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Inflation cannot exist if the end consumer cannot afford the increasing prices, and it flows all the way to the root of every supply/cost chain.
Inflation can and does exist. Inflation to the extreme, when people can't afford to buy a product anymore, yes, that business is doomed. McDs will lay off employees, use robots and automation to circumvent wage increases as much as they can. Gasoline prices can go up due to raw material costs (crude oil), refinery costs, refinery capacity (same demand chasing less available gas drives the price up), overall inflation (wages, value of a dollar, foreign exchange rates though oil is currently priced in petrodollars), etc. When prices get too high, these business collapse, deflationary forces begin. Stagflation is when inflation occurs but wages don't increase, net effect is a loss of purchasing power, lower sales. Deflation is when you can buy products for less money in the future - people postpone today's purchases to buy it cheaper tomorrow. Good for the consumer but bad for businesses.
There used to be no minimum wage long ago. A low end job would be posted and a very low wage offered. If no one was willing to do the work for the wage offered, the owner would have to raise the offering until someone agreed to work for the wage. Some people were exploited, so our "benevolent" government decided to create an official floor for wage compensation. I can remember when minimum wage was $1.70/hr years ago.
Read up on Economics 101 to better understand how economies work. It will answer many your questions.
There used to be no minimum wage long ago. A low end job would be posted and a very low wage offered. If no one was willing to do the work for the wage offered, the owner would have to raise the offering until someone agreed to work for the wage.
Exactly, this is called the free market. A job must pay what society thinks it is worth to do that job. Minimum wage is the primary driver of inflation, because it is mandatory and not able to be organically established/enforced by the actual cost of living required by society
Some people were exploited, so our "benevolent" government decided to create an official floor for wage compensation.
This is wrong. You literally just explained that you understand that people will not work a job for less money than it is worth, an employer cannot “exploit” people with low wages. If the wage is too low, no one will work there.
You tell me to study economics 101 while spouting the deliberate falsehoods of early wages taught by a corrupt federal education system.
The “benevolent” minimum wage exists solely so that inflation can be driven at the rate it is.
It can’t be difficult to understand that there must be consumers for a product to exist. There must be a producer of that product in order for the manaufacturers of the components of that product to exist. There must be manufacturers for suppliers of raw materials to sell those materials. There must be suppliers of materials in order for people to mine or produce those materials. NONE of those can exist if the first one, a consumer with money, doesn’t exist.
So you have to believe one of two things: either producers at the beginning of a supply chain will do whatever is necessary to keep their costs within a range that allows the common end consumer to purchase any given final product, or virtually all products, housing, entertainment, and transportation would simply cease to exist if there was no minimum wage.
Hint: all of those things existed before the idea of a minimum wage existed.
Inflation requires spenders. Minimum wage increases spending ability. Minimum wage is the primary driver of inflation, because it is mandatory and not able to be organically established by the actual cost of living required by a society
In the old days of free capitalism, there was no unemployment insurance, no welfare, nobody but the church to help the downtrodden. You want to eat, you had to find work, unless you owned enough land for a self sufficient farm. There was no work for many during the depression, food lines were established to feed the hungry in the cities. Jobs were crested (Hoover Dam and many other huge government projects) to get people working and improving skill levels, to get more $$$ into the economy and to help reduce/eliminate deflation. Today we have a minimum wage floor, and that wage may be sufficient to feed, clothe and house someone, but is not guaranteed to be enough. People have to make due with what they earn. Eating at home, buying used clothes, having roommates to split the rent - or moving back home, public transportation are ways to reduce the cost of survival. Welfare was created because people were still falling in the cracks.
Semiconductor wages in my backwoods area were roughly 65% of the wages for the exact same jobs in California. Housing costs and state taxes were the biggest contributor. My commute to work was +/- 30 minutes here, my counterparts in CA complained of up to 2hr commutes each way, because housing was unaffordable closer to their work.
Rents are interesting, usually defined by a formula based on purchase price, taxes, upkeep amortized over a period of years, but demand (or lack therof) can drive rents up or down from there. People who have lived in an area all of their lives can get priced out of a community if it becomes a hot place to live. More money chasing an existing housing supply in an area drives the values up, taxes and services up. Think Washington DC area. Conversely, a city that increases taxes to the breaking point can drive the wealthy and their businesses out, increasing unemployment, reduced wages (same workforce chasing fewer jobs), rents drop, malaise increases ... think Detroit.
The economy is in for a rough ride in 2023.
You want to eat, you had to find work
And how many people do you think took jobs that didn’t pay them enough to afford to eat or pay rent? Why would anyone take that job? If we suddenly abolished the minimum wage and Walmart started hiring for $0.10/hr, how many people would apply? Zero. An employer could exploit exactly zero people with an unfair wage just because the government stopped regulating it. Better to be free on the streets homeless and starving than working 40 hours a week and homeless and starving. A legal minimum wage is not required to keep people from working jobs that don’t pay what they need.
Social safety nets are irrelevant to how minimum wage affects inflation. Taxes and other government overreach is also a different conversation, though I do agree that they contribute to cost of living. Yet again, forced increase of wages increases the government’s ability to collect more taxes
Semiconductor wages in my backwoods area were roughly 65% of the wages for the exact same jobs in California.
Yes, again, exactly. The wages for the job are set by what is required by the surrounding society. All wages also increase when minimum wage is increased, which furthers spending ability, which speeds up inflation.
If someone was working as a mechanic for $15/hr when California increased minimum wage to $15/hr, why would they keep that difficult job if they could just throw boxes onto a shelf and take home the same money? So mechanics now make $30/hr. Now why would someone invest thousands of dollars and years of their life to learn a programming trade that pays $30/hr if they can just immediately enter any other trade for $30/hr? Programming jobs have to pay more because the minimum wage increased. The treadmill continues all the way up, and each industry along the way has to increase its prices to compensate for the wage increases.
California can only charge the rent and taxes that it does because its higher minimum wage has driven up the wages of higher skilled industries. If the wages were not so high, nobody could rent or sell their property for as high of a price, and prices would collectively lower. Exactly the same thing happens with product costs.
Minimum wage => inflation
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