Ruken](#): > > False. People who make MW get raises all the damn time, or move to higher paying jobs. _Then_ they aren’t people who make MW. The population of people making MW today is very different than the one in 2009, and you’ll be hard pressed to find many individuals who were MW earners over that entire period. That’s a great theory. But in practice not so much. First, while you may have people moving out of the MW job market, you still have people moving into it in the first place. So even granting that situation, the people entering the workforce at MW are in a worse position than people entering the workforce at MW 8 years ago, so even if they are not the same people, they are the same demographic, and that demographic is getting poorer and less able to effectively contribute to the economy. Second, you may not have had all that much interaction with MW and near MW workers and their bosses, but “all the damn time” is not a phrase that I would associate with how often they get raises. Most fast food jobs around here do not pay a cent over MW (which to be fair, in ohio is higher than the fed MW), and it does not matter how long you work there, they won’t give you a raise. I would not be all that hard pressed to find people that did not make much more than MW over the last 8 years, I know quite a few. I would be one myself if I didn’t get out of that cycle and open my own business, which is something that most MW workers cannot accomplish. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [June 2, 2017, 7:17pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/115 "2017-06-02T19:17:38Z")
there are studies on raising MW to $10.10 because that was the real historical maximum when the studies were comissioned. But there’s been some inflation since then so I checked the BLS CPI and $1.60 in 1968 translates to about $11.50 today. ---
**Author:** ![Slash1972](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slash1972/32/6461_2.png) [@Slash1972](https://boards.straightdope.com/u/Slash1972)\ **Post date:** [June 2, 2017, 7:24pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/116 "2017-06-02T19:24:06Z")
> [@k9bfriender](#): > > Someone’s taxes went up, or will go up when we get around to paying down the debt that you ran up with your extravagant lifestyle I’m not sure what my lifestyle has to do with COL increases. Can you explain? ---
**Author:** ![Slash1972](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slash1972/32/6461_2.png) [@Slash1972](https://boards.straightdope.com/u/Slash1972)\ **Post date:** [June 2, 2017, 7:27pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/117 "2017-06-02T19:27:24Z")
> [@k9bfriender](#): > > Most fast food jobs around here do not pay a cent over MW (which to be fair, in ohio is higher than the fed MW), and it does not matter how long you work there, they won’t give you a raise I’m sorry, but I find it hard to believe that someone who started working at McDonalds in Ohio in 2009 making MW would STILL be making minimum wage today. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [June 2, 2017, 7:34pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/118 "2017-06-02T19:34:31Z")
> [@k9bfriender](#): > > First, while you may have people moving out of the MW job market, you still have people moving into it in the first place. So even granting that situation, the people entering the workforce at MW are in a worse position than people entering the workforce at MW 8 years ago, so even if they are not the same people, they are the same demographic, and that demographic is getting poorer and less able to effectively contribute to the economy. Most workers who earn MW in the US are not poor, are not supporting themselves or anyone else, and do not live in poor households. Regards, Shodan ---
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [June 2, 2017, 8:09pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/119 "2017-06-02T20:09:39Z")
> [@Shodan](#): > > This makes no sense. Inflation can be caused by increases in the MW, and it can also be caused by other factors. That inflation is sometimes caused by other factors does not imply that it cannot be caused by increases in MW. You are claiming here, and further down in your post, that a MW worker will have the same or less purchasing power after a MW hike. I am pointing out that is impossible, unless inflation goes up by the same amount as the MW hike, and that would only be possible if MW was the only driver of inflation. Otherwise, the MW worker has more money, and things may cost a bit more, but not as much as his raise, which means he has more purchasing power, not the same, and not less. > [@](#): > > I do get raises. I don’t get COL raises. > > I get raises based on how well I make my performance goals, and how well the company is doing. I also got raises in the past by changing employers. I could do that because I can do things that a MW worker can’t do, like program computers. And MW could get raises based on the same things. Workers are not fungible. I have had employees that could run circles around other employees, but due to corporate policy, I paid them both MW. I can program computers, and I have recieved MW for not an insignificant amount of my working life. I have had or worked with quite a number