From what I recall, McDonalds doesn't pay min wage to their employees. If memory serves they can make upwards of $7 an hour....shame compensation perhaps...
but back on topic...webbsterApril 14 2006, 05:36:21 UTC
Inflation arising from an increase in minimum does wage exist, but is overblown considerably. On the microeconomic level, the price of goods is sensitive to minimum wage only to the extent that the cost of mimimum wage workers contributes to the overall cost of production. I.E. if half the operating costs of a fast food place joint goes paying their min wage employees, a 10% increase in the costs of paying them will increase total expenses by 5%. Given that many corporations employ little to no minimum wage workers, the overall price level would be altered even less.
The idea that inflation negates a minimum wage increase only works if the price level increases at a 1:1 ratio with the raise. Even accounting for a modest ripple effect, it comes nowhere close to that.
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The idea that inflation negates a minimum wage increase only works if the price level increases at a 1:1 ratio with the raise. Even accounting for a modest ripple effect, it comes nowhere close to that.
w00t economics...
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