On 12/16/2013 10:29 AM, Eddie Haskell wrote:
> "Rudy Canoza" <LaLaLa...@philhendrie.con> wrote in message
> news:35fd6$52af34dd$414e828e$29...@EVERESTKC.NET...
>> On 12/8/2013 12:35 PM, BBugster, lying racist shitbag *looter*, lied:
>>
>>> The highest minimum wage in a major country is Australia�s
>>
>> Australia's unemployment rate is *HIGHER* than it would be if they didn't
>> have their absurd minimum wage. The minimum wage reduces employment.
>> That's a fact.
>
> Yeah, but an increase in the minimum wage means automatic across the board
> pay hikes for union workers which means money for democrats.
It doesn't always mean that, but it does mean automatic increases for
some of them. That's one of the reasons organized labor supports
increases in the minimum wage.
There is another, more subtle reason. What matters in demand is
*relative* prices, not absolute prices. If skilled labor in some
industry earns an average of $28 an hour, and the minimum wage is $7 an
hour, then a skilled worker costs four times what an unskilled minimum
wage worker costs the employer. If the minimum wage now rises to $14 an
hour, the skilled worker now costs only two times as much. The cost of
employing a skilled worker, *relative to* the cost of using an unskilled
minimum wage worker, has fallen by 50%. Because the cost of the skilled
worker has fallen, more of them will be hired.
This is a classic illustration of why relative price, rather than
absolute price, is what matters. The example always given in economics
texts is that the highest quality products are usually unavailable in
the areas where they're produced, and the locals complain about it. The
best known example is apples in Washington state. Suppose a mediocre
apples costs 5� in the apple growing regions of Washington, while a
superior apple costs 10�. Now, it is obvious that it costs exactly the
same amount to ship a mediocre apple and a superior apple to Los
Angeles. Let's say it's 5�. Thus, the price of a mediocre apple in Los
Angeles is 10�, while the cost of a superior apple is 15�. In Los
Angeles, then the price of a superior apple is only 50% higher than the
price of a mediocre apple, instead of 100% higher as it was in
Washington. The price of the superior apple has *fallen* relative to
the cost of mediocre apples, so consumers demand more of them than do
consumers in Washington, and so the superior apples are shipped to Los
Angeles (and elsewhere), and are essentially unavailable in the area
where they're grown.
This is borne out every time.