Except for the fact it's been shown that minimum wage increases result in inflation (either that or aliens are increasing inflation every time the minimum wage rises).
The minimum wage will have a minor impact on inflation, but as wage costs are only a
proportion of the total cost of goods & services the increase in the end cost of goods is significantly less than the rise of wages at the bottom end.
More-so when you factor in inflation is linked highly to the cost of oil & energy - two factors which have a minority of staff on minimum wage & that raw material costs result in significantly lower wage costs as a proportion of total expenditure.
A theoretical increase of 10% on the national minimum wage would not result in a 10% increase in the cost to produce goods.
Wage costs are a proportion of total costs.
Only a percentage of staff in a given organisation are on minimum wage.
From an earlier thread.
"An increase in the wages for the population increases demand & allows for greater expansions & economic activity. There is also the fact that an increase in the minimum wage will increase total wage costs by that amount, but people seem to forget that wage costs of minimum wage employees do not account for 100% of the total costs to produce goods or provide a service.
"Total labor costs, or percentage of gross revenues spent on payroll, vary dramatically by industry.
Highly automated oil refineries and semiconductor plants might have labor costs of less than 10 percent, whereas restaurants average around
30 percent labor costs.
Retail businesses generally have higher labor costs, usually at least 10 percent and ranging up to 15 to 20 percent. According to the Food Marketing Institute,
the average U.S. food retail business had total labor costs of 14.6 percent of sales in 2007"
While these figures are from US studies, the trends should be indicative of ours - with a key point being that not all staff for these organisations are in-fact on the minimum wage to begin with.
It's a percentage of total staffs costs, which is percentage of total turnover. A 10% increase in the minimum wage will in no way increase total prices by 10%.
So assuming a business spends 20% of the total turnover on staff costs a 10% increase in minimum wage would result in a total net increase of 2% in costs (in reality it would less due to a number of staff already surpassing the minimum wage)"
Also.
"I would indeed be higher for a living wage increase of say 40%.
But that would increase the cost of goods by the same proportion. To give a another example, assuming the cost of wages for a business is 20% of total turnover (a higher than average estimate).
If they wanted to to a flat 40% wage increase (your higher estimate), at that absolute most it would increase the cost of goods by at most 8%. In reality it would be lower of course as a percentage of the staff for a given business are on more than a living wage. The other aspect would be the increase in sales from the people who are now able to participate in the local economy.
A 40% wage increase for the poorest in society would be off-set by a minor increase in goods for everybody else, but with the added advantage the government can reduce it's expenditure on tax credits & top ups."