of individuals with skills that simply fell out of demand, or their skills went obsolete due to being out of the workforce for a bit. They may not be a MW worker for all that long as they try to get back into a profession, but while they are, they are trying to survive on a pay that doesn’t really let you afford very much at all. > [@](#): > > I have never received a raise because the government said I should receive a raise, and I would not receive a raise just because the MW was increased. When you ask for rasies, do you take your costs into account at all? If your costs have gone up, do you press for more of a raise? > [@](#): > > So you are saying that people who aren’t covered by MW laws aren’t affected by changes in MW law. IOW just like I wouldn’t get a raise if the MW increased, they wouldn’t get a raise if the MW increased. Gotcha, but I don’t see the point. People who are covered by MW laws would be affected, and those are the people we are talking about. No, that’s not what I am saying. I am saying that most businesses do not pay all of their employees at MW, so a calculation of how much it would cost for all businesses to increase their wages by the amount of the MW increase as a statistic to is going to be an overestimation. I was using those numbers to come up with my 10% cost increase, and then pointing out why those numbers resulted in an unrealistically large cost increase. When you talk about MW workers, you seem to think that it is only important to include those who make exactly $7.25, and that someone who makes $7.30 is not a MW worker. You also seem to completely ignore the states that have a higher MW. The point is that it is that there is not going to be a one for one increase in cost to cover a higher MW as you seem to be indicating. A 40% hike in MW does not translate to a 40% increase in costs. > [@](#): > > So have I. The price of beef has gone up noticeably in the last few years, for instance. As a result, I eat less beef and more pork and chicken. And if chicken and pork had gone up too, would you just eat less? Do you base your necessary caloric intake on your budget? > [@](#): > > That’s what we are talking about. An increase in MW is going to make it that much more difficult to keep labor costs below 25%, or whatever else the figure they want turns out to be. If an increase in MW pushes labor costs too high, then businesses look for ways to cut those costs - one less employee, for instance. Hence the reference in the CBO report to the loss of a half million jobs, should the MW be increased to $10.10. Businesses do not hire because they have money to hire people, businesses hire because they have stuff that needs to be done that cannot be done with their current workforce. No business has ever hired someone that they did not need because they had extra money laying around. And no business has ever refused to hire someone when they needed to get more work done than their staffing could accomplish because they didn’t want it to cut into their profit. You misquote the CBO report every time you bring it up, in a way that would make Bricker very angry. 500,000 People are not losing their jobs, they are choosing not to work them anymore. People with two jobs that can now make ends meat with just one. Two income households that can now make ends meet with just one, stuff like that. The number of actual layoffs is a small percentage of the decrease in the labor force the CBO predicts. > [@](#): > > I think I’ve already explained this to you, and I doubt repeating it will help. Sure, you mentioned that earlier in this post that you have in fact received raises. So, you know who doesn’t receive raises? > [@](#): > > Yes, I would probably reduce the number of times if the price rose. > > Increased price tends to depress demand, all other things being equal. Welcome to Econ 101. Increased prices can decrease demand, unless there are more people with more purchasing power than they used to have, in which case, there can be greater demand, even in the face of higher prices. If increasing price has a tendency to reduced demand, and we have always had inflation, then demand should have been going down historically. As it has been going up historically, along with rising prices, I am going to point out that Econ 101 is not where you should end your economic studies. > [@](#): > > Yes, all of those as well. Prices can increase for a number of reasons, and this has a negative effect on demand. Increases in MW are included among those reasons. > It appears you are assuming that demand would increase, and that is something I don’t see. More people able to participate in the economy increases demand. > [@](#): > > Workers get a raise, not based on their increased productivity, but by law. Productivity has gone up, they just didn’t get raises to pay them for the increased excess value that they are producing, instead, those increases in profit stay with the owners. The law just reflects that reality. > [@](#): > > Businesses increase their prices to cover the increased raises. Then workers go out to spend their money, and find that their money doesn’t buy them more, because prices have gone up. Addressed above, unless you are claiming that MW is the sole driver of inflation, then a increase in MW will