The Minimum Wage and Inflation

yesterday have mmm mmm I don’t know exactly how I want to
characterize the fellow called but he calls with some regularity from
Virginia and I i think I’m I’m I’m guessing that he’s somebody
who does this for a living but any a he call a buddy said you know do you
really want to raise the minimum wage because then you’re mcdonald’s
hamburgers gonna cost more and we on this big debate about the minimum wage and I just completely neglected even
mention the fact that the hamburger wouldn’t have to cost a
penny more if mcdonald’s made a little less profit their corporate profits not
as theirs for corporate profits in general are at the highest level in the
history the Republic worth their CEOs and senior executives
took a little less money those salaries are at the highest level in the
history the Republic they could easily pay their workers were more bernie we got into the impact you know
the the suppose it inflationary impact to the minimum wage I said please
identify for me any one year since 1939 when the minimum
wage is passed 38 when I was passed when raise the minimum wage produced
inflation he was unable to do that and James came did some math on this and some very interesting stuff here he said the minimum wage has been
increased 22% time since 1939 republicans have increased it eight
times democrats increased it 14 times the average percentage increase was
sixteen point two percent which did not produce inflation and if you look at it in decade-long
chunks and the president is proposing not
raising the minimum wage tomorrow morning he’s proposing minute you know
phasing it in over several years so if you look at it decade-long charts
what you see is that the decade of the forties there was one
hundred and fifty percent increase the minimum wage no significant inflation as a
consequence of their in the decade in the fifties was a 53 percent increase in the minimum
wage again didn’t jack up prices to the
extent that there was inflation all through these times it was very purposeful reduction in the
value of the dollar largely by the fat in order for the
government to be able to pay off its debts with cheaper dollars very simple
stuff had nothing to do with minimum wage the decade of the sixties it was 39
percent increase in the minimum wage the decade up the seventies a 93 percent increase in the minimum
wage the decade of the eighties which was
bush and a reagan it was only a 22 percent
increase the minimum wage in fact a 1 I’ve the carries a time when the
minimum wage really didn’t go out much at all are and inflation was quite significant
during that period time oddly enough the decade of the nineties a 35 percent increase the minimum wage
and the first decade of the 21st century a 40 percent increase the minimum wage
not have those they have produced inflation in fact the
average decade-long increases but sixty-two percent now if you were to raise today’s minimum
wage by 62 percent it would be eleven dollars and 76 cents
an hour which is in the neighborhood have the nine dollars an hour that Obama is
proposing or the ten dollars an hour that Bernie Sanders and others are
proposing ten dollars and fifty cents an hour’s
work would be if we just inflation’s just 22 1968 so once again you know we need to raise the minimum
wage and there will be no negative fallout from

55 thoughts on “The Minimum Wage and Inflation

  1. I think the discussion should be that without inflation and the crushing of the spending power of the dollar perpetrated by the Federal Reserve then we wouldn't have to have discussions about raising the minimum wage.Before the creation of the Fed, a dollar (and your wages) would have the same buying power (and savings power) from 1850 to 1890 to 1913.With inflation rising every year and the dollar being devalued consistently, of course it will be an unending cry for raising the minimum wage.

  2. In 1914 Henry Ford raised the wages of his employees and cut their work hours. The business community castigated him for doing it.They used all the same arguments which are still used today by the Republicans. He argued that his employees should be able to afford the product which they made and have the time to use it.A car.He did it again I believe in 1928.All the same arguments were trotted out again.None of the dire consequenses predicted happened.The gov in '38 finally did it. Should be $15.

  3. Well that's why companies like McDonald's and Walmart want to keep the minimum wage low. They want to make it so their workers HAVE NO CHOICE but to buy their cheap products.

  4. If you don't address devaluation of the currency and inflation when does the cycle of pushing the minimum wage end? When fastfood workers make nearly the same as college grads (the wage ff workers demand now?) The result will be what we are seeing – more outsourcing and, more importantly, the robotics that is expanding exponentially.There are now robot waiters in China and tech has been developed to eliminate agricultural workers.

  5. Freaking McDonalds is already expensive if you want descent meal and some of that special drinks etc. it will cost you very easily over $10 and plus,now keep in mind I can go to Golden Corral and for $11 eat until I drop everything from soup to desert and fruits etc. so those suckers have enough to pay their workers more.

  6. Posting juvenile insults to my channel – is that what constitutes an adult discussion to you?

    I'm sorry I insulted your insular, myopic, unscientific philosophy. Someday you'll realize that platonic axioms are a poor basis for economic policy.

