GoFuckYourself.com - Adult Webmaster Forum - View Single Post - Do you feel that a raise in the USA minimum wage will increase sales?

kane · 11-19-2006, 01:17 AM

There is a huge misconception about an increase in the minimum wage increasing the costs of goods and services. It can be true, but most of the time it is not. In most cases the cost of a good/service is driven by the tolerance of the consumers and the presence of competition. Say for example an item sells like crazy at $39 and the manufacturer makes $8 profit on it. The minimum wage goes up and it causes the cost of manufacturing that item to go up and the profit on it drops to $6.50. So they raise the price to $42. It doesn't sell so well because a competitor comes in and sells theirs for $39. They would rather sell more and make less per item. This causes the first company to have to take a little less profit and lower their price to compete. They are still making a nice profit, just not as much.

But this example isn't 100% accurate because in the modern age with the WTO, NAFTA and an ever globalizing economy most of the consumer goods are now made overseas and shipped into this country and those that are not are typically made by people who make over the minimum wage so the increase won't affect them. Most people that work for those ultra low paying jobs do so in service industries like fast food and low end retail or in low end labor jobs. The increase in the minimum wage for them will have very little impact on the overall cost of a product.

In the end I think it's good for the economy. Typically people that make low wages are spenders. If you raise the minimum wage $2 an hour you are putting an extra $160 a month into thier hands. You know they won't save it, they will spend it and spending money helps grow the economy.

11-19-2006, 01:17 AM
kane Too lazy to set a custom title Join Date: Aug 2001 Location: portland, OR Posts: 20,684	There is a huge misconception about an increase in the minimum wage increasing the costs of goods and services. It can be true, but most of the time it is not. In most cases the cost of a good/service is driven by the tolerance of the consumers and the presence of competition. Say for example an item sells like crazy at $39 and the manufacturer makes $8 profit on it. The minimum wage goes up and it causes the cost of manufacturing that item to go up and the profit on it drops to $6.50. So they raise the price to $42. It doesn't sell so well because a competitor comes in and sells theirs for $39. They would rather sell more and make less per item. This causes the first company to have to take a little less profit and lower their price to compete. They are still making a nice profit, just not as much. But this example isn't 100% accurate because in the modern age with the WTO, NAFTA and an ever globalizing economy most of the consumer goods are now made overseas and shipped into this country and those that are not are typically made by people who make over the minimum wage so the increase won't affect them. Most people that work for those ultra low paying jobs do so in service industries like fast food and low end retail or in low end labor jobs. The increase in the minimum wage for them will have very little impact on the overall cost of a product. In the end I think it's good for the economy. Typically people that make low wages are spenders. If you raise the minimum wage $2 an hour you are putting an extra $160 a month into thier hands. You know they won't save it, they will spend it and spending money helps grow the economy.