The liberal arts

[garbon]

Why do you think a Happy Meal costs $8 in the UK?  Why do you think a medium pizza costs $20 in Denmark?

Does Ide think those things?

[MadImmortalMan]

Perhaps there is some other solution to add to that as well. Minimum wage is good, but it's not the cause of the issues. Wages rose in conjunction with productivity until 1971, and have stayed flat since then, despite the minimum wage rising faster in the post-70s period than before. If the old trend had continued the average wage in the US would be a hundred grand a year.

[Ideologue]

Is it possible to legislate a tie between productivity and wages in a free economy?  I'm totally down for that.

Anyway, maybe more later, dudes.  Gotta go.

[mongers]

I don't think you'd notice a dime's worth of difference if every job in the U.S. started paying at least $10-12 an hour tomorrow.  OK, maybe about a dime per purchase.  I wouldn't hurt, would you?

And you came to this prediction how again?

First of all, you chose an hourly wage that's already close to a lot of state minimum wages.  But if you were to really increase the minimum wage, I think the increase would be much more than a dime a purchase.  Cost of labor is the biggest input for a lot of markets.  You can't increase the price of your most significant input by a substantial amount and not expect to see any increase in output price.

Why do you think a Happy Meal costs $8 in the UK?  Why do you think a medium pizza costs $20 in Denmark?

It doesn't, it's nearer the equivalent of $3.5-$4.00.

[Phillip V]

Critical thinking supposedly learned from the liberal arts needs to be applied to picking romantic/marriage partners. So much wealth/potential is destroyed in abusive relationships, divorce, and neglected children.

[garbon]

I don't think you'd notice a dime's worth of difference if every job in the U.S. started paying at least $10-12 an hour tomorrow.  OK, maybe about a dime per purchase.  I wouldn't hurt, would you?

And you came to this prediction how again?

First of all, you chose an hourly wage that's already close to a lot of state minimum wages.  But if you were to really increase the minimum wage, I think the increase would be much more than a dime a purchase.  Cost of labor is the biggest input for a lot of markets.  You can't increase the price of your most significant input by a substantial amount and not expect to see any increase in output price.

Why do you think a Happy Meal costs $8 in the UK?  Why do you think a medium pizza costs $20 in Denmark?

It doesn't, it's nearer the equivalent of $3.5-$4.00.

Yeah that's what my question was about as my quick google did not turn up the prices that Yi was suggesting.

[mongers]

I don't think you'd notice a dime's worth of difference if every job in the U.S. started paying at least $10-12 an hour tomorrow.  OK, maybe about a dime per purchase.  I wouldn't hurt, would you?

And you came to this prediction how again?

First of all, you chose an hourly wage that's already close to a lot of state minimum wages.  But if you were to really increase the minimum wage, I think the increase would be much more than a dime a purchase.  Cost of labor is the biggest input for a lot of markets.  You can't increase the price of your most significant input by a substantial amount and not expect to see any increase in output price.

Why do you think a Happy Meal costs $8 in the UK?  Why do you think a medium pizza costs $20 in Denmark?

It doesn't, it's nearer the equivalent of $3.5-$4.00.

Yeah that's what my question was about as my quick google did not turn up the prices that Yi was suggesting.

Yeah, those things are typically a couple of quid, so say 20 minutes of minimum wage labour, maybe that's a better comparator ?   

Interesting to see if one of our tame Danes could chip in with the cost of a pizza over there; I'm certainly not googling for it.   

[DGuller]

I find the price of pizza argument unconvincing.  Even assuming that higher minimum wage would lead to price of pizza going up, it's unlikely to go up by the same proportion as the minimum wage.  For people on the low end of the scale, that would still be a win, no?  And it would be a bigger win for the product that are less labor-intensive.

[Admiral Yi]

I find the price of pizza argument unconvincing.  Even assuming that higher minimum wage would lead to price of pizza going up, it's unlikely to go up by the same proportion as the minimum wage.  For people on the low end of the scale, that would still be a win, no?  And it would be a bigger win for the product that are less labor-intensive.

It's an unequivocal win for people making minimum wage, unless price elasticity of demand results in the elimination of their job.

[mongers]

I find the price of pizza argument unconvincing.  Even assuming that higher minimum wage would lead to price of pizza going up, it's unlikely to go up by the same proportion as the minimum wage.  For people on the low end of the scale, that would still be a win, no?  And it would be a bigger win for the product that are less labor-intensive.

It's an unequivocal win for people making minimum wage, unless price elasticity of demand results in the elimination of their job.

Pizza's like gas, price inelastic, people have to have both.   

[DGuller]

I find the price of pizza argument unconvincing.  Even assuming that higher minimum wage would lead to price of pizza going up, it's unlikely to go up by the same proportion as the minimum wage.  For people on the low end of the scale, that would still be a win, no?  And it would be a bigger win for the product that are less labor-intensive.

It's an unequivocal win for people making minimum wage, unless price elasticity of demand results in the elimination of their job.

I used to believe that higher minimum wage leads to higher unemployment, since it kinda sounds like basic economics, but my impression is that economic studies don't really bear that out.  It could be that there is a non-basic second-order effect that largely counteracts the obvious conclusion.

[Admiral Yi]

I used to believe that higher wage leads to higher unemployment, since it kinda sounds like basic economics, but my impression is that economic studies don't really bear that out.  It could be that there is a non-basic second-order effect that largely minimizes the obvious conclusion.

AFAIK there is exactly one study, on New Jersey fast food, that purports to reverse the slope of the demand for labor curve.  It's findings have been widely disputed, and AFAIK there has been no other study that produced a similar result.

Bottom line, you pass an increase in the min wage in your state, don't run crying about bad management and unfair shareholder value when unemployment goes up.

[DGuller]

I used to believe that higher wage leads to higher unemployment, since it kinda sounds like basic economics, but my impression is that economic studies don't really bear that out.  It could be that there is a non-basic second-order effect that largely minimizes the obvious conclusion.

AFAIK there is exactly one study, on New Jersey fast food, that purports to reverse the slope of the demand for labor curve.  It's findings have been widely disputed, and AFAIK there has been no other study that produced a similar result.

Bottom line, you pass an increase in the min wage in your state, don't run crying about bad management and unfair shareholder value when unemployment goes up.

So why does Denmark with their $20 pizzas have less than 5% unemployment rate?  Could it be that social-democratic model, at least in the long run, has less obvious and tangible benefits that more than make up for the Econ 101 stuff?

[Admiral Yi]

So why does Denmark with their $20 pizzas have less than 5% unemployment rate?  Could it be that social-democratic model, at least in the long run, has less obvious and tangible benefits that more than make up for the Econ 101 stuff?

It's a bit of a mystery to me as well.  One could theoretically reproduce Denmark's result by doubling *all* wages in the US.  Then demand for pizza would not drop as the price went up. 

The part that confounds me however, is how they insulate their labor market from the external accounts.  Why have they not priced themselves out of all export markets?  Why have their import competers not disappeared?

A tentative hypothesis is that as part of the Scandinavian social contract workers in tradeable sectors in effect accept lower wages than they could command internationally.  Say for example Hollywood actors accepted $100,00/year instead of demanding $20 million a movie.

[MadImmortalMan]

I don't think we've ever increased the minimum wage enough in one go to hit the threshold that would put a serious dent in the demand. Something like 2% of the population makes the minimum right? Could be wrong but it's not a lot, afaik. Now if we had hiked it by twenty bucks in one go, that might be different.