  7. There wasn't much of a middle class back before 1913. Basically you didn't have a middle class until the 1940s but standard of living got better. Minimum wage is not even keeping up with inflation right now. Wages have been stagnant for 30 years because when minimum wages doesn't go up other wages don't go up either. Henry Ford figures this out.

  8. Funny how Thom brings up the high minimum wage increases of the 60's and 70's, but neglected to mention that that period of time was one of the most inflationary of our history.

  9. Proponents of the minimum wage appear to think that wage increase happens in some kind of vacuum. That just those minimum wage workers get their raise, the end. Obviously, that's not how it works.

    In a restaurant, if the dishwasher and busboy gets their minimum wage hike, what do you think happens to the hostess or bartender? They aren't going to be happy now making the same wage as the dishwasher, so their wages go up too. Then of course the managers get raises as well. See the vicious cycle?

  10. And with little competition in that industry Ford was able to get away with spending more on labor. When industries mature you can't afford those kinds of luxuries as competition drives down profit margins.

  11. And why is it that wages should go up for doing the same work? Honestly, explain why it's logical that wages should continue to rise for doing the same job?

    The myth continues that overall inflation is a good thing. It's not. It's basically a hidden tax on your money earned. Sure, wage inflation in of itself sounds great, but it obviously leads to overall inflation…and where does that leave you in the end? It leaves the country with millions of exported jobs because of constantly rising costs

  12. I'm just wondering where this adult discussion is you're talking about. Your anti-Fed squawking is old and tired and has been thoroughly debunked since before I was born. We're not going back to the Gilded Age, because a civilization is not judged by its net profits, and the relative freedom of the banks and markets was only good for a select few exploitative robber barons (to the surprise of absolutely no one).

  13. I would have to say that bnfox's "anti-Fed squawking" isn't old and tired, because the squawking is getting louder each and every day. Tell me, when was anti-Fed philosophy thoroughly debunked? I think the phrase debunked is the wrong way to put it. Instead you should use "crushed by establishment power players against those that threatened to expose the immorality of government and FED force"…there, that sounds more like it.

  14. That's too bad. You might have learned that inflation isn't evil and Austrian Economics is a religion not at all based in reality.

  15. Before you use this obvious distraction tactic, why not answer my question first. You know, when was anti-Fed philosophy thoroughly debunked?

  16. Yes, I'm trying to distract you by making you learn about the effects of the Fed. The "abolish the Fed" crowd have been exposed as anarcho-capitalist crooks who want to return to the Free Banking Era and the gold standard. The idea that that was a great time in American history is indefensible.

    …And you're probably one of those useful idiot Libertarians who bought into this whole mess because Ron Paul promised he would legalize pot. Don't be ashamed; I was too, once.

  17. Higher wages do not "force" higher prices. The pass-the-buck corporatist mentality does. Income inequality is deplorable right now. If conservatives are so keen on returning us to the good old days, we can start with the 5:1 CEO:worker pay ratio.

  18. I beg to differ. If I may borrow a phrase about Austrian economics (I'll leave it to you to discover who said it):
    "Its statements and propositions are not derived from experience… They are not subject to verification or falsification on the ground of experience and facts."
    Austrian economics can not be used to explain how the real world works. It's devoid of empirical truth. It's idle philosophy.

  19. Tracy your comment makes no sense about busboys and bartenders. First waiters and bartenders make less then min wage as they get tips to make up the difference. As for the hostess making less then a dishwasher, who cares its a useless job and most restaurants have the waitress seat people, the dishwasher actually does a job needed to be done as if there is no clean dishes I wont be eating there. Do you even have a job? As your lack if common knowledge on these facts makes me think not.

  20. Ive lived in 3 states and everyone of them has had their base wages below min wage, last my ex girlfriend that waited tables said it was 3.35 an hour and the government assumes theyll make 10% in tips. Regardless shed made good money in tips for 6 hours a night a few days a week. So idk what your talking about and seeing ive made over $17 an hour for the past 15 years you can take your childish insults and inaccurate information and make this assumption, you couldnt do any of the jobs I hadever

  21. Here bnfox you obviously havent worked manuel jobs, you probably worked at daddies company, so try this google how much do waiters make an hour ? Youll see some answers from various post youll have to go thru several as you seem the lazy type I mention several. I saw some say 2 to 5 an hour some minium wage, if thats too complicated for you im sorry

  22. Wow…what a pile of nonsense.

    First off, I never mentioned waiters. A hostess is a useless job? Do you know what kind of chaos there would be without a hostess to organize seating and wait periods and answering phones? Sounds pretty derogatory towards a lower income earner…was that your intention?

    It's obvious my point went way over your head. Minimum wage raises bring on higher wages for everyone else as well…and the vicious cycle of wage inflation leading to overall inflation continues.

