withoutapaddle wrote:Minimum wage is irrelevant
If you raise minimum wage you raise the cost of everything else. Companies pass on the increase costs of production to consumers. So if minimum wage was $1, the cost of a bag of chips would be significantly less than it is now. It's basic labor economics 101
Nope. Simply not justified by economic data; sorry mate. Costs ARE passed on, but not in the 1-for-1 way you are describing. This is because companies still have to compete with one another. By that logic, the cost of everything would have suddenly increased when we went from 5.50 to 7.15. That didn't happen.
I'll give you a case-in-point.
In 2012, Wal-Mart posted NET profits of $365 billion. If Wal-Mart spent just $2 billion of its 2012 net profits on raises for all of its lowest-paid employees -- roughly .3% of their total net profits for that year -- Wal-Mart could have raised its company-wide minimum wage to around $10.50/hour.
In the big scheme of things, that would have almost zero net impact on Wal-Mart's profits, and because Wal-Mart is successful because it operates at a lower profit margin than any other supermarket, it would leave its prices exactly where they are.
The economics of the situation has to factor in profits and competition. The corporate atmosphere in which American capitalist business operates is a model which seeks to maximize profits above all else. That isn't to say that profits would not still be high with a raise in wages. The problem is, there is no incentive to raise wages without legislation for the lowest-paid workers.