leave a MW worker with more purchasing power. > [@](#): > > No, just the opposite. The market deals with all the inputs into a system, good and bad alike, and tends towards equilibrium between perceived supply, and perceived demand. Demand is down. Production is not the problem, the pborlebm is people not spending money. The reason that people are not spending money is that they do not have it to spend. > [@](#): > > If we increase MW, that is a different input into the system. So the market will adjust itself and reach a new equilibrium. According to the CBO report, that equilibrium will consist of a balance between the many MW workers who will benefit from increased income, and the half million who will lose their jobs. Once again, you use the word “lose” when the CBO did not use that word. > [@](#): > > Is that worth it? That’s an open question. Simply saying “there’s no downside and it will pay for itself” is why we get tax cuts and a huge deficit. > I don’t see any waste. The “there’s no downside and it will pay for itself” is what republicans say about tax cuts, not what MW increase advocates say about MW hikes. We do recognize that there is a bit of a downsized, but as all decisions involving opportunity cost, we find that the downside is more than mitigated by the upside. If what you are saying is true, then I would agree with the OP that $15 an hour is a great step up in MW, and that we should do it now, and have it as $50 an hour by years end. So, you can throw that rhetoric at the OP is he is still around, but it does not address my argument in the slightest. > [@](#): > > Everything on earth is worth exactly what you can convince someone else to pay for it. This includes labor. If some MW worker thinks his talents are being wasted on a menial job, he needs to convince someone else that he is worth $10 an hour, or $15, or $100. If he can find that someone, good for him. And that is what happens with most of the rather small minority who earn MW in America - they work their way up, or they find a better job, or they graduate from school, and then they don’t work for MW anymore. Sometimes. But there are quite of people in their 30’s, 40’s and 50’s working at applebee’s for $9 an hour, and they aren’t going to be going anywhere else anytime soon. It does become a cycle you get trapped in. You spend all of your time working, getting ready to work, or recovering from work that it is very difficult to expand your education, or even look for another job. > [@](#): > > If he can’t find that someone, we could increase MW to $10 an hour. Then he doesn’t have to look - his current employer has to pay him $10. > > Or lay him off. In which case he just has to find someone who believes he is worth $10 an hour, when his last employer didn’t think so. Any employer that cannot get $10 an hour worth of productivity out of any employee (exception being disabled or developmentally delayed employees, who you can pay less than MW) needs to revisit their business plan. > [@](#): > > Regards, > Shodan ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [June 2, 2017, 8:20pm UTC](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676/120 "2017-06-02T20:20:25Z")
> [@k9bfriender](#): > > First, while you may have people moving out of the MW job market, you still have people moving into it in the first place. So even granting that situation, the people entering the workforce at MW are in a worse position than people entering the workforce at MW 8 years ago, so even if they are not the same people, they are the same demographic, and that demographic is getting poorer and less able to effectively contribute to the economy. Of course you have people moving in; most 16-24 year olds couldn’t legally work in 2009. Although it’s at below replacement rate. If you want to make arguments about poor demographics then bring data about poor demographics. MW != poor. > [@k9bfriender](#): > > Second, you may not have had all that much interaction with MW and near MW workers and their bosses, but “all the damn time” is not a phrase that I would associate with how often they get raises. Most fast food jobs around here do not pay a cent over MW (which to be fair, in ohio is higher than the fed MW), and it does not matter how long you work there, they won’t give you a raise. I would not be all that hard pressed to find people that did not make much more than MW over the last 8 years, I know quite a few. I would be one myself if I didn’t get out of that cycle and open my own business, which is something that most MW workers cannot accomplish. Your personal anecdote is irrelevant and I don’t I know why you’d bring it up GD. We have actual data. It is literally impossible for it to _not_ happen all the damn time unless BLS is lying to us. Like I already posted, “Characteristics of minimum wage workers” is published every year. Table seven for each year shows age distributions as far back as I’ve looked. The number of MW earners drops precipitously with age. So they’re either getting raises or moving to higher paying jobs. Or getting turned into Soylent Green in FEMA camps. [Previous page](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676.md?page=5) [Next page](https://boards.straightdope.com/t/how-to-increase-the-gdp-rate-to-4/787676.md?page=7)