  23. Sorry, but you still didn't give me an answer. When was anti-FED philosophy thoroughly debunked?

    And give me evidence that the "abolish the FED" crowd are anarcho-capitalist crooks.

    Let's face it, these supposed well known facts are simply opinions of yours just off the top of your head. Nothing based on fact. It's ok, I'm used to dealing with FED shills who are in denial of its destructive debasement of our currency, while at the same time enriching Wall Street at the expense of Main Street.

  24. Since the creation of the Fed, we have seen much fewer and shorter recessions than before. The Fed has been successful in lessening the economic impact of the business cycle (which anti-Fed people claim it creates).
    But no matter how far you go back – even to the supposed "Free Banking Era" – anti-Fed loonies will point to some cursory involvement the government had in banking and blame it for ALL the economic woes of the time. Even if that's true, why have so much faith in such a flimsy system?

  25. Well, funny how Democrats are finally catching onto the decriminalization of marijuana. Guess Ron and Rand Paul can now be considered leaders on this subject…and the rest follow. You see, the best leaders lead with their principles and integrity, not how the wind is blowing at a given moment.

    So, you were a principled Libertarian once? And now…a puppet for the establishment that does as he's told? Seems that way as I don't hear any thoughts of yours that sound original, just regurgitated.

  26. No, I learned that empirical truth trumps metaphysical truth. The non-aggression principle falls apart when you try to build a society which will invariably be built on sacrifice, compromise and forgiveness. On a planet of 7 billion people, every man can't be an island, and rampant idealism never makes good public policy.
    Likewise with Austrian economics and its acolytes. It has no basis in empirical fact or historical evidence.

  27. Funny how one can judge a Libertarian belief system that has never been chosen by the majority as one that "falls apart". From what evidence?

    Unfortunately, anti-libertarians always win out in the end because it's much easier to win over the will of the masses through promises of things that ultimately must be taken from others to achieve their goals. Free stuff is never free, as it's taken by force from one group to give to another. That in essence is immoral. A lesser evil in your opinion?

  28. Well, of course Austrian Economics says that the FED actually fuels the business cycle. And yes, the FED, which helps create the business cycle, then rides on the white horse to lesson the pain of its own actions. Kinda warped thinking if you ask me.

    I personally believe in having ONE currency as long as it is backed by gold. The ONLY reason why our fiat system hasn't collapsed is because foreigners still haven't lost total faith in our currency. But this day will come as we continue to debase.

  29. Evidence? You want evidence of something that can't exist? Good luck with that. While you're at it, show me physical evidence of natural rights. A voluntary society is either a society that panders to the rich, or no society at all. We'd still be living in caves if we didn't have some mandatory contribution to sustain the whole.
    Your phraseology ("taken by force", "lesser evil") only speaks to your immature compulsion to cling to platonic ideals. That and a quarter will get you 25 cents.

  30. Well, of course they do, because they're kooks. All you need to know about Austrian economics is in the following quote (I'll leave it to you to discover who said it): "Its statements and propositions are not derived from experience… They are not subject to verification or falsification on the ground of experience and facts."
    It's idle philosophy that can't be used to explain how the world works. Really, it's Aesop's Fables for anarcho-capitalists.

  31. Tracy I used waiters in my example because they are usually on the same payscale as bartenders, actually sometimes they are better paid as all the waiters have to give some of their tips to them who ordered alcohol. As for wages effecting other wages your correct, but people making min wage can not survive on it and require some federal assistance like food stamps, medicaid which means you are subsidizing the low income earner with your tax dollar

  32. So, how can you prove that libertarianism falls apart if it doesn't now or has never existed in this country?

    A voluntary society makes mandatory contributions in the form of taxation to defend the interests of the whole. But today we have a society that takes for themselves through government force (deal with it) and demands that the unwilling pay for it. Where did it become commonplace where corporations get subsidies that favor them and their industry while other similar industries dont?

  33. So, you're going to take one quote of pseudo science from Mises and make the claim that Austrian economics is kook economics?

    And you're truly going to make the claim that the FED doesn't have a history of stimulating markets to levels beyond sustainability? If that's so, then you're obviously either a card carrying shill for the FED or in denial so deep as to be delusional.

  34. I don't disagree that minimum wage hasn't kept with middle class wages. So, the problem is the inflation of the middle class. It's common belief nowadays that most jobs automatically receive a raise each and every year…5% to 10%. We need to ask ourselves why that is so. Why should you receive more this year than you did last year for doing the exact same work?

    If you want higher wages, then improve your skills and move up the ladder. It shouldn't come from simple wage inflation.

  35. I dont think wage increases are due to inflation, its more that you become more valueable as an employee and you want to retain them. Do I as an employer want to lose an employee that knows the job, probably knows several jobs and have to spend 6k training a new person ( dollar amount is what my employer said it costs) that may or may not work out? Thats basically what would happen if the new employees made the same as someone there for 10 years, no advancement, no acknowledgement means ill leav

  36. Now at the few jobs ive had, they had inflation increases of a few cents every 2 to 3 years but thats different then merit increases and actually the last 1 I got was nothing as they deemed the housing market crash as cost of living went down even tho gas, food and rent went drastically up, anything to get out of a 3 cent raise I guess

  37. But this is how a clerical job transforms from a $10 an hour job into a $22 an hour job with pension and health care benefits not so many years later.

  38. That isn't some random quote; it's the man who pioneered Austrian economics admitting that his philosophy abandons formal scientific analysis for the more pliable (and bullshit-susceptible) verbal analysis. Praxeology is about as applicable to economics as the Bible is to law.
    Most of the Fed's early failures are due to inaction. But Austrians spin that to suggest malice. Hesitating to print more money becomes "contracting the money supply", and so on. Framing is a pasttime for those goldbugs.

  39. If a societal structure is a non-starter, I'm pretty sure that counts as a failure. But sorry, "voluntary" and "mandatory" are mutually exclusive.
    I can't answer your other question. Maybe you should ask the laissez-faire idiots who allowed companies to get big enough to buy politicians.

  40. I don't think those at the FED are bad people generally, though it can be questioned that they likely go through some of the same revolving doors that politicians do after losing an election…off to the corporations that they handed legislative favors to.

    But I believe those at the FED are misguided. Sure, they're smart and know a shitload more about economics than myself. But, being knowledgeable and knowing how to apply the dismal science in real world situations are different things.

  41. From what I've read about the Depression, many argue that the FED did not supply liquidity, which is actually its main function at the time. So, the one time they had a legitimate reason to run their mandate, they didn't.

    The financial crisis wasn't a liquidity issue but rather a solvency issue. There were no bank runs. They simply made speculative bets that ended up imploding. That's no reason to bail out stupidity. So, you can argue that in 2008 protecting their own was a goal of the FED.

  42. Certainly, libertarianism does bode well for corporations and politicians colluding together for their own mutual benefit at the expense of everyone else. So, those in power marginalize it resoundingly as kook philosophy simply in order for them to continue the profiteering they partake in.

    So, yes, that makes it difficult for libertarianism to expand as its philosophy is smashed to bits by the powerful elites. We have corporatism, not laissez-faire free market capitalism. Hard to dispute that.

  43. Yes Private companies could reduce profits…but you have to consider that federal job wages will also get bumped up. The dollar has lost 99% of its value in the last 99 years.

  44. You lost me when you assumed that the price of a good could only be affected by inflation. The value of dollar affects the actions of a business but the actions of a business do not affect the value of the dollar.

  45. The main problem of the theory that minimum wage doesn't increase inflation is that it runs on the assumption that corporations are going to suddenly be less greedy.. 

  46. Increase in min wage=inflation no brainier The min wage goes up, price of means and goods goes up with it, all it does is balance out for min wage peeps, price of living bumps up, others have to now pay more to help the balance, so say you're earning more then the min wage, well now you suffer the inflation, just means people "well off" pay more, people on min wage think they make more thats the misconception, you actually still live below means because now inflation drove the price up for living, business will charge their customers more to balance out cost, hell min wage goes up could mean now you'll work a halfbaked version of full-time 30hrs etc at new min wages, so it's tricky but min wage is exactly that, minimum. I thought it'd help by increased min wage meant more spending? but simple observation all tell tale signs are there, doesn't help anybody actually hurts the economy because now costs go up, say you advance and now make more then min wage? well now you'll be paying more too also can't live off min wage and if you do you're working 2 jobs/ 60-70 hrs a week and or independent and only have to worry about yourself.

  47. Example McD combo meals were $2.99-4.99 for a big Mac combo meals an example, now that same combo meal is $5.99-6.99 see that, the owner of the business had to raise the price of meals to make up for the wage increase, so now you make $10 an hr before making $8 an hr, you see what I mean, price of rent min wage $8/$600-800now at $10 an hr/800-$1,000 for rent, all it does is drive up costs, you're not making more just making everyone else that isn't on min wage pay more, you didn't gain any ground you still balance out, it slowly increases and back to square one, you'll be asking for more money/increase in wages.

  48. And if it's a commission based job you'll make less because now the customer has to pay more so they'll pay you less now by 10-20% if a commission based employee, drives prices up

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